The Japan Students Services Organization (JASSO), a student loan provider under the wing of the education ministry, is suffering from a high delinquency rate on loan payments. Starting in fiscal 2010, it will tell all new borrowers that it will report long-term delinquent borrowers to an organization that logs consumer credit histories. This will help prevent borrowers from taking on multiple debts.
But JASSO's real hope is that the threat of being reported, which would result in difficulty in receiving loans or getting credit cards from other institutions, will increase borrowers' incentive to repay scholarships without fail.
At present, one of every three university students has received low-interest loans from JASSO, established in 2004 as an independent administrative body after it took over the Japan Scholarship Association (which dates back to 1943), and four other organizations. Including the days of the scholarship association, about 8.14 million students have received loans. Since repaid loans become funds for future loans, repayments are the key to continuation of the student loan system. It is imperative that borrowers repay without fail.