A business report for fiscal 2009 of the Japan Students Services Organization (JASSO), a student loan provider under the wing of the education ministry, shows that many borrowers are having difficulty repaying their debts, apparently because of the economic downturn, which makes it difficult for graduates to get stable jobs.
JASSO's outstanding loan balance is ¥6.2337 trillion. Loans in arrears for three months or longer amount to ¥262.9 billion, roughly twice the corresponding figure of ¥136.3 billion in fiscal 2002. Some 70 percent of those loans are overdue for one year or longer and about 10 percent overdue for 10 years or longer.
In fiscal 2009, JASSO extended ¥959.5 billion in loans — ¥248.5 billion without interest and ¥711 billion with interest — to 1.18 million students. As of the end of March 2010, out of 2,627,000 people who had to repay, 336,000 were delinquent borrowers, owing ¥79.7 billion.
During the same fiscal year, JASSO filed 4,233 lawsuits against delinquent borrowers. The number of such lawsuits has been rapidly rising — 58 in fiscal 2004, 266 in fiscal 2005, 547 in fiscal 2006, 1,407 in fiscal 2007 and 1,504 in fiscal 2008.
To cope with an increasing number of delinquent borrowers, JASSO joined an organization that logs individuals' consumer credit histories. Last spring, it started providing the organization with information on delinquent borrowers' names, addresses and amounts owed. Some of them may become unable to use credit cards or get housing loans.
A JASSO survey of borrowers who are in arrears for six months or longer shows that they are suffering from financial difficulties — with 40.8 percent mentioning their low income, 37.3 percent their parents' financial difficulties and 19.8 percent their unemployment. The government should make serious efforts to prevent a situation in which students have to give up going to school because of financial difficulties. It should remember the Democratic Party of Japan's 2009 Lower House election manifesto, which called for granting scholarships carrying no repayment obligations to students who need them.