The Research On State-subsidized Student Loan

The state-subsidized student loan is an unsecured, interest state-subsidized (during the education) personal loan, granted by the commercial bank, which designated by the State-Subsidized Student Loan Administration through biding, to the full-time college & university, second-degree and graduate students who have economic difficulties in complete the higher education. The state-subsidized student loan finances the students paying tuition and living costs, in order to insure the completion of their higher educations.The regulator has been attempting to adjust the applicable policies in accordance with the practical situation, since the commencement of the state-subsidized student loan. However, the expansion of this business didn't run smoothly during the past few years, due to the mechanism contradiction between the mandatory policies of the state and the profitability-oriented operational goal of the commercial bank, weak credit record of the college student, high rate of default, illegitimatized policies concerning the state-subsidized student loan. On contrary, the commercial bank has placed considerable restrictions on this business and strained the financing because of the high risk exposure of this loan. Accordingly, the dilemma brought negative impact on the normal operation of the higher educational institutions, even their admission polices. On other hand, the apprehension about the source the tuition and living costs still clouded the loan applicants. For the government, its public function weakened owing to the inefficient state-subsidized interest mechanism.