Between 2005 and 2007, the China Development Bank offered 1.66 billion yuan ($237 million) worth of loans to 243,000 students from poor families in central China’s Henan Province. According to relevant regulations and loan contracts, students who borrow money must pay back the loan interest and repay the principal amount in the given time. Not all graduates do.

On May 5, the Henan Branch of the China Development Bank and the Henan Provincial Education Department jointly issued an ultimatum requiring 223 college graduates to pay off the interest on their student loans within 30 days. It was not an unreasonable demand, because the two agencies had in fact been regularly asking the students to repay the interest from as far back as January 2008. Nevertheless, the students failed to repay the debts as required. Now, since they have not notified banks of their changes of address, colleges and banks find it impossible to contact these students after they have graduated.

By April 20, 2.8 percent of 2006 graduates who took out student loans in Henan had not yet paid off their interest, with the outstanding amount being 38,000 yuan ($5,430), overdue by one year.

It is in this situation that the China Development Bank and the Henan Provincial Education Department decided to publish the personal information of these students in accordance with relevant regulations concerning student loans.

Those who fail to contact their schools in time will have their bad credit record included in the central bank’s personal credit information database, and this will place a black mark on the students’ future lives and careers. Actually, this is not the first time that banks have published information about student loan defaulters.

Many people sympathize with banks, but still some people point out that some students do not repay simply because their poor financial status does not allow them to. Therefore, to expose their personal information will damage students’ reputations and may well deprive many excellent students of valuable future jobs and promotion opportunities, putting them in an even more difficult financial position.

Keep an open mind

Si Aiwu (guancha.gmw.cn): According to the Constitution, the dignity of citizens of the People’s Republic of China is not to be infringed upon. Insulting and slandering citizens in any means is prohibited. To expose detailed personal information about students who default on education loans is actually insulting students’ dignity and harming their reputation. Although banks have creditors’ rights over defaulters, by no means should they insult students’ dignity and reputation.

Moreover, the clause issued by banks and education departments on student loan default is in nature a “rogue clause.” By announcing this clause, banks can relieve themselves of responsibility and transfer all liabilities to students. In order to successfully recover loans, banks make use of their superior status and force students to accept the unfair clause.