Rising Interest Rates Increase Scholarship Burdens in Japan

Tokyo, July 14 (Jiji Press)–Rising interest rates are leading to higher interest rates on loan-type scholarships for university students in Japan. Higher rates on such scholarships may cause some people’s repayment balances to increase by more than 1 million yen. This would come at the same time as inflation and tuition increases, prompting concerns about impacts on future plans such as marriage and savings. In fiscal 2024, which ended in March last year, 51.1 pct of Japanese university students attending day classes received loan-type scholarships from the Japan Student Services Organization, or JASSO, and companies, according to the organization. The share rose from about 20 pct in the late 1990s, standing at around 50 pct since fiscal 2010. A 32-year-old company worker in Chiba Prefecture, east of Tokyo, 10 years ago started repaying a 2.5-million-yen scholarship she received from JASSO during her student days. Her remaining balance stands at 1.5 million yen. She has used measures to reduce and delay payments as she has an unstable income, partly due to the COVID-19 pandemic forcing her to change jobs from her previous employer in the tourism industry. “I didn’t think it would be this hard to repay,” she said. “I feel guilty when I think of it as debt.” The scholarship given to the woman is interest-free, but some scholarships can become interest-bearing depending on applicants’ family finances and grades. The annual interest rate on JASSO’s fixed-rate scholarship programs stood at 0.07 pct for students who graduated in fiscal 2019, but rose to 2.423 pct for those who graduated in fiscal 2025. For a student repaying 4.8 million yen over 20 years after receiving 100,000 yen in scholarships a month for four years, the difference in the interest rates amounts to about 1.28 million yen. It is difficult for students to predict at the time of borrowing how much they will have to repay, as interest rates are set at the time of graduation. A student in the third year of high school in Chiba who attended an information session in Tokyo held jointly by multiple universities last month said he was concerned about taking out a scholarship. “I want to study the sciences, but considering my possible enrollment in graduate school, the (borrowing) amount will be large.” “I’m worried because I can’t predict the interest rate on scholarships,” his 52-year-old mother said. “We are also looking into student loans offered by banks, as their interest rates are easy to understand.” “Those who graduated this spring experienced rising interest rates during their university years,” said Hirokazu Ouchi, professor of sociology of education at Musashi University in Tokyo who is well-versed in scholarship issues. “It’s too harsh to say that they should bear responsibility” for paying the additional interest, he said. “The problem is that many young people who continue repayments can’t plan their futures,” Ouchi said. “The impact of rising interest rates will begin to appear in earnest,” he said. “Immediate support measures are necessary.” END [Copyright The Jiji Press, Ltd.]