Effective support needed to keep students from abandoning learning

The Council for the Creation of Future Education, chaired by Prime Minister Fumio Kishida, has begun studying ways to create a new student financial aid system. Sufficient discussions are needed on whether a better system can be established to support motivated and capable students.

The new system would be called “shusse barai,” which literally means paying back loaned money after making career progress. In this system, the government would cover tuition at universities and other institutions and students would begin repaying the amount according to their earnings when they reach a certain annual income after graduation. Kishida instructed Education, Culture, Sports, Science and Technology Minister Shinsuke Suematsu to compile the results of the study by the end of next month.

Currently, there are two main types of student financial aid provided by the government. One is a grant-in-aid scholarship with no repayment obligation, targeted at households that are exempt from residential tax or have an annual income of less than about ¥3.8 million, while the other is a loan-based program offered to households with an annual income of about ¥11 million or less. Including private programs, about half of all university students receive financial aid.

While grant-in-aid scholarships do not require repayment, loan-based aid leaves students in debt after graduation, with many borrowers struggling to repay their debts. Currently being discussed is the idea that any student should be able to use the shusse barai system regardless of their parents’ income.

In recent years, many students have fallen into dire straits because school fees have risen and they are unable to work part-time due to the coronavirus pandemic. It is important to create an environment in which students can learn without financial worries. If the burden of educational expenses is reduced, it could lead to an improvement in the declining birthrate.

The government’s move to discuss the introduction of a new type of financial aid at this particular moment is apparently aimed at appealing to younger voters ahead of the House of Councillors election slated for this summer. However, there are many challenges to be solved before realizing it.

Australia has already adopted a similar system, and the ruling Liberal Democratic Party has studied it in the past. But, the plan has yet to be realized due to the difficulty of securing a large amount of financial resources for that purpose.

For the new system, an idea is under discussion to set the start of repayments at the point when the borrower’s annual income exceeds ¥3 million. But it has been argued that postponing repayment while borrowers’ income remains low would discourage them from working.

There is also the difficult problem of how to deal with feelings of inequality affecting graduates who are still struggling to repay their loans.

In assessing whether to introduce the system, it is essential to thoroughly clarify the issues first.

The number of users of the current grant-in-aid scholarship has been lower than the government expected since the program was launched. It is possible that there are eligible students who have not applied for the scholarship due to insufficient promotion of the program. This needs to be verified.

In a survey of students who have received grant-in-aid scholarships, more than 30% of respondents said they would have given up on advancing to higher education if they did not have the scholarships. The role that financial aid plays is significant. It is hoped that the government will devise a system to prevent young people from giving up on higher education due to their future financial worries.

(From The Yomiuri Shimbun, April 7, 2022)