It's time to better regulate loans to students

A Chinese woman shows credit cards and other bank cards in Qionghai city, South China's Hainan province, April 14, 2012. [Photo/IC]

A college student in Zhengzhou, Central China's Henan province, killed himself because he was unable to pay back the hundreds of thousands of yuan he had borrowed from an on-campus loan provider. Thepaper.cn calls for more strictly regulating loans to students:

Banks used to seek to issue credit cards to college students, but most students do not have stable incomes and they rely on their parents to pay off their cards. That's why, in 2009, the China Banking Regulatory Commission forbid banks from issuing credits cards to people under the age of 18 and strictly control the issuing of credit cards to those older than 18.

However, to meet the demand, non-bank financial institutions have started providing loans to students since then. The student in Zhengzhou is reported to have obtained loans with ID cards taken from his classmates, which reveals the lack of risk control in the business.

In order to mitigate the high risks, the loans for students often come with high interest rates as well as radical means of getting the loans back in case a student fails to pay them. Some loan providers threaten the families of the students who have difficulty in paying back their loans, which is illegal because most parents are not signatories to the loans their children take out and usually are not even aware their children have acquired the loans.

Of course, students are grown-ups and have the right to take out loans, but the loan providers have the responsibility to check whether they will be able to pay them back, before issuing a loan. Authorities need to regulate the on-campus loan market, so as to prevent financial institutions from rampantly issuing high-interest loans and getting their payments via illegal means. The Zhengzhou tragedy is a warning, and we cannot afford to let it happen again.