Court freezes bank account of student loan shirker

A local court froze the bank account of a woman who ignored a court order to pay back her 8,000 yuan ($1,254) student loan, even though she owns an apartment and a car, Shanghai Xuhui District People's Court announced Friday.

The woman, surnamed Jia, applied for the student loan because her family didn't have the money to pay for her education, according to a press release from the court Friday. When her loan came due in 2012, five years after she graduated, she ignored the bank repayment notices even though she was much better off.

The bank eventually took Jia to court and the two parties reached an agreement, in which Jia promised to pay back the loan. But she never did, the press release said. After the court froze her bank account, she eventually paid back the loan and apologized to the court.

The problem of graduates who shirk their student loan repayments is not uncommon in the district, said Ma Chao, an official with the court. "We saw about 300 of these cases in Xuhui district last year. Many students refuse to pay back their loans even though they have the ability to do so," Ma told the Global Times.

Ma said that banks have to turn to schools and local courts because many graduates change their addresses and phone numbers after they leave school.

Nonetheless, the courts and the banks are usually lenient with deadbeat graduates. "Although the judge could have ordered a monetary punishment, the court is usually lenient with college graduates if they sincerely apologize for their behavior," Ma said.

Banks have the ability to hike interest rates on overdue student loans, according to the Ministry of Education, which started the national student loan program in 2002 with several State-owned banks.

Graduates who fail to pay back student loans on time can have trouble applying for mortgages or auto loans in the future, according to the press release.

A student's family has to be under the local poverty line to qualify for a student loan, said Xu Liyun, a counselor from the College of English Language and Literature at Shanghai International Studies University. "A student can apply for a student loan if his family's income is below the minimum living standard of about 500 yuan a month per person," Xu told the Global Times Sunday.

Xu said that although she has seen graduates with means who refuse to pay back their loan, there are some graduates from poor families in other areas who actually have problems repaying their loans because they have siblings to support.

According to the Ministry of Education, students can apply for loans of up to 6,000 yuan for each year at university. The loans are interest free until graduation.

The interest rate on the loan runs from 5.85 percent to 6.80 percent, according to China Development Bank.