(Yicai Global) Sept. 6 -- Peer-to-peer lenders are banned from offering loans to students and taking advantage of their limited financial knowledge, Zhao Jianjun, deputy head of the Ministry of Education's finance department, said today.
P2P lending platforms have lured college students into taking out loans with misleading information, he said. Students do not have a regular income, and some ran up more debts than they could afford. Some even committed suicide after taking out large loans.
The education ministry, China Banking Regulatory Commission and Ministry of Human Resources and Social Security banned businesses from lending to students in the first half to restore order to the market.
As a follow-up to the policy, Zhao today said that the ministry encouraged fully-licensed commercial banks to micro-lend to university students after the ban. The MOE also called on higher education institutions to reinforce financial education for students to prevent them from falling victim to scams.
The ministry talked about setting up a student aid system. Between 2012 and 2016, the government granted CNY698.2 billion (USD105.8 billion) in student aid, excluding allowances for compulsory textbooks and food allowances, benefiting 425 million students in pre-school and compulsory, high school, vocational and higher education. Nearly 70 percent of the total amount came from public finance.
Student aid policies reduced the financial burden on low-income families and improved educational quality, the ministry added.