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Students who rely on state loans to finish their university studies may have their loans waived if they go to work in China's western or remote areas, the Ministry of Education announced Thursday.

The loan, up to 24,000 yuan (US$4,000) per student, will be paid by the central government if the graduate promises to work at or under county-level units in western or remote regions for at least three years.

The policy applies to all graduates from about 100 universities attached to the central government, including prestigious Peking and Tsinghua Universities, and the ministry has urged all provincial governments to make similar policies.

Cui Bangyan, the ministry's official in charge of the loans, said such a policy would help adjust the existing misbalance in the job market.

He said many graduates from universities under the central government, which are usually better than local ones, are not willing to work in western and remote regions because of poor salaries and conditions, but at same time, they cannot find jobs in cities due to fierce competition.

"We hope the favourable policy will encourage students from key universities, especially those who face difficulty in repaying loans, to work in China's western and remote regions, so that the gap between the city and the countryside can be narrowed," Cui said.

Graduates have to sign a contract with the university and the employer to make sure that they will follow the policy before applying for the waiver.

In principle, only 5 per cent of the university's graduates can get the waiver each year; for universities specializing in agriculture, forestry, geology and some other majors that usually have a large number of poor students, the percentage could be up to 8, according to the ministry.

Graduates are allowed to quit their jobs before the contract ends, but they should repay the loan beforehand. If they fail to, they will have a stain on their credit record.

The State loan policy, initiated in 1999, is now the major financing method for cash-strapped students in China's public universities.

(China Daily September 15, 2006)