Poor students in China now have one more choice to obtain bank loans to be used as their tuition fees of higher learning institutions.

The government has launched a new pilot project to provide poor students with loans to help them get through their education.

The new pilot project enables poor students to obtain loans from banks at their hometown, and has been carried out in provinces of Jiangsu, Hubei, Gansu and Shaanxi, and Chongqing Municipality, said an official with the Ministry of Education, which joined with the Ministry of Finance and the China Development Bank to launch the project for student loans.

By September 7, more than 33,000 students from the five areas had signed loan contracts, amounting to 560 million yuan (US$75.7 million) in total, according to the China Development Bank.

The loans are offered only when applicants and their families were ascertained as in economic difficulties or with an annual income less than 8,000 yuan (US$1,081), or under such conditions as being an orphan, or with handicapped or unemployed parents.

Each student is allowed to get a loan of up to 6,000 yuan each year to be mainly used as tuition or dormitory fees.

The loan requires no guarantee and can be repaid over ten years after graduation. Interest and risk compensation will be shouldered both by the central and local governments.

The Ministry of Education plans to extend the student loan mechanism to the whole country when enough experience have been gained through the pilot program, and make it part of the State Sponsorship mechanism.

China first introduced a pilot state education loan system in eight major cities, including Beijing, Shanghai and Tianjin in 1999 to assist poor college students. The service was extended to the rest of the country in 2004. By the end of June of this year, education loans balance had reached 19.3 billion yuan (US$2.55 billion), according to figures from the central bank.

Under the state education loan system, needy students are required to apply for education loans through the administration of their universities.

The new pilot project complements the state education loan system, said the education official.

The Ministry of Finance announced on Sunday that China would allocate around 50 billion yuan (US$6.6 billion) every year to fund needy students, starting from the fall semester this year.

About 4 million students at 1,800 colleges and universities and 16 million students at 15,000 secondary vocational schools would benefit from the financial aid scheme.

The move is another major advance in promoting educational equality after the central government exempted students in rural areas from tuition and miscellaneous fees related to nine-year compulsory education last year, said an official with the ministry.

(Xinhua News Agency September 13, 2007)