Photo/IllutrationOf more than 8 million yen the 27-year-old son borrowed through a state scholarship loan, 5.76 million yen bears interest. (The Asahi Shimbun)

  • Photo/Illustraion

Immediately after his son filed for personal bankruptcy, a man in Osaka Prefecture received a bill that would lead to his own bankruptcy declaration. The man is now worried that his own father could be next.

“I never thought that a student loan, which should allow people without the necessary resources to attend university, could be such a heavy burden,” the man said.

A total of 15,338 personal bankruptcies were filed in connection with state scholarship loans over the five years through fiscal 2016, according to the quasi-governmental Japan Student Services Organization (JASSO), the loan provider, and others.

The borrowers filed for 8,108, or 53 percent, of the total, while guarantors, such as their parents and other relatives, accounted for the remaining 7,230 cases.

The annual number of such personal bankruptcy filings has hovered around 3,000 in recent years against a backdrop of spreading irregular employment, rising tuition fees and other factors.

The record high figure of 3,451 in fiscal 2016 was up 13 percent from five years earlier.

In the case of the 52-year-old father in Osaka Prefecture, his now 27-year-old son borrowed more than 8 million yen ($73,900) through a JASSO scholarship loan to attend a private university.

The monthly repayment of 40,000 yen weighed heavily on the son, who receives only about 200,000 yen a month in take-home pay. He filed for personal bankruptcy early last year.

A JASSO loan applicant must either designate two guarantors, including one joint guarantor, or pay a guarantee charge to the Japan Educational Exchanges and Services, a guarantee institution.

One parent serves as the joint guarantor. Relatives up to the fourth degree of consanguinity are eligible to be the other guarantor.

Of the 8,108 borrowers who filed for personal bankruptcies over the five years, 475 chose the guarantee institution option.

The Osaka man, who was the joint guarantor for his son’s loan, received a bill from JASSO in March last year. He and his wife, who works part-time, have a combined annual income of 3 million yen.

Four months later, the father filed for personal bankruptcy.

The man’s 91-year-old father, who is the other guarantor, is a pensioner with little to no assets. The man said he hopes his father will not be stuck with the bill.

Applicants for JASSO loans do not have to undergo credit screening or place a mortgage.

Some JASSO loans are interest-free. The loans that do come with interest have less stringent requirements concerning academic achievements and income.

In fiscal 2016, 1.31 million people received JASSO loans, or one in every 2.6 students attending universities and junior colleges. About 4.1 million individuals were repaying their JASSO loans as of the end of fiscal 2016.

Some 160,000 were in arrears with their repayments for at least three months as of the end of fiscal 2016. In a sampling survey in fiscal 2015, 77 percent of about 3,000 respondents told JASSO that they were earning less than 3 million yen a year.

Eighty percent of those in arrears for at least three months were between the ages of 25 and 39.

Yoshiharu Iwashige, a lawyer who has handled student loan-related cases, said the family-based guarantee system, which could cause both children and their parents to fall into bankruptcy, must be reconsidered.

“The forms of families have become diversified, and the economic environment has changed,” he said. “But there remains a deep-rooted belief that parents are responsible for providing their children with education.”

JASSO’s numbers include overlaps. For example, a student who took out a loan as an undergraduate and another loan in graduate school is considered two individuals in JASSO’s statistics.

A JASSO official said the real number is probably about 80 percent of the nominal figure, although exact numbers are not available because of the way the system is operated.

(This article was compiled from reports by Yuji Moronaga and Shunsuke Abe.)