Most Japanese “Scholarships” Require Repayment

The Japan Student Services Organization is responsible for the “scholarship” program funded by the Japanese government. The program budget for fiscal 2023 was ¥1.2 trillion. While grants accounted for ¥260.1 billion (22.6%), interest-free and interest-bearing loan-based scholarships that require repayment stood at ¥890.7 billion, or almost 80% of the total.

In a survey conducted by SMBC Consumer Finance on teenagers’ thinking about money, respondents were asked who was responsible for repaying a scholarship if they used one. The results revealed that 69.1% of university students (including students retaking exams and vocational students) and 61.7% of high school students said “myself,” an indication that students who were depending on their parents financially were in the minority.

Grant-based scholarships were only introduced in 2017, so it could be it is still deeply instilled that a scholarship is something that needs to be paid back.

It is not, however, easy for students to repay loans themselves. According to JASSO data, the average total loaned amount per scholarship student whose loan ended in March 2022 was ¥2.2 million (interest free) and ¥3.4 million (interest bearing). As of fiscal 2021, there were 128,000 people struggling to repay their loans (defined as being three months or more in arrears). While the figure is dropping, it is an issue that cannot be overlooked.

The system of grant scholarships with no repayment requirement was launched in fiscal 2017, intended for students from low-income, tax-exempt households. From fiscal 2024, this support will be expanded to include middle-income households with three or more children. The annual income cap for eligibility will be raised from the current ¥3.8 million to around ¥6 million. It is expected that the number of people newly eligible will increase by up to 200,000.

(Translated from Japanese. Banner photo: © Pixta.)