Xinhua Insight: High-interest loans on campus fuel concerns

It is said that a picture is worth a thousand words. For some college students in China it can be worth a high-interest loan totalling thousands of yuan.

Nanfang Metropolis Daily on Monday carried a report that revealed some college students had used nude pictures as collateral to borrow money from certain platforms.

The loans were accompanied by weekly interest rates as high as 30 percent and extra "commission fees" charged by the platforms. If the borrowers missed any repayments, the lenders would threaten to send the nude pictures, many of which included the borrowers' ID cards, to their parents, according to the newspaper.

Platforms on campuses and mobile apps offering high-interest loans typically lure students with claims such as "no collateral," "no guarantee" and "loan granted on the day of application," according to an investigation by Xinhua reporters.

"The process is simple, borrow up to 100,000 yuan [15,170 U.S. dollars]," one ad claimed.

One of the victims told the newspaper that a lender had threatened to leak her naked pictures.

"Fortunately, my family paid the money," she said on condition of anonymity.

"The interest is very high," she said. "If you wanted to borrow 1,000 yuan, the weekly interest is 300 yuan, which means you have to owe 1,300 yuan within a week."

She added that the lender also charged a 200 yuan "commission fee."

It is illegal to promote unauthorized loans on campus, according to a circular issued in April by the Ministry of Education. Financial experts say an incomplete supervision system and college students' lack of financial abilities allow the illegal businesses to pop up.

LOANS AND "NUDITY IOU"

Xinhua reporters visited some colleges in China to find out about the high-interest campus loans.

On the buses of Jiangbei University Town in Harbin City, capital of northeast China's Heilongjiang Province, adverts read: "Loans: simple procedure, no collateral."

Xinhua contacted one of the "loan managers," surnamed Yang, to inquire about a loan, and the manager said only a student card, ID card and a bank card were needed. Of course, the borrower should leave the phone numbers of his or her classmates and teachers.

Such a simple procedure has resulted in many university students borrowing without their parents knowledge.

"If I want to buy a mobile phone, worth say 5,000 yuan, I can borrow from them. It is very convenient," said Zheng Shuang, a freshman at Harbin Huade University. "In fact, many of my classmates have borrowed money from lenders, too."

Some ads even claim to lend money as long as the borrower takes a nude picture, Xinhua found.

But behind the ads are exorbitant interest rates.

In March, a college student in Henan's Zhengzhou City jumped to his death after defaulting on a 1 million yuan loan. Another student in the central province of Hubei borrowed 30,000 yuan in October last year, but owed more than 700,000 yuan after just two months.

Industry insiders say the phenomenon has to do with attitudes toward consumption.

"College students' concept of consumption is changing these days, with many living beyond their means," said Fu Jian, a lawyer with Yulong Lawyers' Firm in the central Henan Province. "Most college students depend on their parents financially, which is why they turn to these high-interest loans."

Fu said that college students' risk awareness is still low, making them susceptible to such traps.

Another reason is the low threshold for establishing lending platforms in China, with some masquerading as e-commerce companies while secretly engaging in lending.

"A lack of supervision is also to blame," said Huang Xiaowu, a professor with Zhongnan University of Economics and Law. "There are no strict laws and regulations on campus loans currently, making management difficult."

Fu Jian said the government should issue more specific laws and regulations targeting campus loans, and relative departments should better supervise the sector.

"College students should realize that naked photos cannot be collateral, and if anyone leaks the photos, they should report to police," said Huang Xiaowu.

They should also be aware of the risks associated with excessive consumption, said psychologist Yang Yongchao. "Colleges should make sure their students are more financially aware, through courses or training," he said. Endi