Ministry of Education

September 12, 2007

The number of students from families with financial difficulties and living subsidy increased to 7.8 million. In 2007, the reform of funds guarantee mechanism for rural compulsory education is extended to the whole country, which will benefit 148 million rural students of compulsory education. This reform greatly released the financial burden of farmers. Average annual reduction of tuition and miscellaneous fees for each primary school student in the west region reaches 140 yuan and that for each junior high school student 180 yuan. For students provided with free textbooks, 210 yuan and 320 yuan are saved annually for each primary and secondary school student respectively, and 510 yuan and 620 yuan respectively for students receiving both free textbooks and living subsidy. Farmers said with delight, "No taxes for farming; no tuition for schooling. Farmers get benefits and the society becomes harmonious."

In 2004, the central government launched the program of Fighting the Toughest Battle in Promoting the Two Basics in the West Region, which consists of several important projects. One is named Construction of Rural Boarding Schools with financial input of 10 billion yuan from the central government. This project will provide additional schooling and boarding capacity for more than 2 million student, who will no long suffer from tramping over hill and dale or trekking a long way everyday for school. The project of Modern Distance Education for Rural Schools has got investment of 11.1 billion yuan from both central and provincial governments. The project has covered over 80 percent of rural schools in the central and western areas, transmitting quality education resources to more than 100 millions school students. Children said cheerfully, "No more will the mountain block the knowledge!" The program has greatly promoted development of rural compulsory education in west China , and plays an important role in promoting a coordinated development in education between rural and urban areas, across different regions and in education of all kinds and at all levels. All children can afford schooling and have access to quality education resources.

Establishing and improving a new financial aid system to guarantee that students from families with financial difficulties have access to higher and vocational education

In order to help students from families with financial difficulties to complete their study, in recent years, a financial aid system for students from families with financial difficulties has been set up for higher education, with the integration of various forms of student loan, scholarship, subsidies, internship programs, special subsidies for emergencies, and tuition reductions or waive. While for secondary vocational education, a financial aid system is taking form, with national subsidy as the main form and internship, work-study program, school scholarships and tuition reduction or waive as the supplements. Despite the fact that the difficulties in study and life of students from families with financial difficulties in non-compulsory education stage have been alleviated to a certain degree, this financial aid system is by no means perfect against the backdrop of new trend and a series of prominent problems remain unsolved, which are to some extent impeding the sound and sustained development of educational undertaking. To ensure access to college and vocational education for students from families with financial difficulties, on March 5th, 2007, at the fifth session of the tenth NPC, Premier Wen solemnly declared in his Government Work Report that, starting from this new school year, the scholarship and sponsorship system shall be established in higher education institutions, secondary and tertiary vocational schools, and national loan policies shall be further carried out. On May 13th, the State Council released and put into effect Opinions on establishing and improving the policies framework on financial aid for students from families with financial difficulties in higher education institutions, secondary and tertiary vocational schools (hereinafter referred to as the Opinions). From June to July, related government bodies like Ministry of Finance and Ministry of Education came up with a series of supporting documents, providing concrete regulations regarding the new aid policies and measures.

The new policies framework on financial aid for students from families with financial difficulties is a serious decision made by the central government and the State Council, with great vision and perspective of the overall situation when faced with tasks under new trend of development for education. After the exemption of tuition and miscellaneous fees for compulsory education in rural areas, this is again a great endeavor to promote equity in education, guided by the scientific outlook on development. Moreover, it is an important action to guarantee the sustained, coordinated and sound development of education undertaking by promoting equity in education with the ultimate goal of building a harmonious socialist society. It is also a concrete measure to put in place the strategy of rejuvenating the country by science and education, to provide intellectual support for the aim of building an innovation-led country, and to perform the function of public finance of the central government. Showing the great concern over the well-being of the poor from the central government, the system fully embodies the principle of development of the people, by the people and for the people. It is where the superiority of socialist system lies and of great significance with both immediate and far-reaching influence.

1 . General viewpoints on the new policy framework on financial aid

System serves as the fundamental guarantee of social equity and justice. To tackle problems in education for students from families with financial difficulties, the key lies in system construction for the policy framework on financial aid and in clarifying the aid policies for compulsory and non-compulsory education. Compulsory Education Law provides that no tuition and miscellaneous fees be charged for compulsory education, which is covered fully by the public finance. Governments at all levels provide free textbooks and subsidize the boarding for school age children from families with financial difficulties. This issue has been well addressed up to now. Under the Higher Education Law and Vocational Education Law, multi-channel fund-raising including government support is practiced to finance higher education and secondary vocational education. As required, the combination of modes of assistance including government subsidy should be put in place to help needy students in higher education institutions and secondary vocational schools. To put it specific, financial aid for students in higher education needs larger input from the government, the perfection and implementation of state policies on student loans, and the implementation of drawing out a certain proportion of school revenue into financial aid. In terms of financial aid for students in senior high school education, priority is given to increasing its access to students from families with financial difficulties in secondary vocational schools, due to the fact that after restructuring in senior high school education, a larger proportion of students in secondary vocational schools are facing serious financial difficulties.

To this end, starting from perfection of the system and innovation of the mechanism, the new financial aid system has eased the strain in education for students from families with financial difficulties by means of increased financial input, implementation of aid policies, and extension of aid coverage and level. Meanwhile, the system promoted sound and sustained development of education by further optimizing education structure and upholding equity in education. The new financial aid system will be followed by the establishment of multi-channel assistance system consisting of state scholarship, state encouragement scholarship, state sponsorship, state student loan and work-study program, etc., among which, state student loan mainly goes to the tuition and accommodation, supplemented by state encouragement scholarship; state sponsorship mainly supports students' life, supplemented by work-study program. Ultimately, a new financial aid system in secondary vocational education will be established, focused on state sponsorship and supplemented with student's work-study program, internship, and exemption and deduction of tuition fees.

2. Main contents of the new policies framework on financial aid

1) Higher education

-- The State Scholarship, established by the central government, is awarded to outstanding full-time students in regular universities and tertiary vocational education institutions studying for bachelor degree or diploma. Each year, it will award 50,000 students with 8,000 yuan. The fund comes from the central government.

-- The State Encouragement Scholarship, jointly set up by the central and local governments, is also awarded to full-time students in regular universities and tertiary vocational education institutions studying for bachelor degree or diploma, those who are outstanding in both morality and learning but comes from families with financial difficulties. Each year, the scholarship will cover a number of 510,000 students, accounting for 3 percent of the total enrollment, and each recipient gets 5,000 yuan. The preference goes to the students in the most needed subject areas of agronomy, forestry, hydrology, geography, mining, petroleum and nuclear science, etc. The scholarship for higher institutions under the direct administration of the central government is financed by the central government, while that for higher institutions under the local governments is jointly financed by the central and local governments, shares being decided based on the financial conditions in local areas and that of the students.

-- The State Sponsorship system shall be improved. The State Sponsorship System is used to provide financial aids to full-time students in regular universities and tertiary vocational education institutions studying for bachelor degree or diploma but those who comes from families with financial difficulties. Each year, the award is granted to 3.4 million students, accounting for 20 percent of the total enrollment. On average, each recipient receives 2,000 yuan, while the awards can consist of two or three grades, ranging from 1,000 yuan to 3,000 yuan, in light of local conditions.

-- The State Student Loan policy shall be further improved and implemented. The current State Student Loan policy shall be further improved and carried out, and the policy of providing loan to students at their registered residential places shall be adopted, in order to ensure all the eligible students with financial difficulties have access to the loans. For those full-time students in regular universities and tertiary vocational education institutions studying for bachelor degree or diploma who borrowed loan during their study, but are willing to work in the grassroot units in poverty-stricken areas and have fulfilled a certain time span, the government shall repay the loan for them.

-- Pilot on free education for students trained as future teacher has been carried out in 2007. New students trained as future teachers in the six normal universities which are directly under the MOE, namely Beijing Normal University , East China Normal University , Northeast Normal University , Huazhong Normal University , Shaanxi Normal University and Southwest University , shall enjoy free education. These students, while studying at university, are exempted from tuition and lodging fees, and provided with living subsidy.

-- 4-6 percent of the total school revenue shall be allotted to financial aid, providing support in various forms to students with financial difficulties, such as reduction and exemption of tuition fees, risk compensation for state student loans, work-study program, interest-free school loans, school scholarships and special subsidies for emergencies.

-- Related favorable policies on enlisting support and raising funds from non-government entities will be further implemented and improved.

2) Secondary Vocational Education

-- The State Sponsorship shall be improved. It is available to all kinds of institutions of secondary vocational education approved by and registered with the government, including public and non-public general secondary specialized schools, adult secondary specialized schools, vocational high schools, skilled labor training schools, as well as secondary specialized schools and vocational schools attached to tertiary vocational schools. The award is granted to all the first and second grade students with rural residence registration, students living in counties with urban residence registration, as well as students from urban areas but from families with financial difficulties. Each year, each recipient gets 1,500 yuan and the award is funded jointly by the central and local budgets.

-- Programs such as work-study and internship are put into operation. The third grade students in secondary vocational schools shall be provided with part-time jobs or internships with payment to cover some of the study and living expenses.

-- 5 precent of school revenue shall be allocated as financial aid to students with financial difficulties in various forms, such as reduction and exemption of tuition, school scholarships and sponsorships, and special subsidies for emergencies.

-- "Green Passage"shall be set up by those secondary vocational schools with better financial situation. Newly recruited students who have required documents to prove financial difficulty of their families should be enrolled at first. The form of financial aid and official registration could be done after their financial status being checked and confirmed.

3. The main characters of the new policy framework of financial aid

1) The system is designed with emphasis on its systematicness and long-term nature. First, the policies are designed to mainly support students from families with financial difficulties and also to encourage students with outstanding academic achievements. Thus, the State Scholarship is awarded to students on the basis of academic achievements, rather than financial status. While the State Encouragement Scholarship is granted to students who are of financial need but are also outstanding in both morality and learning. The State Sponsorship award is granted to cover the living expenses for students from families with financial difficulties. Second, input of financial support has been increased with multi-channel fund-raising being encouraged at the same time. The new sponsorship policy, on one hand, increases the government financial input, on the other, encourages investment from various social sectors. Schools are demanded to use a certain proportion of their total revenue as the funds of financial aid, and meanwhile donations is also encouraged. Third, there is a unified system of policies throughout the country, while local differences have also been taken into consideration. The State Encouragement Scholarship and the State Sponsorship System are jointly set up and appropriately funded by the central and local governments. In terms of financial input and the scope, standard and form of assistance, the policies are designed by taking both the central and local situations and differences among regions into consideration, which made the overall planning more scientific and practical. Fourth, the program attaches equal importance to financing students with financial need and optimizing educational structure. The policies, for one thing, extend support to students of financial need to fulfill their studies, and for the other, encourage students to receive vocational education or to pursue knowledge of some subjects, which is in urgent necessity for the development of China .

2) The funding is shared in a more rational manner. The shared responsibilities of the funding from all parties concerned are clarified by the Opinions issued by the State Council. The State Scholarship is funded by the central government. The State Encouragement Scholarship and the State Sponsorship are jointly funded by the central and local governments, which means the central government provides the funding for institutions under the direct administration of the central government, and the central and local governments jointly fund others. The proportion of the funding each party should take is designed with the reference to the reform of funds guarantee mechanism for rural compulsory education. Meanwhile it is set under the principle about students' registered residence areas. For instance, if an institution in the eastern region enrolls students living in the western or central region, its fund shall be shared according to the policies on the western or central region. If an institution in the central region enrolls students from the eastern or western region, its fund shall be shared according to the policies on the central or western region. And the fund of a western institution is shared according to the policies on the western region regardless of the students' registered residence area. Generally speaking, the central government's input accounts for the majority of the funding, with the preference going to the western region and rational support to the eastern region. In addition, the responsibility of schools to provide assistance to students of financial need has been highlighted in the Opinions.

3) The level of financial aid increases significantly. In terms of coverage, The State Encouragement Scholarship is granted to 3 percent of all the students in higher education institutions. Increased from the previous 3 percent, currently 20 percent of all the students in higher education institutions have access to the State Sponsorship. The percentage of students winning the State Sponsorship in secondary vocational education institutions hits 90 percent, an increase of 85 percent after the adoption of the new policy. In terms of aid level, the amount of the state scholarship per student per year has increased from 4,000 yuan to 8,000 yuan. The newly funded State Encouragement Scholarship reaches 5000 yuan per student per year. The average amount of State Sponsorship in higher education institutions has increased from 1,500 yuan to 2,000 yuan for each student, and that in secondary vocational institutions has also increased from 1,000 yuan to 1,500 yuan.

4) The guiding power of the policies has been enhanced. First, the increased financial assistance to students in secondary vocational schools shall attract an increasing number of applicants, which shall enhance the development of vocation education and improve the restructuring of senior secondary education. Second, the State Scholarship and Sponsorship are not equally allocated. In light of the distinctions between schools and majors, the priority goes to the students in the subject areas of agronomy, forestry, hydrology, geography, mining, petroleum and nuclear science. Thus an increasing number of talents who are urgently needed for the development of China shall be trained, and the educational program planning in higher education institutions shall be rationalized. Third, through an encouraging policy of paying off loans for students working in grassroots units in poverty-stricken areas, the government shall promote an increasingly appropriate distribution of human resources. Fourth, the policies on the joint funding between the central and local governments shall serve as levers in increasing the scale of enrolment in underdeveloped areas, and in stimulating balanced educational development among different regions. In the same case, the average coverage of students in higher education receiving State Sponsorship is 20 percent, which doesn't mean 20 percent of students in any school and in any region shall get the State Sponsorship. Coverage percentage of the State Sponsorship in various provinces, autonomous regions and municipalities should be co-defined by the Ministry of Finance and the Ministry of Education with reference to various factors and their different situations.

5) Financial input by government has increased significantly. In 2006, only 1.8 billion yuan was allocated from central budget as funding for State Scholarship and State Sponsorship for higher education and secondary vocational education, and the local input was also limited. However, after the adoption of the new financial assistance system, the input of the central and local governments will hit 15.4 billion yuan in the second half of 2007, among which 9.5 billion yuan comes from central budget and the rest 5.9 billion yuan from the local. It is expected that the total input from central and local budgets will reach 30.8 billion yuan in 2008. After the full implementation of the new policy, the amount of budget input, student loan and school-funded financial aid will amount to 50 billion yuan, with 4 million college students and 16 million students in secondary vocational education institutions as beneficiaries.

VI. Relevant departments of the central government and local governments at all levels have adopted resolute measures to implement the new policy framework on financial aid in an all round way.

1. Formulating supplementary measures and guaranteeing funds. From June to August this year, the Ministry of Finance and the Ministry of Education have issued a series of supplementary documents concerning the management of State Scholarship, State Encouragement Scholarship, State Sponsorship, and Work-study program for regular higher education institutions and tertiary vocational schools, State Sponsorship for secondary vocational education, and management for student internships, etc.. The fund from the central government has been allocated to local governments. Local governments have also formulated specific implementing measures and ensured allocation of supporting funds. Local input of Guizhou , Yunnan , Tibet , Gansun, Ningxia and Xinjiang Production and Construction Corps will be financed by provincial budget. The four municipalities directly under the central government, namely Beijing , Shanghai , Tianjin and Chongqing , and provinces including Fujian , Zhejiang and Yunnan have also raised funds to enlarge the coverage of the State Sponsorship. At present, schools of various kinds and levels are endeavoring to draw up the measures for the evaluation and distribution of the State Scholarship and State Sponsorship.

2. Publicizing and interpreting the new policy framework on financial aid with great efforts. The Ministry of Finance and the Ministry of Education have called on a number of press conferences, expounding on the new policy framework on financial aid. Printed booklets of questions and answers concerning financial aid policy for students of higher education institutions and secondary vocational schools have been provided to new recruits together with their entrance admission. China National Center for Student Assistance Administration offered hotline service from August 15th to September 15th for consulting and complaining. Major news agencies have been organized to conduct field interviews and reports of policy consultation in Huining , Gansu Province, and special Q&A column has been opened in major newspapers and websites. The officials from the MOF and MOE have been invited to the Internet media such as Xinhua Net, introducing the policy and answering questions raised by netizens. The TV ads for public good to advocate the new policy, jointly produced by MOF, MOE and the Publicity Department of the CPC Central Committee, is now broadcasted by CCTV. Local governments have also carried out public activities in large scales based on local situation. Major news agencies both at the central and local level reported on the new policy and related publicizing activities intensively, fostering a favorable environment of public opinion, forming an intensive propaganda crusade, and thus achieving good publicizing effects.

3) Convening conferences on planning, supervising and urging the implementation of the New Policies. On 11th June, the MOE and MOF jointly convened a seminar on financial aid policy for students of secondary vocational education, putting forward the overall and concrete requirements for the implementation of the new financial aid policy. At the end of July and the beginning of August, the MOE held conferences on the implementation of the financial aid policy for secondary vocational schools and the 2007 student enrollment work in western, central and eastern China . It was required that local governments should focus on five aspects in the implementation of the financial aid policy for students of secondary vocational education, i.e. to guarantee awareness of the significance of the policy and make sure that measures are taken, funds are allocated, management is properly organized and internship system is well conducted. Recently, local finance and education departments are working very hard to evaluate and allocate the State Sponsorship to secondary vocational schools. All the secondary vocational schools will distribute the grants to students in the first month of the new term.

4) Launching pilot project of providing student loan at the students' registration residential places. In order to smoothly advance the project of providing student loan at the students' registration residential places, the MOF, MOE, and the China Development Bank have jointly launched the pilot project in Jiangsu , Hubei , Gansu , Shaanxi , and Chonging. Since the beginning of August, the MOF, with the cooperation of MOE and the China Development Bank, has been making great efforts in promoting the project, as well as provinces concerned. According to statistics from the China Development Bank, by September 7th, over 33,000 students from the above five provinces and municipality have signed the loan contracts, amounting to 560 million yuan in total value. Chongqing , Jiangsu , Gansu and Hubei has reached the goal of "full coverage", which means that students from all counties (prefectures and districts) have access to the loan project. With experience gained through pilot, the project will be extended to the whole country and a complementary system will be gradually formed featuring the integration of providing student loan at the students' registration residential places and State Sponsorship.

(China Development Gateway September 12, 2007)