2019 Volume 22 Pages 49-70
This paper examines the content and the implications of change in the relationship between higher education and the financial markets from the perspective of changes in the procurement structure of JASSO’s scholarship project financial resources. There are currently three types of JASSO scholarship projects: benefit-type, interest-free loans, and interest-bearing loans. The main focus of our examination is on the two loan types. Interest-free loans have existed since the establishment of the public scholarship system in Japan in 1943. The interest-bearing loan is a system that was created with the cooperation of the Fiscal Investment and Loan Program (FILP) as a financial resource in 1984. As resources for these scholarship programs, the government’s general funds are used for the interest-free loan system, while FILP is used for the interest-bearing loan system. Furthermore, in both schemes, loan repayment money is used as a financial resource. In 1999, an extension of the number of lenders was adopted as national policy, against the background of the financial policy of utilizing FILP in the education field. The FILP reform was implemented in 2001, and the institutions that accept FILP have decided to issue bonds on their own initiative. Furthermore, in 2007, JASSO’s started to borrow private funds to cope with the difference between the FILP loans as a source of funding and the interest rate for interest-bearing scholarship loans. These initiatives brought about diversification of the scholarship resources. Direct financing from such financial markets has contributed to the expansion of JASSO scholarship program, to the establishment of secure stable financial resources and to a reduction in the burden imposed on public finances. However, the loan-scholarship system runs the risk for the lender of being faced with default, and a further risk for the borrower, who may not know whether or not he/she has to return the scholarship-loan. Reform of the scholarship system in the 2010s can be seen as a manifestation of these risks and institutional adjustments. There is also a systemic problem facing the scholarship projects as a public system supporting the advancement of higher education, in a context of greatly expanded higher education opportunities, of how to secure huge amounts of funds each year continuously while reducing the burden imposed on public finances.
