Charged with robbery, killing one person and wounding another two, 19-year-old Zhang Xiaojie (pseudonym), a junior college student, stood in in court in Jicheng, Shanxi province, on November 7, 2019.

Zhang had stolen and robbed before to repay over 30,000 RMB online debts, but this was the first time he was caught at the scene. Afraid of being exposed, he stabbed wildly at the three members of the same family who had caught him in the act, killing one on site with over 40 knife wounds.

Online loans for college students, also known as xiaoyuan dai (校园贷, campus loans), have been popular for a number of years already, and attracted much controversy. According to Xinhua News Agency, online consumer campus loans amounted to over 80 billion RMB in 2016. College students can easily get loans worth thousands of RMB just by providing personal information, including their ID, college, and parents’ names and contact information, or simply their student card.

However, according to China Comment magazine, while the popularity of online borrowing among college students is well-known, the practice in secondary and technical schools (whose students are mainly minor) has attracted less attention, but has also been increasing.

The accessibility of online loans has heightened students’ desire to consume, encouraging them to spend on the basis of assumed future earnings, Zhang Anquan, associate professor of Southwestern University of Finance and Economics, told China Comment last December. College student Li Chao, who also works as an agent of a campus loan platform in Qinghai, told news website Sina Tech, “In addition to ‘reasonable’ uses, such as purchasing electronic gadgets and travelling, some students borrow money online for gambling.”

Over-borrowing can lead to severe consequences. In March 2016, 20-year-old college student Zheng Dexing jumped from the eighth floor of a hotel and died, leaving nearly 600,000 RMB online debts borrowed in the names of 28 classmates. It’s also common (though illegal) for platforms to demand borrowers to provide nude photographs of themselves as collateral. In April 2017, a college student in Xiamen killed herself after being pressed for repayment and threatened with having her nude photos disseminated publicly.

This incidents, along with reports of scams, extortionate interest rates, and violent recollections methods, saw campus loans provided by online lending companies suspended in June 2017 in accordance with a notice jointly issued by the China Banking Regulatory Commission, the Ministry of Education and the Ministry of Human Resources and Social Security. However, college students can still get access to various loans via illegal platforms, or from well-known tech companies, including WeChat Loan (微粒贷), of China’s tech giant Tencent, and Jiebei (借呗) of Alipay, if they meet the requirements for borrowing.

Though WeChat Loan and Jiebei lend only to adults, students under 18 can use parents’ or other adults’ ID information to get loans. Zhang Xiaojie, for instance, started borrowing from Alipay when he was in high school by using his mother’s ID, then moved on to other platforms, some of which loan to anyone with an ID card, minors or adults. He told the China Comment, “Over 20 of the 40 students in my class in high school borrowed online.”

“Compared with college students with more online loans, high school students with trivial amounts of debt could more readily commit crimes,” warned judge Wang Chan, who presided over Zhang Xiaojie’s case. Wang suggested younger students’ lack of knowledge and experience in the world, and their inability to repay and withstand pressure, could turn them to crime more easily.

Often, parents are unaware of the borrowing, until their child confesses to them under repayment pressure or they are contacted directly by the lending companies. Since most students, both high school and college, have no income, parents are normally the ones who cover the debts, as in Zheng Dexing’s case. Meanwhile, many teachers do not know much about the risks of online loans, and education lags far behind rapidly developing internet finance, according to the China Comment.

To solve the problem, Geng Yeqiang, professor of economic management at Shanxi University, proposed that authorities should make further regulations on online lending and parents should help children cultivate healthy consumption habits.

The “Opinion on Strengthening Kind and Polite Enforcement” issued by the Supreme People’s Court this January aims to discourage companies from issuing campus loans, and protect borrowers. It stipulates that full-time students shall not be blacklisted as “dishonest persons failing to fulfill a court order (失信被执行人)” or laolai (老赖, “deadbeat”) when they’re unable to (but not unwilling to) repay the due campus loans, which is to say, the loan would not influence their personal and social credit scores, a major concern of college students with overdue loans.

Whether this will be enough to protect college students is yet to be seen. On the other hand, the fast-developing worlds of online finance and personal consumption create further temptations—and risks—that parents and educators will need to help students balance.

Cover image by zibik from Pixabay