Many Chinese students have fallen victim to fraudulent online lending operations. The Chinese government has enacted a ban on such companies.
On Wednesday, the Ministry of Education (MOE) in China announced that all online lending platforms in the country have been banned from offering student loans to Chinese students, according to the Global Times.
More traditional, commercial banks will still be able to provide educational loans to Chinese college students according to Zhao Jianjun, Vice Director of the Finance Department of the MOE.
Internet lenders in China have created quite the social problem in the country. Over the last couple of years, online student loan lenders have handed out high-interest loans to Chinese students. In many instances, the lenders promised to provide young women with student loans in exchange for nude photos. Afterwards, the student loan borrowers were blackmailed by the online lenders, who threatened to release the pictures if the loans were not paid. Tragically, a few Chinese students committed suicide because of the blackmail threats.
There have been other reported instances of the internet lenders using violent debt collection practices on the campuses where many of the student debtors attend college.
Commercial banks are being encouraged to provide young Chinese students with educational loans. It has been theorized that many of these internet lenders rose to prominence because traditional Chinese banks have been unwilling to provide educational loans, which created a vacuum.
According to Zhai Jianjun, the MOE is working with a few more departments to enact a series of measures meant to combat illegal student loans. They will also be encouraging colleges and universities to promote financial and fraud awareness.
Unfortunately, student loan scams and fraudulent lending operations have become a global problem. Just yesterday, the Student Loan Report covered the story regarding a new student loan email scam in the United Kingdom that is targeting first-year and returning college students. A fraudulent email is sent to the student loan borrower informing them that their account has been temporarily suspended due to missing information. If the borrower falls for the scam, they will be directed to a fraudulent website where they are encouraged to enter sensitive personal and financial information.
In the United States, a North Carolina man’s cell phone number was hacked and used to make calls to thousands of Americans. They were informed that their student loans would be entirely forgiven if they made one lump sum payment. Also in the U.S., an Arizona man was sentenced to 15.75 years in prison for using online dating sites to convince women to give him money on the false promise that he would help them repay their student loans.
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