JASSO supports motivated and capable students

Scholarship Loan Programs for Japanese Students JASSO supports motivated and capable students JASSO's scholarship loan programs are implemented as one of the government's essential educational measures based on the principle of equal educational opportunity so that motivated and capable students can enjoy higher education of their own choosing and on their own responsibility. JASSO provides loans to students who excel academically but have difficulty in pursuing their studies due to financial reasons, and strives to enhance the system for loans and repayments based on economic and societal conditions in order to allow students to learn with peace of mind. Outline of Scholarship Loan Programs JASSO provides (interest-free) and (interest-bearing) for students attending graduate schools, universities, junior colleges, colleges of technology and specialized training colleges (post-secondary courses). The program scale in the FY budget has increased to approximately 1,100 billion yen in loans and 1.34 million recipients, and the loan amount ratio between Category 1 and is about 1:2.5. As repaid loan money makes up a very high proportion of the resources for scholarship loans, it is very important that recipients fulfill their repayment obligations to support many students in the future. Scholarship Loan Situation and Trends Status of Scholarship loans (based on FY results) Number of loan recipients (A) Total number of students (B) Ratio (A/B X 100) One in every X students 985,858 2,562,068 38.5 2.6 Junior colleges 56,999 3,714 42.6 2.3 Graduate schools 78,270 3,903 38.4 2.6 Master's courses 67,527 4,511 43.7 2.3 10,743 49,392 21.8 4.6 Colleges of technology 6,058 54,864 11.0 9.1 Specialized training colleges (post-secondary courses) 211,711 554,453 38.2 2.6 Total 1,338,896 3,509,002 38.2 2.6 Notes: 1. Total numbers of students (B) for universities, junior colleges and colleges of technology are from the FY School Basic Survey Report, while the numbers for graduate schools and specialized training colleges are from a survey by JASSO. 2. 111 recipients of scholarship loans for university correspondence courses are not included in the table. Trends in number of recipients and amount of scholarship loans (Budget) students 1,400,000 1,0,000 1,000,000 800,000 600,000 Number of recipients 992,746 741.9 583,065 487.9 1,008,653 781.0 631,287 527.8 1,018,9 821.5 676,084 Program cost 572.7 1,092,753 901.3 750,298 651.2 1,148,854 947.5 1,183,467 804,485 697.3 1,005.5 834,543 750.6 1,078.1 1,271,8 9,555 818.5 1,6.3 1,339,301 955,963 849.6 1,198.2 1,443,1 1,017,302 907.0 1,174.5 1,408,591 956,867 867.7 1,1.9 1,344,640 877,343 796.6 billion yen 1,0 1,100 1,000 900 800 700 600 500 400 400,000 300 0,000 409,681 254.0 377,366 253.1 342,828 248.9 342,455 250.1 344,369 250.2 348,924 254.9 358,260 259.7 383,338 276.7 425,819 291.2 451,724 306.8 467,297 317.3 0 100 0 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY FY FY14 FY 0 Notes: 1. The number of recipients and the amount of scholarship loans of those students who entered upper secondary schools, which include upper secondary courses of specialized training colleges, in FY05 or later are not included because they have been transferred to prefectural or municipal authorities. 2. Figures may not add up to the total because of rounding. 5

Breakdown of Loans by Funding Source and School Type (FY Budget) Breakdown of funding sources Total cost of scholarship loan programs (interest-free loans) (unit: billion yen) 1,1.9 317.3 Government loans 74.8 Government loans (recovery and restoration) 4.5 Credited repayments 238.0 (low-interest loans) 796.6 Fiscal loan funds 779.7 Fiscal investment and loan program agency bonds 0.0 fund loans 376.3 Credited repayments 479.6 Redemption of fiscal loan funds, etc. 959.0 Number of loan recipients and loan amount by school type universities universities junior colleges Graduate schools Master's courses (Graduate law schools *included in the Master's courses) Colleges of technology Specialized training colleges (post-secondary courses) Correspondence courses and junior colleges Graduate schools Master's courses (Graduate law schools *included in the Master's courses) Colleges of technology (4th and 5th year students) Specialized training colleges (post-secondary courses) Special increase in the loan amount for entrance preparation Scholarship loans for study abroad Total Number of loan recipients 467,297 351,342 107,495 232,493 11,354 66,466 55,841 3,372 10,625 4,710 44,425 354 877,343 692,783,024 14,333 1,219 691 362 165,800 44,601 3,374 1,344,640 New recipients (included in the number of loan recipients) 140,347 92,661 26,625 60,193 5,843 31,2 27,552 1,197 3,570 933,277 354 260,167 179,744 7,900 7,657 1,100 243 181 70,653 44,601 1,689 400,514 Loan amount ( million) 317,304 223,970 60,825 5,938 7,7 63,282 49,345 3,250,937 1,844 28,177 31 796,578 599,505 16,353,503 3,224 851 260 9,584 17,141 3,735 1,1,882 Note: Figures may not add up to the total because of rounding. Notes: 1. junior colleges are included in the "national and universities" line of. 2. Emergency payments for 3,976 people are included in the "new recipients" column of. 3. The column for "New recipients" under "Colleges of technology" in applies to 4th year students. 4. The figure for the number of recipients of the "Special Increase in the Loan Amount for Entrance Preparation" in is included in the figure for each line of. 5. Figures may not add up to the total because of rounding. Scholarship Loans Loan recipients are selected upon being recommended by their school heads and undergoing strict screening by JASSO. In collaboration with schools, JASSO also endeavors to improve the qualities of scholarship students and to instruct and impress upon them the importance of repaying their loan after graduation. Types of Scholarship Loans These are interest-free scholarship loans. These loans are provided to students who are academically outstanding but have significant difficulty in pursuing their studies due to financial reasons. Income-based repayment postponement for Those who meet the standards for (excluding those for graduate school) and who meet financial conditions set separately may receive a postponement in their payment period through application until their salary and income reach a specified level after graduation. Exemption from repayment for graduate school students with particularly outstanding academic achievements Graduate school recipients of, whom JASSO recognizes as having achieved particularly outstanding academic results in their studies upon completion of their loan period, may be partially or wholly exempted from repayment of the loan. In FY, 9,472 out of 31,584 graduate school recipients who completed the loan period were exempted from repayment. Furthermore, from FY we are planning on improving and enhancing this system directed at students who go on to enroll in Doctoral course. (Please refer to Page 8) These are scholarship loans which bear interest. These loans are provided to students who are academically excellent but have difficulty in pursuing their studies due to financial reasons. The interest rates of are pegged to the same rates as those borne when JASSO borrows fiscal loan funds as capital for scholarship loans from the government, and are lower than general educational loans. (Ref.) Interest rate for recipients who completed the loan period as of March (interest rate for monthly base amount): Fixed interest rate: 0.63% per year / Variable interest rate: 0.10% per year *The maximum rate of interest is 3.0% per year as stipulated by law. *Category 2 loans are interest-free before graduation and during the postponement of payment. 6

Selection Method Prior applications (applying before commencing studies) Students may apply for scholarship loans prior to commencing studies so that they can commence studies with peace of mind. Applications are accepted through the schools in which students are enrolled the year prior to commencing studies. Post-entry applications (applying after commencing studies) Applications are accepted through the schools in which students are currently enrolled. In principle, there are announcements of applications every spring. Emergency applications (), temporary applications () Applications for scholarship loans are accepted at any time through the schools in which students are currently enrolled if the necessity arises because of sudden changes in the financial situation of students' families due to unemployment, personal bankruptcy, company bankruptcy, sickness or death, or disasters such as fires, earthquakes, storms, or flooding. The selection criteria are based on the following standards: student's character, health, academic ability, and his/her family's financial situation. Requirements for recommendation (for Post-entry application of university students) Loan category and school type Academic requirements Have obtained average of grades above 3.5 on a 5-point scale for junior and senior years of high school Individuals who meet one or more of the following criteria 1. Have demonstrated above-average academic performance in high school. 2. Demonstrate excellence in one specific field. 3. Be motivated and qualified to accomplish studies. Income requirements: Upper limit of annual income (based on a family of four and commuting from home) approx. 8.05 approx. 8.54 approx. 11.21 approx. 11.70 Note: The selection criteria is the upper limit of annual income of the individual who supports the household expenses of the applicant's family (father, mother, or person who supports the household expenses in lieu thereof). (unit: million yen) Scholarship Loan Amount Scholarship loan amount and example of repayment plan (as of FY) Junior colleges and Specialized training colleges (post-secondary courses) Graduate schools (interest-free loans) - In the case of loans starting from April Monthly amount Loan period months Total repayment Monthly repayment Number of installments Away from home 45,000 51,000 2,160,000 2,448,000,857,600 168 54,000 48 2,592,000 14,400 Away from home 64,000 3,072,000 14,222 216 30,000 9,230 45,000 1,080,000 7,500 Away from home 51,000 1,224,000 8,500 53,000 24 1,272,000 8,833 Away from home 60,000 9,230 30,000 7,000 6,666 108 Master's courses 50,000 1,0,000 8,333 24 88,000 2,1,000,571 168 80,000 2,880,000,000 192 36 2,000 4,392,000 18,300 Years for repayment 14 18 9 14 16 (undergraduate) Monthly amount 30,000 50,000 80,000 100,000 (low-interest loans) - In the case of loans starting from April Estimated repayment amount ( ) Loan period Total amount lent In the case of actual interest rate (0.63%) In the case of the maximum interest rate (3.0%) months Total repayment amount Total repayment amount Monthly repayment Monthly repayment (principal + interest) (principal + interest) 48 2,400,000 3,840,000 4,800,000 1,504,529 2,523,141 4,099,753 5,4,730 9,644 14,017 17,082 21,352 1,761,917 3,018,568 5,167,586 6,459,510 11,293 16,769 21,531 26,914 Number of installments 0,000 5,760,000 6,149,683 25,624 7,751,445 32,297 For, applicants can choose the amount of a monthly payment (five choices). Notes: 1. The 0.63% interest rate (fixed interest rate) is applied to applicants who completed the loan period by March, and the 3.0% interest rate is the maximum rate stipulated by law. 2. Interest for the period from the time of graduation until commencing repayments is included in the total amount of repayment. 3. There are cases where figures may not add up to the total repayment amount even when the monthly installment amount is multiplied by the number of payments due to rounding. Special increase in the loan amount for entrance preparation (bearing interest) A specially increased amount may be transferred along with the first loan amount to help a student pay for expenses incurred when entering school upon request. The student may choose one of the following amounts as a special increase in addition to his/her loan : 100,000, 0,000, 300,000, 400,000, or 500,000. Scholarship loan and repayment simulation This is a tool that estimates the amount of loans that can be borrowed and future repayment amounts before students apply. http://simulation.sas.jasso.go.jp/simulation/ *In Japanese only. Years for repayment 7

Scholarship Loans for Studying Abroad Scholarship loans for those wishing to study abroad () This loan system is for those wishing to study abroad for a degree at colleges, universities and graduate schools after graduating from a Japanese high school, college, university or other educational institution. A student can apply by submitting an application after obtaining a recommendation from the president or principal of the school which the applicant is presently attending or has attended. The application must be made within two years of completion of study at the school. These loans may be utilized together with the Special Increase in the Loan Amount for Entrance Preparation (). *Both a personal guarantee and an organizational guarantee are required for this loan system. Scholarship loans for short-term study abroad () These scholarship loans, on the recommendation of the university president, are offered to students who plan to study abroad for more than three months but less than one year based on student exchange agreements between Japanese and overseas universities, or credit transfer systems among those universities. These loans may be utilized together with the Special Increase in the Loan Amount for Occasions such as Study Abroad Preparation (). * (for recipients of the "Graduate scholarship for degree seeking students"), (for recipients of the "Scholarship for short-term study abroad") This is a system that students, who still require more financial assistance even though they are receiving benefits under the study abroad assistance system, can apply for. (please refer to Page ) Guarantee System, Handling of Personal Credit Information, and Interest Rate Calculation Method Guarantee system Applicants are required to choose either a "personal guarantee" or "organizational guarantee." Personal guarantee: The applicant selects a joint guarantor (in principle, their mother or father) and a guarantor (in principle, an uncle, aunt, sibling, or those who is an adult relative within the fourth degree of kinship, is financially independent from both the applicant and joint guarantor, and is under 65 years of age). Organizational guarantee: Japan Educational Exchanges and Services (JEES) will serve as a joint guarantor with the payment of a specified amount of guarantee money. In such cases, there is no need for a separate guarantor. Consent regarding handling of personal credit information If repayments are delayed for three months or more, the personal information of the person who delayed the payment shall be registered with personal credit information organizations. Therefore, applicants for scholarship loans are required to submit the "written agreement" on the handling of personal credit information at the time of application for scholarship loans. Interest rate calculation method The interest rate for are calculated by the fixed interest rate method in which the rate determined at the completion of the loan period is applied until the completion of repayment, or the variable interest rate method in which the interest rate is reviewed every five years during the repayment period. Improvement and Enhancement of Repayment Exemption System Due to Particularly Outstanding Academic Achievements (for doctoral courses students) Since FY, within the scope of the current system's budget, JASSO introduced a system where students can be selected as candidates for repayment exemption at the stage where they advance to a doctoral course and are selected as scholarship students. The introduction of this system is expected to provide an incentive to students to continue on to a doctoral course, to enhance the effectiveness of benefits, and further to foster an environment where they can continue to devote themselves to educational and research activities with peace of mind after enrolling in a doctoral course. Guidance for Scholarship Students during Loan Period JASSO makes efforts for student guidance in cooperation with schools. Annual check of eligibility as a loan recipient To provide scholarship loans to qualified students who truly need the support, JASSO confirms the eligibility of students as loan recipients every year in cooperation with the schools in which the students are currently enrolled. Based on the "Application for Continuation of Scholarship Loans" and other documents submitted by students, whether or not they are eligible to continue to receive loans will be thoroughly examined based on their character, health, academic ability, and financial situation. Change of monthly loan amount, and refusal The monthly loan amount may be changed, or the loans may be refused at the request of the scholarship student. Scholarship Loan Repayment 8

In JASSO's scholarship programs, the amount of repaid money will be used immediately as scholarship money. Therefore, JASSO strives to collect repayment money in an appropriate manner to provide loans to as many students who need support as possible. About Repayment Number of repayment installments, installment method, and repayment starting month The number of repayment installments depends on the total amount of the loan (borrowed amount). Repayments are to be made in monthly installments or both monthly and semi-annual installments, and start seven months after the completion of the loan period. Repayment Method Repayments are automatically deducted from the recipient's bank account. Advance repayment For both and, it is possible to pay the installments in advance of the payment deadline upon the request of the loan recipient. Measures for Recipients Who Have Difficulty in Making Repayments For recipients who have difficulty in making repayments, JASSO takes the following measures. Reduction of the monthly installment If loan recipients have difficulty in making repayments due to disaster, sickness, injury or other financial reasons, but can still pay if the installment is reduced, the monthly installment amount may be reduced by half for a specified period of time upon request. Postponement of payment Postponement while in school By notification, the payment deadline will be postponed while loan recipients are still pursuing their studies at school (with some exceptions). Postponement for other reasons Loan recipients who have difficulty in making repayments due to disaster, sickness, injury, financial hardship, unemployment, etc. may be granted a postponement of the payment deadline upon request. With the revision of the system in April 14, the maximum length of the postponement of payment was extended from five years in total to ten years in total. Exemption from repayment When it becomes impossible to make repayments due to death or physical or mental disabilities, the loan recipients may be exempted from repayment upon request. There is also the "Exemption from Repayment for Graduate School Students with Particularly Outstanding Achievements" for Category1 Loans (please refer to Page 6). *The exemption system for teaching and research professions, which was conditional upon being in employment for a specified period of time, has been abolished. *Furthermore, it has been finalized by "The Guidelines on Measures to Combat Childhood Poverty (Approved by the Cabinet on August 29, 14)" to introduce a more flexible "Income-linked Repayment Scholarship Loan System" that links the monthly scholarship loan repayment amount to the recipient's income after graduation, and that is currently being examined in coordination with the government as of April. About Overdue Repayment To prevent long-term overdue repayment, JASSO notifies of overdue repayment each month and asks for proper action to be taken while informing those who have difficulties in repayment of reduction of the monthly installment and postponement of payment. Overdue repayment charges Additional charges will be imposed on overdue installments (excluding interest) as overdue charges, prorated by the number of days delayed. With the revision of the system in April 14, the imposition rate of overdue charges that accrued or would accrue in or after that month was reduced from 10% to 5% a year. Registration of personal information with personal credit information organizations Steps will be taken to register overdue repayment information with personal credit information organizations only in cases where scholarship loan repayment is overdue by more than three months. These steps are taken to prevent individuals in arrears from further borrowing and incurring multiple debts from other financial institutions. Registration will result in adverse consequences, such as being unable to take out a loan from a private financial institution for a specified period of time. Demand of repayment For loan recipients who have selected a personal guarantee: Collection notices will be sent to the loan recipient, the joint guarantor, and the guarantor via letter, telephone, and/or visit. If there is no repayment even after such notices are received, the benefit of time shall be forfeited, and legal action demanding repayment may be taken. For loan recipients who have selected an organizational guarantee: Collection notices will be sent to the loan recipient via letter, telephone, and/or visit. If there is no repayment even after such notices are received, the benefit of time shall be forfeited, and the guaranteeing organization shall repay JASSO in place of the loan recipient. The guaranteeing organization shall then claim payment for the repaid amount from the loan recipient. 9