Interest rates on loans from the Japan Student Services Organization have risen sharply following the Bank of Japan's policy rate increase. Some recent graduates now face rates more than six times higher than before they entered college.
The applied interest rate for those who graduated in March stood at 2.423 percent, up from 0.369 percent in March 2022. It rose further to 2.922 percent in June, nearing the program's 3 percent upper limit.
The Bank of Japan raised its policy rate to 1.00 percent at its mid-June meeting, marking a 31-year high. The move responds to inflationary pressures, higher energy costs, and a weak yen.
A borrower taking 100,000 yen monthly for four years would pay about 1 million yen more over a 20-year repayment period. In fiscal 2024, 623,000 such loans totaling 556.2 billion yen were extended.
Japanese companies are increasingly offering to repay employees' student loans to attract hires, with 4,852 firms using the program by the end of March, up from 320 four years earlier.
