The other day, I came across a story about a 21-year-old student named Ding Xiaoxu (a pseudonym). He's currently studying in Guangzhou, and like many young people, he loves gaming and spending time online. Unfortunately, things took a turn for the worse when Xiaoxu found himself entangled in private loans and spiraling debts. He got caught in what felt like an endless whirlpool, unable to break free. His family has been constantly harassed by the lending platforms—receiving intimidating calls and even threatening messages. It's been affecting their daily lives and causing immense stress.
Xiaoxu looks visibly upset in the pictures. He’s a sophomore at a university in Guangzhou, originally from Ding'an. His monthly living expenses are around 1,200 yuan, which isn't enough to cover his lifestyle, especially with his love for online shopping and gaming. Last December, he decided to try his hand at a small business to supplement his income. He borrowed 6,000 yuan from an online lending platform to buy a batch of watches to resell. Unfortunately, the venture didn't pan out, and he ended up losing the money instead.
Because he couldn't keep up with the repayments, Xiaoxu hesitated to involve his family, fearing the consequences. Instead, he turned to other lending platforms, hoping to borrow more to cover his previous debts. This cycle continued until he had borrowed from over 10 different campus loan platforms. The principal, along with accumulated interest and service fees, skyrocketed to 70,000 yuan. But it didn’t stop there. The hole kept getting bigger, and soon the total debt ballooned to 320,000 yuan.
Driven by his desire to maintain his lifestyle, Xiaoxu kept borrowing without realizing how quickly the loans were piling up. Before long, the principal and interest reached 190,000 yuan. His parents, who earn just around 3,000 yuan a month working odd jobs, struggled to keep up with the monthly payments. To make matters worse, Xiaoxu convinced a few friends to also take out loans on his behalf, adding another 60,000 yuan to his debt. Including the previous amounts, his total debt soared to a staggering 320,000 yuan.
Things went downhill fast. When Xiaoxu failed to repay his loans, the lending platforms started targeting his family and friends. They called incessantly, sending threatening messages and putting immense pressure on everyone involved. His parents, who already struggle financially, have done everything they can to help. They initially managed to scrape together 30,000 yuan, but the debt kept growing. Eventually, they borrowed another 130,000 yuan from acquaintances to settle some of the loans, yet they still owe 190,000 yuan.
Even after paying back part of the loans, the harassment hasn’t stopped. Xiaoxu and his family feel trapped and desperate. Just when things seemed hopeless, they heard about new regulations aimed at curbing the rampant campus loan industry. Recently, the China Banking Regulatory Commission, the Ministry of Education, and the Ministry of Human Resources and Social Security jointly issued a notice requiring all online lending institutions engaged in campus loans to halt new business and phase out existing ones. Additionally, unapproved institutions are prohibited from entering campuses to offer credit services.
It’s alarming to learn that many students are falling into similar traps. One example is Xiao Zhang, a fellow student from Hainan. Faced with job prospects after graduation, he started an online store selling local specialties with his friend’s encouragement. While he mostly covered the startup costs himself, he borrowed 1,000 to 2,000 yuan from two campus loan platforms to make up the shortfall. Xiao Zhang admits that although campus loans can temporarily alleviate financial pressures, they carry significant risks of exorbitant interest rates. He’s already repaid 3,000 yuan of his initial borrowings.
In recent years, reports of college students drowning in debt due to campus loans have become alarmingly common. Some have even resorted to drastic measures like taking their own lives or dropping out of school. To address these issues, authorities have taken action. The annual interest rate for private loans exceeding 24% isn’t legally protected, and experts warn students to steer clear of risky lending practices. Formal channels like state-sponsored student loans are much safer alternatives.
As someone who knows a bit about finance, I strongly advise students to think twice before signing up for any kind of loan, especially those offered by unregulated platforms. It’s crucial to weigh the risks and seek advice from trusted sources. While it’s easy to get caught up in the moment, the consequences of poor financial decisions can last a lifetime.
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