Hello.
With tax returns finally over, many people are probably busy at the end of the fiscal year.
Well, this month’s newsletter will feature a column by financial planner Furukawa-sensei for the first time in three months.
It’s a bit long, but it’s easy to understand. Please read to the end.
Must-see for moms and dads! Overview of new scholarships and educational loans in countries that are freelance-
friendly Financial planner, Money in Life, Health Center, Miho Furukawa
I’m Miho Furukawa, a financial planner and health center for money in daily life. I have hay fever and can’t enjoy spring. It’s hard. But thanks to the “Jabara” juice I’ve been drinking since last year, I feel like the itching has eased a little.
Well, for the world’s salarymen, spring is the season for welcoming and farewell parties. It’s an event that doesn’t have much to do with freelancers, but for parents with children, it’s a season of joy as their beloved child climbs the ladder.
While they’re happy to see their child grow, one of the worries that pops into their minds is probably education funds.
Freelancers generally have more fluctuations in income than salarymen. Parents may believe public school is suitable, but children might prefer private schooling, early admissions, or studying sports and arts abroad.
It would be good if they had enough money for the entrance fee and the tuition ad lirviving expenses for the next few years, but if they are not prepared for sonme reason, both parents and children will be troubled and hurt.
In this article, we will explain the scholarships offered by the Japan Student Seces Organization and the country’s educational loans that are friendly to freelancers.
1. [Traditional] Scholarships from the Japan Student Services Organization
① Loan-type scholarships
Loan-type scholarships help students continue their education by providing financial support. Students must repay a specified amount after graduating, based on the scholarship size borrowed.
The system circulates the repaid money to scholarships for new students.
Three loan-type scholarships exist: Type 1 (no interest), Type 2 (interest 0.01-3%), and Special Increased Loan.
Type 2 scholarships have more lenient academic and economic standards than Type 1, which has no interest.
Starting in 2017, academic standards for low-income Type 1 scholarship students will be abolished.
The special entrance loan scholarship aids students unable to access the national educational loan, transferring after their enrollment.
It will not be in time for the payment of the entrance fee. Please be careful.
Scholarship applications can be submitted during spring information sessions in the third year of high school, university sessions, or through emergency applications due to sudden financial changes.
Scholarship repayments begin seven months after graduation. Type 2 and special increased loan scholarships at the time of enrollment are repaid including interest.
When applying for a scholarship, you can choose between a fixed interest rate method or a reviewable interest rate method (which can be changed for a certain period of time), and the monthly repayment amount and number of repayments (period) are calculated based on the type of scholarship, monthly loan amount, number of months, whether or not there is an additional loan, and the interest rate method.
If you are planning to apply for a loan, we recommend doing a simulation on the Japan Student Services Organization’s website .
Starting in the 2017 academic year, a new repayment method called the income-linked repayment method will be introduced.
This applies to Type 1 scholarship recipients, who do not accrue interest, and the monthly repayment amount will change according to income from the second year of repayment.
The minimum monthly repayment amount is 2,000 yen, so it is certainly easier to repay, but the period will be longer. For this reason, it is mandatory to join an “institutional guarantee” where a guarantee fee will be deducted from the monthly scholarship.
According to the Japan Student Services Organization, the average total loan amount per student for university students whose loans expired in March 2016 was 2.36 million yen for the first type and 3.43 million yen for the second type.
Unfortunately, not all students are aware that they will enter society with this much debt during or after their student days. Some drop out or do not work before graduating for simple reasons. Many recognize their duty to repay but struggle to keep working, leading to missed payments.
For such cases, there are systems for reduced repayments and grace periods for repayment. If three months late on repayments, you’ll be labeled delinquent, affecting your financial credibility negatively.
Scholarships are a good system for continuing to study, acquiring a sense of responsibility, and becoming financially independent.
However, I think it is not only irresponsible use by parents who ask their children to borrow a scholarship because the family is tight on finances and put some of the money towards the family budget, but also use without planning.
② [New System] Grant-type Scholarships
*This is a summary at the current time, as the bill has not been passed.
Due to the “Japan 100 Million All-Party Plan” and “Economic Measures to Realize Investment in the Future,” grant-type scholarships are scheduled to be implemented from 2018.
The grant is for those who will be entering (advancing to) a university, junior college, technical college (4th year), or vocational school, who meet the dormitory criteria, and whose financial supporters (parents) are exempt from resident tax.
Therefore, I think that most of the people reading this newsletter are not eligible based on the household criteria.
Monthly grants range from 20,000 to 40,000 yen, limited to 20,000 recipients annually.
For those who commute to private universities, junior colleges, technical colleges (4th year), and vocational schools from outside their homes, and those who require social welfare, the system will be implemented from the 2017 academic year. The daily benefit amount is 40,000 yen per month.
2. National Education Loan
Freelancers seek loans from consumer finance for children’s education during life plan consultations.
Repaying loans can take nearly 10 years, causing shock due to the high interest accumulated.
It is true that it is difficult for freelancers to get an education loan from a bank. Banks view company employees as having more stable incomes than those with higher annual earnings due to job security concerns.
What you should consider in this case is a national education loan. Unlike scholarships that students borrow themselves, education loans are loans taken out by parents or relatives.
Because it is provided by the government, the interest rate is very low (1.81% as of March 20, 2017. For single-parent families and those with an income of 1.22 million yen or less, the rate is 1.41%. Guarantee fees are separate), and the interest rate is fixed and will not change until the repayment is complete.
The maximum loan amount is 3.5 million yen per child, and if you cannot find a guarantor, you can use the guarantee of the Public Interest Incorporated Foundation Educational Loan Guarantee Fund. You can also repay only the interest while your child is in school.
It is not widely known, but national education loans can be used not only to pay entrance fees, tuition fees, and other costs to be paid to the school, but also to cover expenses incurred over the next year, such as entrance exam costs (examination fees, transportation costs, etc.), housing costs such as rent needed to attend school, textbooks, learning materials, the cost of purchasing a computer, commuting costs, and your child’s national pension insurance premiums.
You can apply online even before taking the exam or passing the exam. It is busy from January to March when the results are announced, and it is often difficult to make the payment by the deadline. Since cancellations and changes to the school you will be attending are possible, apply at least three months before you need the funds.
Now, the condition for using a national education loan, which may be the biggest obstacle for IT freelance engineers, is the upper limit of income (there is no lower limit).
Since it is a national project, there is an upper limit set as shown in Figure 1. People who cannot use a national education loan are likely to have a high income, or have bad information listed in the personal credit information agency, such as many overdue or unpaid payments, or have undergone legal debt restructuring. Income limits for applying for national education loans Income limits for applying for national education loans
| Number of children | Upper limit of “household” income (annual income) |
| 1 person | 5.9 million (7.9 million)* |
| 2 people | 6.8 million (8.9 million)* |
| 3 people | 7.7 million (9.9 million) |
| 4 people | 8.7 million (10.9 million) |
| 5 people | 9.7 million (11.9 million) |
*If you have two or less children and meet one or more of the following criteria, the upper limit will be relaxed to 7.7 million yen (9.9 million yen):
(1) Less than three years of business (service)
(2) Less than one year of residence
(3) Someone in the household is (planning to) attend school outside of home
(4) The applicant or their spouse is working away from home
(5) The purpose of the loan is to fund overseas study
(6) The ratio of the annual repayment amount, including other loans, to the income (annual income) on the loan application form (repayment burden rate) is more than 30%
(7) You have a relative or other person who has been certified as needing nursing care (assistance) and you are responsible for the costs of nursing care for that relative
(8) You have been affected by a large-scale disaster.