Situation and Strategy of State-Subsidized Student Loan in China

State-Subsidized Student Loan is a main focus of the government in higher educational institution of China.It is granted by state banks to college students and provided with pay interest through the“Student Loan”special account fund set up by education departments.Although,great efforts have been made,the practice of‘Student Loan’did not function well enough as expected.For one thing,the state banks and national share holding banks have the obligation to abide by the government policy; yet,for another,as commercial banks,it is not profitable to invest in this credit business.We empirically analyze this contradiction and the unbalance in regional distribution of the‘Student Loan’.Furthermore,we discuss how the compensation fund can be introduced to facilitate the smooth functioning of the coan and how to motivate major state banks by financial reward.