Plaintiffs win over demand for full repayment of student loans: The Asahi Shimbun
On May 13, the Sapporo District Court ruled that a lender affiliated with the Ministry of Education had unfairly forced student loan guarantors to pay more than their legal obligation.
The verdict, the first of its kind in Japan, was a victory for the plaintiffs who had sued the Japan Student Services Organization (JASSO).
The cases highlight problems with the scholarship system that require loan seekers to nominate guarantors and may seek recovery from them if students fall behind in their payments.
“The court made the decision with due regard to the legal provision,” a former high school teacher in Hokkaido, one of the plaintiffs, said at a press conference after the judgment.
The former teacher and the wife of another guarantor living in Hokkaido sued JASSO, claiming that its demand for full repayment of unpaid scholarship loans from the guarantors violated the law as they are only required to pay half the amount. amount.
The complainants requested compensation and reimbursement of the overpayment.
A similar lawsuit against JASSO for its demand for full payment of outstanding loans from guarantors, which was first reported by The Asahi Shimbun in 2018, has also been filed in the Tokyo District Court.
A lawyer representing the plaintiffs in the Tokyo trial also attended the May 13 press conference.
“It is significant that the court ruled that the overpayment was unjust enrichment,” said the lawyer. “The decision raised a fundamental question about the scholarship system.”
A civil law provision grants guarantors certain rights, when their obligation to repay a loan is divided equally between them, if the borrower has several guarantors, including co-guarantors.
According to the May 13 ruling, the 75-year-old former high school teacher, who lives in Otaru, Hokkaido, paid JASSO about 650,000 yen ($ 5,940) after the organization asked him to pay some 940,000 yen as as guarantor of his student’s loan. .
The deceased husband of the other plaintiff, 68, who lives in Sapporo, the capital of Hokkaido, paid the full amount demanded by JASSO, approximately 2.42 million yen, as guarantor of the scholarship loan. of his nephew.
In both cases, the borrowers’ fathers were co-guarantors, but lacked the capacity to repay the loans, according to the judgment.
The plaintiffs argued that the guarantors only have to pay half of the unpaid loans since the civil law provision would be applied to the cases.
The court noted that the rights of the guarantors are stipulated even if they do not claim them and that the guarantors have repaid the loans without knowing that they have the right to contest the charges.
The court found that part of the amount paid by the guarantors to JASSO that exceeded their legal obligation was unfair and ordered the organization to reimburse a total of 1.39 million yen.
But the court dismissed the plaintiffs’ claim for damages. He said JASSO’s demand for full repayment was not a direct violation of the law, as there were different views on how the guarantors’ rights were applied when they repaid the loans.
According to a team of lawyers representing the plaintiffs, JASSO demanded full repayment of unpaid student loans from guarantors in 825 cases between fiscal 2010 and 2017, for a total of around 1.3 billion yen. The guarantors claimed the right to only partially repay the debt in 31 of the cases.
The former Hokkaido teacher agreed to his industrial high school student’s request to vouch for the loan in order to fulfill the student’s desire to study. The man himself used student loans provided by JASSO’s predecessor to pay for his high school and university tuition and made his dream of becoming a teacher come true.
Her student graduated from college and got a job, but started failing to pay the scholarship loan and disappeared. JASSO often called and faxed the former teacher asking him to repay the outstanding loan.
The man revealed that JASSO staff said mean things to him and he couldn’t believe it was the words of people working in the organization designed to support financially struggling students.
âI’m glad I kept fighting without giving up,â the man said. âThe scholarships aim to help the children who will carry the future of our society. I want JASSO to get back to basics. “
Possible revisions to the scholarship system are being discussed to require all loan seekers to pay a guarantee fee to Japanese scholarships and educational services, instead of appointing guarantors.