[Scholarships also have a 3% interest rate] How will rising interest rates change the lives of the younger generation?
Siblings attending the same university borrow the same amount in scholarships.
The tuition and the number of years they borrow for are the same.
Even so, the amount they pay back after graduation is not necessarily the same.
What makes the difference is the interest rate applied.
Scholarships are funds that support tuition and living expenses while in school. If that interest rate rises, the impact continues into the monthly household budget after graduation.
Even with the same fixed-rate method, interest rates have been rising
On November 2, the Japan Student Services Organization (JASSO) announced the loan interest rates for October 2026. For the basic monthly amount of the interest-bearing “Type 2 Scholarship,” the fixed-rate method is 3% per year. This level has continued since July.
The interest rate for the same fixed-rate method was 0.940% in March 2024. The conditions for the interest rate applied change depending on when you finish borrowing. (JASSO interest rate list)
A difference of 4,742 yen per month, about 1.14 million yen over 20 years
So, how much does that difference affect daily life?
Let’s consider the siblings mentioned earlier as a hypothetical example.
Suppose both borrow 100,000 yen per month for four years, for a total of 4.8 million yen, and pay it back over 20 years. Assume an interest rate of 1% per year is applied to one, and 3% per year to the other.
According to the repayment examples published by JASSO, this is how it works out.
-
1% per year: 22,172 yen per month / Total repayment: approx. 5.32 million yen
-
3% per year: 26,914 yen per month / Total repayment: approx. 6.46 million yen
The monthly difference is 4,742 yen. Over 20 years, the total difference is about 1.14 million yen. (JASSO repayment examples)
*This is an example comparing only the interest rates while keeping the loan amount and repayment period the same. This announcement does not mean that everyone’s repayment amount will increase by this much.
The amount received while in school is the same 100,000 yen per month for both. However, the amount they set aside for repayment from their salary after they start working is different.
Assuming their take-home pay is the same, a difference of about 4,700 yen per month arises in the money available for living expenses and savings after repayment.
Even if you borrow the same amount, you are not guaranteed to start your professional life with the same burden. Changes in interest rates manifest in life in this way.
When thinking about the household finances of young people close to you, there are parts that cannot be seen from income alone. Even if parents say, “I also paid back a scholarship, and it only cost this much,” that experience is not necessarily a guide for current repayment amounts.
Interest rates are determined in the month you finish borrowing
And this difference is related to the unique mechanism of scholarships.
For Type II scholarships, the interest rate is determined in the month you finish borrowing.
When applying, you choose a “method”: either a fixed interest rate or one that is periodically reviewed. The actual interest rate is determined when the loan period ends. If you choose the fixed method, that rate continues until you finish repayment. (JASSO)
In other words, even if you choose “fixed” at the time of enrollment, you are not securing the interest rate at the time of enrollment.
If siblings finish borrowing in different years, the difference in interest rates at those times may be reflected in their subsequent repayment amounts.
The 3% annual rate mentioned this time is also a figure applied to the fixed method/basic monthly amount for those whose loan period ends in October 2026. The interest rate for those who finish borrowing next March has not yet been decided.
To begin with, why do the interest rates for money that supports students fluctuate?
JASSO borrows funds from the government as the source for Type II scholarships. The interest rate applied to users is also determined based on that borrowing rate. (JASSO)
Scholarships are also connected to global interest rates through the mechanism of procuring funds.
However, there is a 3% annual cap on the basic monthly amount, and the government bears the portion that exceeds the interest rate borrowed from the government. Increased amounts, such as special increases at the time of enrollment, follow different rules.
Will the burden also increase for those who are already repaying?
So, will the burden also increase for those who are already repaying?
For those currently repaying under the fixed method, the interest rate will not change to 3% due to this announcement.
Those on the review method undergo a review generally every five years. This interest rate hike does not apply to interest-free Type I scholarships.
There is no need to assume that your repayment amount will change immediately just by looking at today’s news.
First, check your own conditions
If you or your family members are using a scholarship, be sure to check the following points.
-
Those currently repaying: Check the type of scholarship, whether it is fixed or review-based, and the current applicable interest rate.
-
Those currently borrowing: Check the method you have chosen. If you are considering a change, check the deadline for procedures at your school’s office. You cannot change it after the loan period ends. (JASSO)
-
For families planning to borrow: Use the JASSO simulation to check the monthly repayment amount relative to the loan amount. For the basic monthly amount, it is also recommended to calculate based on the maximum annual rate of 3%.
You can check your selected repayment method in the “Detailed Information” section of Skynet Personal. JASSO is also urging those whose loan period ends in March 2027 to check early.
If repayment is difficult, there are options such as “Reduced Repayment” and “Repayment Deferment,” which have specific conditions and screening processes. While these are not programs that waive repayment, they are ways to reduce your monthly burden or have your repayments paused for a certain period. You can consult with them before you fall into arrears. (JASSO)
Scholarships are an important mechanism that supports educational choices. If you are going to use this system, you should consider the money you receive while in school alongside the money you will repay after graduation.
When you see news about interest rates, look beyond “what the percentage is” to see how much of a burden it will represent on a monthly basis.
The news that “interest rates are rising” also includes the lives of those who are about to start working.
*Based on information published as of November 3, 2026.