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Jul 7, 2017 at 12:00am ET By Joanna Hughes

China recently issued a directive curtailing the dangerous and yet rapidly growing online moneylending phenomenon targeted at student borrowers until measures could be taken to safeguard the well-being of students, according to Here’s a closer look at the situation, along with at the impetus for government intervention.

The Consequences of Crowdfunding

Known as “wang dai,” the practice of online peer-to-peer moneylending -- during which people make small loans to others via smartphones and websites -- has been on the rise in China in recent years. While no one has a firm number, there are currently at least 500 platforms engaged in online moneylenders, according to microfinancing portal Wangdaizhijia.

Unfortunately, moneylending in China comes at a high cost in the form of everything from skyrocketing interest rates as high as 1,000 percent to demands for “nude selfies” as collateral ultimately leading to unfavorable outcomes for students both financially and personally.

Protecting Student Safety

According to an announcement made by China's banking, education and social security authorities and announced on the Jiangxi provincial government’s website, the trend of “making extortionate loans” was resulting in situations which had “severely harmed the safety of university students,” thereby necessitating the need for the government to step in.

Explains, “In some cases, borrowers were instructed to send naked pictures of themselves, with their identification cards, to the lender as collateral. They would threaten to release the pictures if the student defaulted on their debts.”  The leaking of these photos last winter, along with contact information for female borrowers, highlighted the problem, spurring the government to take action.

Why are Chinese students such easy targets for ill-meaning moneylenders?  According to a report from The Washington Post, college students in China have limited access to credit due to tight regulations and equally tight availability. Factor in the country’s lack of an overseeing body for online lending, and the result is a perfect storm of opportunities for predatory lenders and potential heartache for unknowing students.


Joanna worked in higher education administration for many years at a leading research institution before becoming a full-time freelance writer. She lives in the beautiful White Mountains region of New Hampshire with her family.

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