Related: Universities Rack up Huge Debts

Chinese colleges were saddled with debts of 200.1 billion yuan in unpaid loans by the end of 2005, the Beijing News reported Wednesday, citing a report from National Development and Reform Commission(NDRC).

The report, quoting statistics from the People's Bank of China, is the first official figure from the top economic planning organ on the condition of Chinese colleges' liabilities.

"Heavy debts have hampered regular operations of some colleges, " the report was quoted as saying.

Seventy-six colleges, directly controlled by the central government, had borrowed 33.6 billion yuan by the end of 2005 with an average annual growth of 76 percent, said a report from the Institute of Economics of Education, Peking University (PKU).

The debts equaled 51.1 percent of the revenue of the colleges, totaling 65.67 billion yuan, said the PKU report.

The continuous increase in college enrollments was a key factor in the debts, as colleges had been encouraged to borrow from banks to construct new campuses and offer loans to poor students, asking them to pay back in full before graduation, experts said.

In 1999, China's education authority increased the size of college enrollment. About 5.04 million students were enrolled in 2005, up 370 percent from 1998.

Analysts say the actual debt far exceeds the reported number, reaching 400 billion yuan if unpaid funds for construction and investment from other organizations were included.

Reports from the Ministry of Education also showed that some students are unable to, or chose not to clear their debts putting the colleges under further financial stress.

Figures from the ministry show 2.07 million students had received a total of 17.27 billion yuan in loans by the end of 2005, but almost one in five defaulted on repayments. The unpaid loans exceeded three billion yuan.

Recent price hikes had also applied pressure to college expenditure, though some colleges had taken measures to control meal prices, the NDRC report said.

Experts say the government could learn from foreign universities where students borrowed from banks.

The government has paid off some colleges' debts. In the eastern Jiangsu Province, the local government pays one third of colleges' debts, raises another third through capital operations, and the colleges shoulder the rest of the debt. (One dollar equals to 7.59 yuan.)