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. Last Updated: 07/27/2016

Frozen Students Loans Stir Fears on Campuses

Hundreds of the country's brightest students fear possible expulsion from their universities for failing to pay tuition fees after their student loans were frozen amid the financial crisis.

Well under 1 percent of the country's 7 million students receive financial aid, an infant industry in Russia, but they represent a large percentage of the nation's up-and-coming talent, with many enrolled in top universities.

At risk are students with loans from a program called Kredo, which is underwritten by the company Krein and has been offered through Soyuz Bank since 2003.

The loans are offered to students at 21 prestigious state institutions, including Moscow State University. A total of 4,400 students have received the loans, of which 3,500 are currently students, according to figures from Kredo.

Anton Repnikov, a third-year journalism student at the Higher School of Economics, took out a 250,000 ruble ($9,455) loan at the beginning of his studies. "I took it out so I wouldn't be a burden on my parents," he said.

Last month, he went to the bank to hand in documents to get the latest installment of the loan transferred to the school. "I was told it wasn't possible for technical reasons," he said.

Since then, he has been waiting for news. On Wednesday, he went to a branch of Soyuz Bank near the VDNKh metro station and was told it no longer served individual clients.

Repnikov said he and other students with loans were not allowed to take an exam Monday. After an anxious wait, they were allowed to take the exam Wednesday, he said.

Studying at the Higher School of Economics costs up to 350,000 rubles ($13,000) per year, depending on the student's grades, according to the school's web site.

The school's president, Yaroslav Kuzminov, expressed anxiety about the loan situation in a statement Friday and said Krein representatives had told him that "the bank is taking measures to carry out its obligations on the loans." He asked the affected students to sign an agreement postponing their tuition payments until Dec. 15.

Repnikov said he had signed the agreement.

Universities insist that they have no intention of expelling students over the frozen loans.

"The university will stand up for its students, and they will continue their education," said a spokeswoman for Moscow State University. She said she had no information on the number of students affected at the school.

A spokeswoman for the Bauman Institute said there were not so many students affected. "The question is being resolved, and no one is being expelled," she said.

But some schools -- and many students -- are worried about the uncertainty surrounding the loans.

"When the problems began, all the universities were affected by the reduction of the credit program. The payments stopped," said Anton Moskalenkov, head of public relations at Moscow State Institute of International Relations, or MGIMO. Annual fees at the institute are around 274,000 rubles ($10,500) for undergraduate courses, according to its web site.

The reasons for the loan problems are unclear. The delays are "temporary and technical in nature," Kredo general director Mikhail Matrosov told Interfax earlier this month. He ascribed them to the "general situation on the world's financial markets."

Matrosov told Vedomosti last week that 2,400 students had not received payments this fall.

Repeated calls to Matrosov for comment since last Thursday went unanswered.

The loans are available to students who pay fees to study at state higher-education institutions. This academic year, they were also offered to students on state scholarships to cover living expenses.

According to Kredo's terms, students can borrow up to $45,000 and only have to pay it back when they finish studying, at an annual percentage rate of 10 percent for up to 16 years. They do not have to provide any collateral.

A Soyuz Bank spokeswoman described her bank as an "operator" in the program and referred questions to the universities and Krein.

Krein, like Soyuz Bank, is part of the Basic Element group controlled by billionaire Oleg Deripaska, Matrosov told Vedomosti. A Basic Element spokesman denied this.

But some students are still blaming Deripaska for their problems. "I think Deripaska could pay out of his own pocket," a student named Mikhail wrote on the online forum of the Higher School of Economics. "I don't think he has been impoverished by the crisis."

A spokeswoman at the Higher School of Economics said she could not comment on how many students had taken out the loans at the school.

Repnikov said only seven of the 65 students in his journalism class had loans, adding that the program was more common among business students.

The program is particularly popular at the Plekhanov Russian Academy of Economics, where 429 current students have taken out loans, a spokesman said.

However, the problems only affect students who submitted documents to the bank after a deadline on Sept. 22, a senior academy official, Pavel Zhuravlyov, wrote in answer to e-mailed questions. He said this applied to 125 students.

"Not one student with a Kredo student loan has been expelled due to the bank's problems with paying the tranche," he said. "I hope the problems will be temporary and the situation will settle down by mid-November."

The payment delays have never happened before, Zhuravlyov said.

As part of the government's anti-crisis program, it has pledged support for banks that offer student loans, a Kremlin spokesman told RIA-Novosti.

"A decision has been made to support bank programs that provide student loans," he said, commenting on the results of a meeting between President Dmitry Medvedev and his Cabinet earlier in the week.

Student loans are offered by several banks but on a very small scale. Bank Obrazovaniye has been offering student loans since 2006 and has given out more than 200, said spokesman Mikhail Kulkov.

Banque Societe Generale Vostok has been providing student loans since 2004, the youth program development manager Maria Vlasyuk said. So far this year, it has provided around 800 loans. The sector is "very promising," and the bank provided 80 percent more loans in 2007 than it did in 2006, Vlasyuk said.

The Kredo program has been partially underwritten by the Education and Science Ministry since February this year in what official documents describe as an "experiment."

The ministry guarantees 10 percent of the loans to the underwriter, Krein, in case the student is unable to pay.

"The nature of the experiment is that the student gets a loan on quite preferential terms," Deputy Education and Science Minister Vladimir Miklushevsky said, Interfax reported.

He said 970 students were taking part in the experiment.

The state, however, offers no guarantee to the students.

"The ministry doesn't take part in relations between the student, the university and the credit organization. Their relations are regulated by contracts," a ministry spokeswoman, Ksenia Zolotaryova, said in an e-mailed statement.