Pedestrians walk past ads for an online lending app in the Shanghai subway in January 2016. Photo: IC

Online lenders that target college students, often offering them loans with illegally high interest, are booming as China's financial sector expands.

"Students want to enjoy a high-quality lifestyle, so they may need money to buy devices or take extra courses," Song Yongjun, head of Xiongdi Hezhong Technology, a company that promotes online lending apps to college students, told the Global Times on Tuesday.

However, while some students have used credit with no problems, others have fallen into heavy debt that can lead to tragedies.

Beijing Business Today reported March 21 that a student at Henan Agricultural University committed suicide after accumulating a debt of around 589,000 yuan ($90,000) that he borrowed from 14 different lending platforms using the stolen ID cards of 28 of his classmates.

Pay in advance

"It's quite easy, you only need to make an IOU," a freshman from Baoding University who prefers to be called Q told the Global Times.

According to Q, at his college's request he and 10 of his classmates signed an agreement which allowed them to borrow money from the Qufenqi lending platform.

Q said he borrowed money several times "for some random needs like buying clothes," getting about 300 yuan ($46.3) each time, and repaid each loan within three months, paying around 10 yuan in interest.

According to the China Youth Daily, in Zilonghu, a college town under Zhengzhou, Central China's Henan Province, the town's billboards, windows, gates and even toilets are full of ads for online lenders.

Qiu, a junior student from the Shandong University of Technology, told the Global Times that lending apps are easy to find as ads have been posted everywhere on his campus since last year.

"Some people who promote lending platforms will ask you to scan a QR code, and then they will give you a bottle of soft drink in return," Qiu said.

P2P lending

"The market [of online lending platforms for college students] started last year, when the lending market became more specialized, until small loan services appeared," Song said.

Moneyplat, is a peer-to-peer (P2P) lending service, which allows users to borrow money from other users.

On its homepage usernames are displayed next to how much money they need and why they need it.

"Xing0000," a 21-year-old student asked for 3,000 yuan "to start a business." One student wanted money because "I need to buy a new computer."

Users who agree to lend money should be paid back by students within  six or seven months.

The loan limits vary from site to site. Chuying Loan sets limits according to borrowers' level of education － from 5,000 yuan for students at adult education institutes to 8,000 yuan students at top universities.

"You only need to give your student ID, you will get the money in hours," Chuying Loan told the Global Times.

"College students, as young people, are open to new things like online loan platforms," Zhou Hao, a lawyer from the Beijing-based Jia An Law Office, told the Global Times on Monday.

"Their open minds also mean they want to seek a fashionable lifestyle, as they are no longer under the control of their parents," Zhou added.

Benefits and risks

"The platforms offer many part-time sales jobs on campuses, and it helps to realize the dreams of students," Song said.

However, these new lending platforms have run into some legal issues.

"Some students use the identities of their classmates to borrow money, which is illegal," Zhou said.

A March 14 report by news portal Sina said that around 100 university students in Laiwu, East China's Shandong Province found that their identities had been stolen and had been used to borrow money from Qufenqi.

"Lenders sometimes set a higher interest rate than the legal standard of 24 percent a year, and they use illegal methods to collect debts, such as threatening students, their families and teachers," Zhou explained.

Over 1,000 members of a QQ group called "Anti-Jiexin" including students, claimed they and their families have been tormented by endless debt-collection texts and phone calls from Jiexin, a lending company.

"They took advantage of our innocence by setting way too high interest rates," one "Anti-Jiexin" member told the Global Times.

Some people in the QQ group posted pictures of what they claimed were fake legal notices concocted by Jiexin's debt collectors to threaten them.

"From the point of view of lenders, they see not only the needs of the students, but also their stability, high-quality and naivete, which means they will not simply run away from debts," Zhou said.