College students who have graduated or will graduate in 2023 and are paying State-subsidized student loans are exempt from paying interest on their loans this year, according to the Ministry of Finance.

They can also apply to defer principal payments on their loans for one year without having to worry about penalties or compound interest, Assistant Finance Minister Ou Wenhan said on Friday.

The measures were adopted after a decision was reached in a recent State Council executive meeting to continue offering interest-free and deferred principal repayments for government-subsidized student loans.

The policy is expected to benefit more than 4 million college graduates this year, with more than 2.3 billion yuan ($334 million) in interest being waived, Ou said at a news conference at the State Council Information Office.

With more than 11 million college students expected to graduate this year, the latest moves aim to alleviate the burden on graduates who come from poor families and improve employment services for the students, he said.

A similar policy was also issued last year, benefiting 3.79 million college graduates with 1.95 billion yuan in interest waived, he said.

Hua Jiayu, an official with the Ministry of Finance, said the State-subsidized student loan policy has been constantly improved over the years.

Loan ceilings have been increased twice from no more than 6,000 yuan per student per year to up to 12,000 yuan per year for undergraduate students, and as much as 16,000 yuan per student per year for graduate students, he said.

The students do not need to pay the principal or interest while they are still studying and can apply for a five-year probation period after graduation, during which they only have to pay the interest on their loans, he said.

Ou said since the State-subsidized student loan policy was introduced in 1999, more than 400 billion yuan of such loans have been issued, benefiting more than 20 million students.