College students graduating this year, or who have already graduated and have applied for State-subsidized student loans are exempt from paying interest this year, according to the Ministry of Finance.

They can also apply to defer repayment of the loan principal for a year without penalties or compound interest, Assistant Finance Minister Ou Wenhan said on Friday.

The measures were adopted after the decision by a recent State Council executive meeting to continue the policy of interest-free and deferred principal repayments for government-subsidized student loans.

They are expected to benefit around 4 million graduates this year, with some 2.3 billion yuan ($334 million) in interest being waived, Ou told a news conference at the State Council Information Office.

With a record 11 million college students expected to graduate, the move aims to alleviate the burden on graduates from families in financial difficulty, and improve employment services for students, Ou said.

A similar policy was also instituted last year, benefiting 3.79 million college graduates and waiving 1.95 billion yuan in interest, he said.

Hua Jiayu, an official with the Ministry of Finance, said that State-subsidized student loans have 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 undergraduates, and 16,000 yuan per year for postgraduates.

Students do not need to repay the principal or interest while they are still at college, and can apply for a five-year probation period after graduation, during which they only pay interest.

Ou said that since State-subsidized student loans were introduced in 1999, more than 400 billion yuan in loans have been made, benefiting around 20 million students.

The Party and the government have pledged to make sure that no student drops out of school due to financial difficulties, and a financial-aid system covers all students with financial difficulties at all levels of education, Ou said.

Those eligible may apply for different kinds of scholarships, loans and subsidies, as well as exemption from tuition and part-time jobs, he said.

"Millions of students from underprivileged family backgrounds have realized their dreams of going to college thanks to these policies, which demonstrate the strength of our people-centered and equality-oriented education policy."

Guo Peng, an official with the Ministry of Education, said that to make sure policies are implemented, authorities have asked banks to improve efficiency.

Hotlines have been opened to answer students' questions and authorities have arranged for staff to monitor implementation of the policy and collect feedback.

An aid mechanism was established in 2015 to help students who have lost the ability to work due to illness, or who are from families that have been victim to major natural disasters or suffered from illness, Ou said.

Students are also encouraged to work at the grassroots level in central and western regions in exchange for their loans being repaid by local government or to serve in the military, in which case their loans are repaid by the central government, he added.