NEWS RELEASE
23-D-0028

April 14, 2023
Japan Credit Rating Agency, Ltd. (JCR) announces the following Social Finance Framework Evaluation Results.

Japan Student Services Organization
Social Finance Framework
Assignment
Overall
Evaluation

Socialness
Evaluation（Use of Proceeds）

Management,
Operation andTransparency Evaluation

Social 1(F)

s1(F)

m1(F)

Issuer/Borrower

Japan Student Services Organization

Subject

Japan Student Services Organization
Social Finance Framework

Overview of Evaluation▶▶▶1. Outline of Japan Student Services Organization

Japan Student Services Organization ﴾hereinafter referred to as "JASSO" or "the Organization"﴿ isan independent administrative institution with a mid-term goal management, which carries out
three tertiary education-related businesses as follows: ﴾1﴿ Scholarship Programs for JapaneseStudents comprising of scholarship loans/grants as its center; ﴾2﴿ Support Programs forInternational Students and ﴾3﴿ Student Support Program. JASSO was founded in April, 2004, as acore and leading organization that comprehensively conducts various students' support in Japanby organizing/integrating Scholarship Loan Programs provided by Japan Scholarship Foundation
or International Student Exchange Programs implemented by four public corporations: ﴾1﴿
Association of International Education, Japan; ﴾2﴿ Center for Domestic and Foreign Students; ﴾3﴿
the International Students Institute and ﴾4﴿ the Kansai International Students Institute, as well as
scholarship programs for international students and surveys related to student life provided by thegovernment since the Act on the Japan Student Services Organization, Independent Administrative
Agency ﴾hereinafter referred to as "the JASSO Act,"﴿ was enacted in June, 2003, based on the "Plan
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for Reorganization and Rationalization of Special Public Corporations" decided in the cabinet in
December, 2001.

▶▶▶2. ESG Management and Initiatives for Regional Revitalization conducted by JASSO
The purpose of JASSO is to "establish adequate educational environments for students studying
at universities and other educational institutions in Japan and thereby contribute to developing
the next generation of human resources who possess a rich humanity and creativity and who are
dedicated to promoting international mutual understandings" stipulated in the Act on the Japan
Student Services Organization, Independent Administrative Agency. The Organization regards thefollowing as key issues: to foster students' exploration abilities, promote international
understandings and establish educational environments for motivated and capable students tocontribute to developing human resources who can flexibly respond to changes in the times, suchas recent progress of globalization and rapid advances in science and technology, including ICT or
AI. The Organization, based on the recognition that resolving these issues is an important role, thatshould play as National Center for student support, aims to achieve the objectives set forth in the
JASSO Act through projects by lending/granting academic fees or other financial aids to students
in order to contribute to equal opportunities for education, providing students with advice andguidance on education, course selection and others by universities and promoting exchange
programs for international students.

▶▶▶3. Social Finance Framework

This evaluation target is Social Finance Framework ﴾hereinafter referred to as "the Framework"﴿
stipulated by the Organization to limit the proceeds financed through bonds and loans ﴾collectively,
hereinafter referred to as "Social Finance"﴿ only to the use of proceeds with social benefits. The useof proceeds defined in the Framework is a project on scholarship loans ﴾hereinafter referred to as"the Project"﴿ that have impacts on the development of creative human resources with a richhumanity who are responsible for the next generation in society. JCR evaluates whether the
Framework complies with "Social Bond Principles 1 ," "Social Loan Principles 2 ," "Social Bond
Guidelines3" and SDGs. Since these principles or the guideline are not regulations, they are notbinding; however, these are widely globally referred to at the present moment; therefore, JCR
confirms the conformity with these principles or the guideline. A reference indicator in evaluation
should be a mapping4 of SDGs stipulated by ICMA with a social project category in Social Bond
Principles since JCR emphasizes the consistency of the use of proceeds of social bonds and its
social improvement impacts ﴾hereinafter referred to as an "impact"﴿ with internationalsustainability goals or national policies.
JCR evaluates that the project subject to the use of proceeds set forth in the Framework aims toensure educational opportunities and is a business that provides social benefits that contribute to"access to essential services ﴾education﴿" for students who are unable to create study environments
due to financial reasons. JASSO aims to develop creative human resources with rich humanity who
are responsible for the next generation and contribute to promoting international mutual
understandings, and it establishes clear processes and a system to manage proceeds. The details
to be disclosed as reporting is appropriate. Based on the aforementioned, JCR evaluates that theInternational Capital Market Association ﴾"ICMA"﴿: Social Bond Principles 2021
https://www.icmagroup.org/assets/documents/Sustainable-finance/2022-updates/Social-Bond-Principles_June-2022v3020822.pdf
2Loan Market Association ﴾"LMA"﴿, Asia Pacific Loan Market Association ﴾"APLMA"﴿, Loan Syndications and Trading Association
﴾"LSTA"﴿:Social Loan Principles 2023
https://www.lsta.org/content/social-loan-principles-slp/
3Social Bond Guidelines 2021 by Financial Services Agency
https://www.fsa.go.jp/news/r3/singi/20211026-2/01.pdf
4
https://www.icmagroup.org/sustainable-finance/the-principles-guidelines-and-handbooks/mapping-to-the-sustainabledevelopment-goals/
1

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Organization establishes its administrative operational structure and has a high level oftransparency.
Consequently, JCR, based on JCR Social Finance Evaluation Methodology, assigned "s1﴾F﴿" for"Socialness Evaluation ﴾Use of Proceeds﴿," "m1﴾F﴿" for "Management, Operation and Transparency
Evaluation" and "Social 1﴾F﴿" for "JCR Social Finance Framework Evaluation" with regard to the
Framework. The Framework fully satisfies the standards for the items required in Social Bond
Principles, Social Loan Principles and Social Bond Guidelines, and it also complies with concretemeasures for SDGs and the governmental SGDs goals.

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Table of Contents■Evaluation Phase 1: Socialness Evaluation
I. The overview of Use of Proceeds
JCR's Key Consideration on This Factor
Current Status of Evaluation Targets and JCR's Evaluation
1. Social Benefits of the Project
2. Consistency with SDGs
3. Response to Environmental/Social Risks■Evaluation Phase 2: Management, Operation and Transparency Evaluation
I. Selection Standards and Processes for Use of Proceeds
JCR's Key Consideration on This Factor
Current Status of Evaluation Targets and JCR's Evaluation
1. Goals
2. Selection criteria
3. Process
II. Management of Proceeds
JCR's Key Consideration on This Factor
Current Status of Evaluation Targets and JCR's Evaluation
III. Reporting
JCR's Key Consideration on This Factor
Current Status of Evaluation Targets and JCR's Evaluation
IV. Organization's Sustainability Initiatives
JCR's Key Consideration on This Factor
Current Status of Evaluation Targets and JCR's Evaluation■Evaluation Phase 3: Evaluation result (Conclusion)

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Evaluation Phase 1: Socialness Evaluation

s1(F)I. The overview of Use of Proceeds
JCR's Key Consideration on This Factor
In this section, JCR first confirms whether the proceeds are used for social projects that bring aboutclear social benefits. Then, in cases where the use of proceeds is expected to have negative impacts
on society and the environment, JCR confirms whether the impacts are fully examined by aninternal specialized department or an external third party and whether necessary measures aretaken for its avoidance and mitigation. Finally, JCR confirms the consistency with Sustainable
Development Goals ﴾hereinafter referred to as "SDGs".﴿

▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

The proceeds financed based on the Framework are used for a project on scholarship loans undertaken
by JASSO. JCR evaluates that the project is contributable to developing study environments for students
who have difficulties in studying due to financial reasons, which are social issues, and is great social
significance.

The Framework on use of proceeds

The proceeds financed based on the Framework are used for scholarship loans for students who
are unable to develop study environments due to financial reasons although they are motivatedand capable. Specifically, proceeds financed through social loans are used for Category 1
Scholarship Loans and Category 2 Scholarship Loans, while proceeds financed through social
bonds are used for Category 2 Scholarship Loans.
Accordingly, proceeds financed under the Framework are not used for any project except for
the Project.

JCR's Evaluation for the Framework
1. Social Benefits of the Project﴾1﴿ Use of proceeds: Scholarship loans
The proceeds financed under the Framework will be allocated to scholarship loans in the Project
carried out by the Organization. JCR evaluates that the Project is of high social significance since
it systematically supports "the right to receive education" stipulated in Article 26 of theConstitution of Japan and "equal opportunity for education" set forth in Article 4 of theFundamental Law of Education, aims to contribute to developing socially promising humanresources and is regarded as one of the important governmental educational measures that are
not replaceable by any private sector.

﴾2﴿ Overview of Qualified Projects
JASSO carries out the scholarship business, which is important as an education business from theviewpoint of equal opportunity of education so as to support independence and improve study
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environments for students who have difficulties in studying due to financial reasons although they
are motivated and capable. Scholarships are categorized as scholarship grants and scholarshiploans and the latter includes Category 1 Scholarship Loans ﴾with no interests﴿ and Category 2
Scholarship Loans ﴾with interests.﴿ Category 1 Scholarship Loans and Category 2 Scholarship Loansare provided to students studying at universities, graduate schools, colleges of technology andspecialized training colleges ﴾post-secondary courses﴿, and simultaneously provided to inparticular, students who face financial difficulties.
Category 1 Scholarship Loans are funded by interest-free borrowing from general account andspecial account, and repayments from Scholarship Loan borrowers. Fiscal loans and private loans
have also been utilized since FY2017 so as to provide all applicants who meet criteria for thescholarships. Category 2 Scholarship Loans are funded by fiscal loans, Fiscal Investment and Loan
Program Agency Bonds and repayments from Scholarship Loan borrowers; however, private loans
have been also utilized for new scholarship students since FY 2007.
Proceeds financed under the Framework are allocated to Category 1 Scholarship Loans andCategory 2 Scholarship Loans, both of which are scholarship loans.
Table 1: Summary of Eligible Business5
Eligible business

Overview

Category 1 Scholarship Loans

Category 2 Scholarship Loans

The program was launched in 1943 as

The program was established in 1984a scholarship program under the Dai-

as scholarship loans with interests

Nippon Scholarship Foundation andusing the Fiscal Investment and Loan

provides students with scholarships

Program Fund to respond towithout interests.

increases in the number of students

The targets are students who are

who apply for scholarships along withstudying at universities, graduate

increases in the number of students

schools, colleges of technology andand students who use scholarships

specialized training colleges (post-

after Category 1 Scholarship Loanssecondary courses.)

program had begun.

The target scholarship students are

The targets are students who are

judged/chosen comprehensively

studying at universities, graduate

based on regulations regarding

schools, colleges of technology

personality, academic ability and(fourth and fifth graders) andhousehold finances.

specialized training colleges (postsecondary courses.)
The target scholarship students are
judged/chosen comprehensively
based on regulations regarding
personality, academic ability andhousehold finances (the standards
are laxer than those of Category 1
Scholarship Loans.)

Financial resources whilein school
5

General account debts

Proceeds financed through the use ofprivate funds, including issuance of bonds
or loans

Prepared by JCR by referring to the Organization's website, materials disclosed and the Framework
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Business category (ICMA

Access to essential services (education)

Principles)
The target

Students who are unable to have study environments due to financial reasons﴾3﴿ Social issues: It is a very important issue to develop study environments for students who facedifficulties to study in tertiary education due to financial reasons since the ratio of private
educational costs is high under tertiary education systems and the ratio of educational costs
to disposable incomes is also high.
In the "Grand Design for Tertiary Education for 2040 ﴾Report﴿" compiled by Central Council for
Education in November 2018, five points were listed as directions in changing society around 2040
as follows: SDGs, Society 5.0/the Fourth industrial revolution, the 100-year life, globalization andregional revitalization. Higher education institutions, which are the core in human resources'development and intellectual creative activities, are required to play an even more important roleso that individuals can enjoy fruitful life, Japanese society can maintain sustainablegrowth/development and human society can be developed in harmony while changing economic
society, rapidly progressing globalization and seriously depopulating society. On the other hand,the 18-year-old population, which is the main students to be enrolled in tertiary education reached
the peak with approximately 2.05 million in 1992 and since then the population has declined toroughly 1.17 million in 2020, and it is estimated to decrease to 0.88 million in 2040. In light of thissituation, it is important to provide opportunities for higher education to all young people withwills and abilities for learning.
In comparison of public spending on tertiary education with the other OECD members, the ratioof public spending from primary to tertiary education to the total general government expenditureis 7.8% in Japan ﴾Fig.1﴿, which is lower than 10.6%, the average of that in the OECD countries. Japanis also listed as one of the countries with higher tuitions for tertiary education in the OECDmembers, and these tuitions have been increasing for the last 10 years. In 2019, the share of private
spending on tertiary education reached 67% in Japan, which is well above the average of 31% in
the other OECD countries.

Figure 1: Ratio of Public Expenditure on Education to Total General Government Expenditure by Educational
Stage (2019)6
6

Quoted from Education at a Glance 2022
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Figure 2: Ratio of Private Expenditures to Educational Expenditures in Tertiary Education (2019)7

The educational expense in a household budget accounts for roughly 1/2 of the average
disposable income in working households in cases where two children go to private universities. If
these two children living away from home, the ratio of educational-related expense to the average
disposable income is estimated to 80 percent or more for a year. It is likely to be difficult for evenhouseholds who earn more than the average disposable income to pay all expenses on tertiary
education if the financial resource is only household incomes in Japan. The necessity to support
tertiary educational fees through public funds in the Organization is additionally remarked in theReport.

Figure 3: Educational Costs in households8
78

Quoted from Education at a Glance 2022
Quoted from White Paper on Education, Culture, Sports, Science and Technology 2020 ﴾in Japanese﴿
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There is strong demand for the scholarship system provided by the Organization as an institutionthat has comprehensively implemented a student support-related business. Currently,
approximately thirty percent of all the students use the scholarship system, including interest-free
and interest-bearing loan programs. Although JASSO has a significant role to contribute toincreasing the enrollment rate in tertiary education and developing advanced human resources forthe next generation, it is also expected for the Organization to contribute to equal opportunities
for education, developing human resources who are responsible for the next generation in society,promoting to globalize universities and enhancing international mutual understandings. The
government clarifies its policy to strengthen to invest in education/human resources development
through expanding the scholarship system and the Organization who plays such a role, isconsidered to be highly important.
Based on the aforementioned, JCR evaluates that the use of proceeds in the Framework is a projectthat contributes to improving the study environments for students who are unable to study intertiary education due to financial reasons.
The use of proceeds is categorized under a business that contributes to "access to essential services
﴾education﴿" for "students who are unable to have learning environments due to financial reasons"in the eligible social project business category of Social Bond Principles, Social Loan Principles andSocial Bond Guidelines.

2. Consistency with SDGs
﴾1﴿ Consistency with SDGs mapping of ICMA
Project subject to the use of proceeds are evaluated to contribute to the following SDGs andtargets in light of the SDGs mapping of ICMA.
Goal 4. Quality education
Target 4.3 By 2030, ensure equal access for all women and men to affordable and quality
technical, vocational and tertiary education, including university

﴾2﴿ Consistency with SDGs Action Plans and Social Bond Guidelines
JCR has confirmed that projects subject to the use of proceeds comply with the following items in"SDGs Action Plan in 2022" set forth by the Japanese government to achieve the goals by 2030
based on the SDGs implementation guidelines.
Eight prioritized issues in the "SDGs Implementation Guidelines" and their related specific initiatives
Prioritized Issues: 1. Achieve Society/Gender Equality in which All People Play Active Roles
New support program for tertiary education

TargetContribute to addressing the rapid
declining birthrate in Japan by reducing
economic burdens on education atuniversities through reducing tuitions andproviding scholarship grants to people in

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Eight prioritized issues in the "SDGs Implementation Guidelines" and their related specific initiatives
Prioritized Issues: 1. Achieve Society/Gender Equality in which All People Play Active Roles

Targetlow-income households who truly needsupport.

3. Response to Environmental/Social Risks
JCR evaluates that there is no negative risks on the environment since the use of proceeds
stipulated by the Framework is appropriated for scholarship loans. JCR also evaluates thatappropriate avoidance and mitigation measures are taken for negative risks on society as follows:(1) Risks assumed in society
Delinquency in repaying scholarships and having multiple debts(2) Measures to avoid/mitigate risks[Before making loans]
Disseminate how scholarship students should have mindsets to prepare for repayment ofloans and the procedures while receiving scholarships with "guide for scholarshipstudents ﴾the digest version﴿" distributed when students were chosen be eligible forscholarship grants and scholarship loans and "guide for scholarship students ﴾the whole
version﴿" posted on JASSO website.
JASSO has engaged in a business to send scholarship advisers with special knowledge
from the financial perspectives to high schools nationwide to provide guidance since FY
2017 so that high school students can wipe out their concerns over financial issues after
they go to higher education and can use scholarship without anxiety.
[While in lending]
The Organization operates a "Scholarship Loan/Repayment Simulation" website forscholarship students to check their loan amounts/monthly repayments status on thewebsite, and it also tries to make them be conscious to repay their loans. JASSO requests
universities to hold meetings on repayment of loans so as to explain how important forscholarship students to repay their loans and various procedures to return scholarships
for students who are graduating sooner.
JASSO sent documents indicating "to prevent delays in repayment of scholarships ﴾on arequest basis﴿" to universities and requested for their cooperation to make scholarshipstudents be conscious to repay their loans while in school.
[While in repaying]
JASSO has established a relief system ﴾e.g., reduce repayment, postpone repayment,
exempt from repayment or respond to COVID-19﴿ in cases where scholarship students
have difficulty in making repayments and it has newly introduced an income-linked
repayment system that allows scholarship students to repay affordable amounts while
their income is lower since FY 2017.

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In the event of delinquency, the Organization sends letters or makes phone calls toprovide advice so that borrowers can repay their loans based on their real circumstances.

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Evaluation Phase 2:
Management, Operation and Transparency Evaluation

m1(F)I. Selection Standards and Processes for Use of Proceeds
JCR's Key Consideration on This Factor
In this section, JCR confirms the objectives to be achieved through the Framework, theappropriateness of social project selection standards and the processes, and whether a series ofprocesses are properly disclosed to investors.

▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

JCR determines that the management and departments with special knowledge are adequately involved in
the goals in the Framework, criteria for selecting social projects and the processes.

1. Goals
The Framework on Goals and the Organization's Policy Structure (Excerpt)[Related to the implementation of social financing]
As globalization progresses and intellectual creativity is getting important to support social
development, there is a strong demand to foster creative human resources who can flexibly
respond to changes in the times. For this reason, it is getting significant to foster students'
exploration abilities, promote international understandings and develop study environments forstudents who are motivated and capable hereafter.
JASSO was established to achieve the aforementioned philosophy, aiming to "establish
adequate educational environments for students studying at universities and other educational
institutions in Japan and thereby contribute to developing the next generation of humanresources who possess a rich humanity and creativity, and who are dedicated to promotinginternational mutual understandings" stipulated under Article 3 of the JASSO Act, and it has abasic policy for business to assume functions that are suitable for National Center on student
support based on how to share roles between the government who supports students anduniversities, and the Organization is making efforts in order for motivated and capable students
to have equal opportunities to study and spend free and meaningful campus life.

[Policy Structure in the Organization]
Policy Targets by the Ministry of Education, Culture, Sports, Science and Technology
Policy Target 4: Promoting Tertiary Education to Cultivate Students' Individuality
Policy Target 4.1: Improving Quality of Education/Research at Universities
Policy Target 5: Promoting Support for Motivated and Capable Individuals through the
Scholarship System
Policy Target 5.1: Promoting Scholarship Programs for Motivated and Capable Students

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Policy Target 13: Promoting International Exchange/Cooperation, which Contribute to
Building Productive International Society
Policy Target 13.1: Promoting International Exchange

Act on Japan Student Services Organization, Independent Administrative Agency
﴾Purpose of the Organization﴿
Article 3 Japan Student Support Organization aims to establish adequate educational
environments for students studying at universities and other educational institutions in Japanand thereby contribute to developing human resources who possess a rich humanity andcreativity and are responsible for the next generation and who are dedicated to promotinginternational mutual understandings through providing scholarship loans and scholarshipgrants, as well as student support services with the aim of contributing to equal educational
opportunities and offering consultation and guidance on academic programs, course options
and others by universities, and simultaneously implementing projects to promote exchange
programs for international students.

Roles undertaken by JASSO during the fourth target period
Comprehensively taking supporting measures for Japanese and international students as thecore organization to support students
Providing scholarship loans and scholarship grants and student support services
Provides the scholarship program to encourage students' independence and develop study
environments for motivated and capable students who have difficulties in pursuing their studies
due to financial reasons
Provide students with academic programs and course options by universities
Support effective efforts at universities by collecting/analyzing/providing advanced cases tocontribute to conducting surveys/analyses on student life/support, providing information,
carrying out career education/employment support and supporting disabled students
Projects aimed to promote exchange programs for international students
Making consistent efforts for providing information on studying abroad, supportinginternational students while in school, assisting employment, following up students even after
their returning home so as to promote strategic exchange among foreign students, develop
global human resources and activate two-way exchange among students.

JCR's Evaluation for the Framework
The Japanese government enhances efforts to ensure equal opportunities in education, and JASSO
supports students who have no choice but to give up their tertiary education due to financial
reasons and those who are unable to develop study environments mainly through providing thosestudents with scholarship loans and scholarship grants. The mid-term goal for business operations
to be achieved by JASSO stipulates the Organization's position and roles as a core institution to
support students at universities, colleges of technology and specialized training colleges ﴾postsecondary courses﴿ in Japan as follows: ﴾i﴿ Providing scholarship loans/scholarship grants and
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student support services; ﴾ii﴿ Providing consultation and guidance on academic programs/course
options by universities and other educational institutions and ﴾iii﴿ Projects aiming at promoting
exchange programs for international students. In the "Third Basic Plan for Promoting Education"
approved by the cabinet in June 2018, it is required to enhance meticulous student support,
including supporting for overseas study for motivated and capable Japanese students, actively andstrategically accepting outstanding foreign students and promoting to develop opportunities forstudents with disabilities to study in light of ratifying the Convention on the Rights of Persons with
Disabilities and enforcing the Disability Discrimination Act. JASSO aims to enhance equal access totertiary education through financing based on the Framework.
Accordingly, JCR evaluates that the goals set forth in the Framework by JASSO is in a consistentmanner.

2. Selection criteria
The target criteria in the Framework are as described in the Evaluation Phase I in this Report. JCR
evaluates that the project selection criteria are appropriate.

3. Process
The Framework for process[Process for Project Evaluation and Selection]
JASSO screens scholarship students who are recommended by School Principal based on the
JASSO Act, Act on the Japan Student Services Organization, Independent Administrative Agency
﴾Order of the Ministry of Education, Culture, Sports, Science and Technology No. 2 of 2004﴿,Ordinance of Act on the Japan Student Services Organization, Independent Administrative
Agency ﴾Order of the Ministry of Education, Culture, Sports, Science and Technology No. 23 of2004﴿, the operation procedures and regulations on scholarship loans stipulated by theOrganization. Division in charge of selecting scholarship students in the Organization screensapplicants and the result is reported to its internal Supervising Section and the approval is givenby the Board of Directors. The loans, in principle, are made to all applicants who meet thestandards.
In selecting the scholarship students, JASSO selects the students comprehensively based on
criteria such as personality, academic ability and family financial status, and the details in
respective standards are described in the statement of operation procedures and are madepublic.

JCR's Evaluation for the Framework
Social issues why the project, the use of proceeds, is conducted and the social benefits that may
be brought about are evaluated by the Ministry of Education, Culture, Sports, Science andTechnology, which is the government agency under its jurisdiction, and scholarship students
eligible for projects who are recommended by School Principal in the Organization are screened
based on the JASSO Act, Act on the Japan Student Services Organization, Independent
Administrative Agency ﴾Order of the Ministry of Education, Culture, Sports, Science and Technology
No. 2 of 2004﴿, Ordinance of Act on the Japan Student Services Organization, Independent
Administrative Agency ﴾Order of the Ministry of Education, Culture, Sports, Science and Technology
No. 23 of 2004﴿, the operation procedures and regulations on scholarship loans stipulated by the
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Organization. Division in charge of selecting scholarship students in the Organization screensapplicants and the result is reported to its internal Supervising Section and the approval is givenby the Board of Directors. JCR evaluates that the project selection standards and processes for theuse of proceeds are appropriate.
The selection criteria and process described above are outlined in this Evaluation Report andtransparency to investors is ensured.

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II. Management of Proceeds
JCR's Key Consideration on This Factor
It is usually assumed that management methods of proceeds vary widely depending upon issuers.
JCR confirms whether the proceeds financed based on the Framework are surely appropriated tothe social project and whether a mechanism and an internal system are in place to enable easy
tracking of the appropriation of the proceeds.
JCR also gives importance to whether the proceeds are scheduled to be used for social projects at
an early stage and to the evaluation of management/operation methods for unallocated proceeds.

▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

JCR evaluates that the proceeds' management system in the Organization is properly established, and themethodology to manage proceeds is disclosed in this Evaluation Report and via its website; therefore,
JASSO has a high level of transparency.

The Framework on cash management[Management of Proceeds]
Finance Department in the Organization manages all of the proceeds financed through social
finance, separately from other proceeds for scholarships.
Proceeds for Category 1 Scholarship Loans are allocated in the deposit account exclusively for
Category 1 Scholarship Loan and proceeds for Category 2 Scholarship Loans are appropriatedin the deposit account exclusively for Category 2 Scholarship Loan until these proceeds areappropriated to resources for remittance.
The proceeds financed through bonds are transferred two business days before the remittancedate of the Category 2 Scholarship Loan and managed in the deposit account exclusively for
Category 2 Scholarship Loan until the remittance date comes, and the total amount of proceeds
is allocated to resources for remittance.
Finance Department manages the proceeds financed with cash flow tables ﴾on a daily andmonthly basis, respectively﴿, and the proceeds concerned are fully allocated to loan scholarships
under a structure. The cash flow management is regularly reported to the Minister of Education,
Culture, Sports, Science and Technology. In cases where the remittance of scholarships is
postponed due to disasters or others, the Organization continues to conduct its management
and immediately transfers the amount as soon as the event causing the postponement is
resolved.

JCR's Evaluation for the Framework
Finance Department in the Organization conducts cash management separately from other
scholarship funds until the total amount is allocated to the project subject to the use of proceeds.
JASSO will raise funds only necessary based on the daily cash flow table and the funds are promptly
allocated to scholarships; therefore, no unallocated proceeds remain. In cases where there is any
unallocated proceeds due to unforeseen circumstances such as disasters, the Organization
continues its management until the amount is fully allocated with cash or cash equivalents.
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Finance Department regularly checks vouchers used for tracking management and the approval isgiven by Treasury Manager. These vouchers will be kept until the finance based on the Framework
is completed in accordance with regulations in the Organization. The breakdown of the balance
carried forward to the following fiscal year ﴾in a list of balances﴿ is submitted to the audit firm
through Inspection Office as year-end audit materials.
Accordingly, JCR evaluates that the Organization's proceeds management is appropriate and the
management method has a high level of transparency.

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III. Reporting
JCR's Key Consideration on This Factor
In this section, JCR evaluates whether the disclosure system for investors is planned in a detailed
and effective manner before and after financing based on the Framework.

▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

JCR evaluates that the reporting in JASSO is planned to appropriately disclose the appropriation ofproceeds and the benefits to society to investors.

The Framework for Reporting[Reporting]
JASSO publishes reporting on operational performance reports and financial statements every
year.
In preparing the operational performance reports, deliberation is made in the Board of Directors
and a decision is made by the Chairman of the Board of Directors only after hearing the opinions
discussed in the Evaluation Committee in JASSO, which is composed of external academics.
These operational performance reports determined by the Chairman of the Board of Directors
are submitted to the Minister of Education, Culture, Sports, Science and Technology forevaluation.
The Chairman of the Board of Directors makes a final decision on the financial statements aswell as operational performance reports and business reports through deliberation made by the
Board of Directors only after auditors and the audit firm audit these documents. These financial
statements or others determined by the Chairman of the Board of Directors are submitted to
the Minister of Education, Culture, Sports, Science and Technology for evaluation.
The Organization annually reports on proceeds allocated to projects and social benefits in the"allocation of proceeds/social impact reports," which will be continuously carried out hereafter.
In the "allocation of proceeds/social impact reports," the businesses in the Organization, theoutline of scholarships and the allocated conditions of proceeds financed are reported to theextent practicable as long as there is a balance of proceeds procured through social finance.
﴾1﴿ Reporting on allocation of proceeds
Overview of Project
Amount of Proceeds Appropriated in the Fiscal Year
Ratio of Refinancing ﴾as of the end of the Fiscal Year﴿
Unappropriated Amount ﴾as of the end of the Fiscal Year﴿

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﴾2﴿ Impact reporting ﴾social benefits﴿
Qualified

OutputOutcome

Impactbusiness
Category 1

Number of students who

Ratio of students who

Establishment of adequate

Scholarshipare given Scholarship Loans

received scholarship loans

educational environments

Loans

per FY (Unit: 10,000)

among applicants whofor students studying at

Category 2

Amount of scholarship

satisfied the criteria

universities and other

Scholarshiploans per FY

Ratio of students who usededucational institutions in

Loans(Unit: 100 million yen)scholarships of thoseJapan

Various Scholarshipstudying at tertiary

Development of human

Systems on repayment ofeducation institutions

resources who possess ascholarships

Ratio of students who arerich humanity and creativity

Providing information onenrolled in higher

and are responsible for thethe use of scholarships

education institutions

next generation*The Organization provides students with scholarship grants as the New Aid System for higher
education in addition to scholarship loans.

JCR's Evaluation for the Framework
JCR evaluates that both of the appropriation of proceeds and social benefits in the reporting above
will be appropriately disclosed to investors.

Reporting on appropriation of proceeds
The Organization plans to explain about the use of proceeds financed through social finance toinvestors in advance. JASSO will annually disclose "Proceeds Appropriation and Social Impact
Report" as reporting on the appropriation of proceeds on its website. JCR evaluates that reportingon the allocation of these proceeds is appropriate.

Reporting on social benefits
The "Proceeds Appropriation and Social Impact Report" will be annually disclosed on the
Organization's website. Reporting on social benefits is established so as to quantitatively grasp
impacts along with outputs and outcomes, and the appropriate disclosure target is identified. The
impacts are also consistent with the objectives of the Organization and are sufficient enough todemonstrate the social significance of the project.
JCR evaluates that these disclosure items and their frequency are appropriate and that JASSO plans
to appropriately disclose reporting on the proceeds allocated and social benefits to investors.

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IV. Organization's Sustainability Initiatives
JCR's Key Consideration on This Factor
In this section, JCR evaluates whether the management highly prioritizes social issues as asignificant issue for management and whether financing policies/processes based on the
Framework and criteria for selecting social projects are clearly positioned through establishing adepartment which is specialized in promoting sustainability, including social issues, or incollaboration with external organizations.

▶▶▶ Current Status of Evaluation Targets and JCR's Evaluation

JCR highly evaluates that the Organization regards sustainability issues as a key management issue, has ameeting body on social issues to address these issues from practical/administrative perspectives andformulates the contents of the Framework while incorporating the knowledge obtained by Department incharge of practices in the Organization and external experts.

The basic management philosophy in the Organization is to provide students with essential
services, such as developing study environments in which students can learn with confidence, with"Student Services," so-called "two SS" as a starting point in their activities, and to watch how the
youth who are responsible for the future learn and grow. JASSO engages in three businesses:
scholarships, international student support and student support based on its five management
policies to achieve its goals as an organization.

Figure 4: Symbol Mark of the Organization9

Management Policy

1. Supporting Students
JASSO, as a core organization for supporting students in Japan, supports the youth to study
through providing scholarship loans/grants to ensure opportunities for education, actively backs
up international student exchanges toward globalization and assists students' life in response
to diversifying needs based on circumstances surrounding students or real situations in theirlife.
2. Supporting Tertiary Educational Institutions
The Organization supports to sophisticate educational functions and strengthen foundations forschool management through organizationally supporting the development of learning
environments expected hereafter for tertiary educational institutions that are responsible for
producing promising human resources for society as a place for motivated students to study.
9

Quoted from the Framework
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3. Collaborating/cooperating with the government/universities/companies
JASSO aims to effectively provide students with high-quality support so that the entire society
can assist students in studying and simultaneously human resources sought by society can be
fostered through closely collaborating and cooperating with the government, universities andcompanies and through unifying their resources, capabilities and ideas.
4. Enhancing functions as National Center for student support
JASSO, as National Center for student support, enhances information collection/analyses on theactual situation of campus life/student support, which is the foundation for the government
related measures, and concurrently the Organization grasps and analyzes issues through theentire country and provides information on advanced initiatives.
5. Constantly reviewing operations and efficiently managing businesses
The Organization, under the leadership of the Chairman of the Board of Directors, constantly
reviews its businesses in response to changes in social conditions. At the same time, JASSO
appropriately allocates management resources based on the rapid decision-making that fully
utilizes the characteristics as an independent administrative agency and efficiently manages its
businesses.

Scholarship Program
The Organization provides scholarship loans/grants to students who have difficulties in developing
study environments due to financial reasons. JASSO also fulfills the scholarship system to meet
diversified students' needs, remedies the application procedures, enhances to provide information
on scholarships and appropriately collects scholarship loans. The Organization has introduced abusiness for scholarship grants for the first time in Japan since FY 2017 so that no students haveto give up on studies in tertiary education due to financial difficulties. JASSO also expands theextent of scholarships without interests in order for all applicants who satisfy the lending criteria
to receive loans and simultaneously strives to reduce repayment burdens, including introducing
the income-linked installments ﴾a monthly payment is determined based on incomes﴿ since FY
2017. The Organization has additionally implemented a new system to support tertiary education,
which exempts or reduces tuitions and/or enrollment fees and substantially increases scholarships
grants since FY 2020.
The Organization took various kinds of measures under the COVID-19 pandemic as follows:﴾1﴿ Scholarships with interests are changed to scholarships without interests for students whose
incomes from part-time jobs significantly declined ﴾the government pays the difference in theseinterests﴿; ﴾2﴿ Category 2 scholarship loans are provided for one year at the maximum for students
who are continuously enrolled in schools due to cancellation of their job offers; ﴾3﴿ Category 2
scholarship loans are provided for one year at the maximum for students who are absent fromschool to engage in social contribution activities such as volunteers ﴾multi-level study﴿ who takechanges in study environments as an opportunity; ﴾4﴿ Scholarships are granted to students who
suffered from sudden changes in their household budgets and ﴾5﴿ Benefits are provided to
students who are financially negatively affected. The Organization also supports to improve asystem to postpone repayment due dates and to reduce financial burdens for those who havedifficulties to repay scholarship loans.

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Program to support international students
The Organization promotes to grant scholarships to international students and Japanese students
who study overseas, implement various exchange programs for international students, improvethe enrollment procedures through the Japanese university admission for international students
and collect/provide information on study abroad. JASSO also strives to enhance various businesses
to strategically accept international students and foster global human resources.
The Ministry of Education, Culture, Sports, Science and Technology and the Organization has
established a program to support students to study overseas under "TOBITATE! ﴾that means riseup﴿ Study Abroad Program, representation from JAPAN" ﴾1st Stage: FY 2014 – FY 2022﴿ that wasaddressed through public and private partnership since October, 2013, aiming to encourage all
Japanese young people with motivation and capabilities to take their own steps to study abroad
and provided non-repayable scholarships to support the youth to study abroad. The Ministry of
Education, Culture, Sports, Science and Technology and the Organization have begun recruiting
students who want to study abroad under "TOBITATE! ﴾that means rise up﴿ Study Abroad Program,New representation from JAPAN " ﴾2nd Stage: FY 2023 – FY 2027.﴿ The "New Program representing
JAPAN" with the basic concept of the "Program representation from JAPAN" has launched as a newprogram to foster human resources who create the future of Japan as "Leaders to quest the global
who make innovation happen in society" ﴾for high school students﴿ for the future or "Global leaders
who make transformation happen in society" ﴾for university students.﴿ The program has built the
momentum and strengthened support for studying abroad, targeting at students still in highschools, leading the younger generation to study overseas.

Program to support campus life for students
JASSO collects/analyzes/provides various information on student life support in order for
universities to assist students with various kinds of student life support activities. The Organization
also strives to fulfill carrier education or support students with disabilities, based on thegovernmental policies and needs from universities.
Disability Discrimination Act was revised in May, 2021 ﴾to be enforced on April 1, 2024﴿, with which it
is mandatory for private schools to provide reasonable accommodation that was changed from only
making reasonable efforts to provide it. The Organization held a seminar forunderstandings/motivation on supporting students with disabilities in specialized training colleges﴾post-secondary courses﴿ in FY 2022, aiming to promote to support more disabled students throughstriving to provide information to vocational schools.
The Organization, with the aforementioned three projects as a pillar, aims to contribute to fostering
human resources who are responsible for the next generation in society, while cooperating withthe relevant organizations such as the government and universities, as National Center forsupporting students, which provides significant infrastructures to support students' learning.
JASSO complies laws and regulations and simultaneously operates businesses through obtaining
advice from external experts to ensure transparency and fairness in its whole operations. The
Organization has a management council with external experts to receive external knowledge,
aiming to map out a mid-term plan and deliberate important matters regarding operating otherinstitutions or conducting operations. Along with which, the Organization sets JASSO Evaluation
Committee that consists of external experts based on regulations of JASSO Evaluation Committee
in order to evaluate its operational performance. Additionally, JASSO has an appropriate
governance structure since it will map out plans for a medium-term/fiscal year to achieve the22/25
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medium-term plan instructed by a competent minister, and the minister will evaluate the financial
performance in the medium-term and the fiscal year.
The Organization researches with public hearings and the results are publicized for the purpose ofcollecting information that contributes to a review on how the information on JASSO's businesses
should be provided and to examine the recognition of a new system for tertiary educational
support or the method to collect the information, aiming at high school students who want tostudy in tertiary education and their parents. Opinions about the Organization's businesses
received through the contact services that are permanently established on its website are reported
to the Operational Report Subcommittee of Business Administration Committee in which
executives and heads of respective divisions participate, and external opinions are also accepted,
for instance, to use as references to improve operations.
The Organization sets forth the following as its policy, considering the environment and society
and implements initiatives in accordance with respective policies.
The Organization's implementation plan to stipulate measures to reduce greenhouse gas
emissions in its administrative work and businesses
Policy to strive to promote the procurement of eco-friendly goods.
JASSO Action Plan ﴾an action plan to promote women to play important roles﴿
Implementation of public procurement initiatives to promote women's active participationin the Organization
Regulations on prevention of human rights infringement, including sexual harassment
Guidelines on promoting the elimination of discrimination due to disability in JASSO
JCR, based on the aforementioned, evaluates that the management in the Organization highly
prioritizes sustainability initiatives, including social issues.

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Evaluation Phase 3:
Evaluation result(Conclusion)

Social1(F)With regard to the Framework, JCR, based on JCR Social Finance Evaluation Methodology, assigned"s1﴾F﴿" for "Socialness Evaluation ﴾use of proceeds﴿ and "m1﴾F﴿" for "Management, Operation andTransparency Evaluation"; therefore, it assigned "Social 1﴾F﴿" for "JCR Social Finance Framework
Evaluation." The Framework meets the standards for the items required in Social Bond Principles,
Social Loan Principles and Social Bond Guidelines and it is consistent with concrete measures for
SDGs Goals and the governmental SGDs Goals.

Management, operation, and transparency evaluation

Social Evaluation

m1(F)

m2(F)

m3(F)

m4(F)

m5(F)

s1(F)

Social 1(F)Social 2(F)Social 3(F)Social 4(F)Social5(F)s2(F)

Social 2(F)Social 2(F)Social 3(F)Social 4(F)Social5(F)s3(F)

Social 3(F)Social 3(F)Social 4(F)Social 5(F)Not qualifieds4(F)Social 4(F)Social 4(F)Social 5(F)Not qualified

Not qualifieds5(F)Social 5(F)Social 5(F)Not qualified

Not qualified

Not qualified(Responsible analysts for this evaluation) Atsuko Kajiwara, Shintaro Arai, Katsuto Kobayashi

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Important Explanation on the Evaluation
1. Assumptions, Significance and Limitations of JCR Social Finance Framework Evaluation
JCR Social Finance Framework Evaluation, which is granted and assigned by Japan Credit Rating Agency, Ltd. ("JCR"), covers
the policies set out in Social Finance Framework, and expresses the overall opinion of JCR at the present moment regarding theappropriateness of Social Project as defined by JCR and the extent of management, operation and transparency initiatives related
to the use of proceeds and other matters. Therefore, it is not intended to evaluate the effects of specific social contributions,management and operation systems and transparency of individual bonds and borrowings to be implemented based on thesepolicies concerned. In the event that an individual bond or individual borrowing based on the said Framework is subject to a social
finance evaluation, a separate evaluation is required. In addition, JCR Social Framework Evaluation does not demonstrate social
improvement effects of individual bonds or borrowings implemented under the Framework concerned, and does not assume
responsibility for social improvement effects. In principle, JCR does not directly measure social improvement effects of proceeds
financed under Social Finance Framework although JCR confirms items measured quantitatively and qualitatively by the issuer
and/or borrower (hereinafter collectively referred to as "a fund raiser") or a third party requested by the fund raiser.
2. Methodologies used to perform this evaluation
The methodologies used in this evaluation are described in "JCR Social Finance Evaluation Methodology" on the "Sustainable
Finance/ESGs" section of the JCR website (https://www.jcr.co.jp/en/.)
3. Relationship with Acts concerning Credit Rating Business
The act of granting and assigning an assessment of JCR Social Finance Framework Evaluation is conducted by JCR as a related
business and differs from the act related to the credit rating business.
4. Relationship with Credit Ratings
The evaluation is different from the credit rating and does not commit to provide a pre-determined credit rating or make available
for inspection.
5. Third-Party Evaluation of JCR Social Finance Framework Evaluation
There are no capital or personnel relationships that may result in a conflict of interests between the evaluation parties and JCR.
Points to consider

The information contained in this document was obtained by JCR from the fund raiser and accurate and reliable sources. However, such information may be mistaken forhuman, mechanical or other reasons. Therefore, JCR makes no representation or warranty, express or implied, as to the accuracy, result, eligibility, timeliness, completeness,marketability or fitness for any particular purpose of such information, and JCR assumes no responsibility for any errors, omissions or consequences of using suchinformation. JCR shall not be liable for any loss of opportunity and extraordinary, indirect, incidental or consequential damages of any kind, including any loss of money,
which may result from any use of such information under any circumstances, whether contractual liability, tort liability, negligence or other causes of liability, and whether
such damage is foreseeable or unforeseeable. JCR Social Finance Evaluation does not express any opinion on various risks (credit risk, price fluctuation risk, market
liquidity risk or others) related to the social finance, which is the target of the evaluation. JCR Social Finance Evaluation is a comprehensive opinion of JCR at the present
time and does not represent facts nor does it make any recommendation regarding risk assessment or decisions on the purchase, sale or holding of individual bonds,
commercial paper, etc. JCR Social Finance Evaluation may be modified, suspended or withdrawn due to changes in information, lack of information or other reasons. All
rights pertaining to this document, including data from JCR Social Finance Evaluation, are held by JCR. All or part of this document, including data from JCR Social
Finance Evaluation, is prohibited from being reproduced, modified or otherwise altered without the permission of JCR.

Terminology

JCR Social Finance Framework Evaluation: the extent to which the proceeds financed based on the Social Finance Framework is appropriated for social projects as
defined by JCR, and the degree to which the management, operation, and transparency of the use of proceeds of the said Social Finance is evaluated. Evaluations are
performed on a 5-point scale, from top to bottom, using evaluation symbols of Social 1 (F), Social 2 (F), Social 3 (F), Social 4 (F) and Social 5 (F).

Status of registration as an external evaluator of sustainability finance・Ministry of the Environment: Registered as an external reviewer for issuing Green Bond・ICMA (registered as an observer of the International Capital Markets Association)
・UNEP FI: Positive Impact Financial Principles: Members of Working Group・Climate Bonds Initiative Approved Verifier

Status of registration as a credit rating agency
・Credit Rating Agency: the Commissioner of Financial Services Agency (Credit Rating) No. 1
・EU Certified Credit Rating Agency
・NRSRO: JCR registered with the following four of the five credit rating classes of Nationally Recognized Statistical Rating Organization ("NRSRO") as defined by
the U.S. Securities and Exchange Commission: (1) financial institutions, broker/dealers, (2) insurance companies, (3) general business corporations and (4) government
and local governments. In cases where disclosure is required based on Section 17g-7(a) of the Securities and Exchange Commission rules, such disclosure is attached
to a news release posted on the JCR's website (https://www.jcr.co.jp/en/.)■For further information, contact
Information-Service Department
TEL:03-3544-7013 FAX:03-3544-7026

Japan Credit Rating Agency, Ltd.
Jiji Press Building, 5-15-8 Ginza, Chuo-ku, Tokyo 104-0061, Japan
Tel. +81 3 3544 7013, Fax. +81 3 3544 7026
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