Some women have to submit images of themselves nude, or performing lewd acts, as collateral, and threatened that they will be posted online if debts are not paid.
Reuters has reviewed a file of so-called "naked collateral," videos and pictures of more than 160 naked college women holding their identification cards or IOUs.
Jiedaibao, the online finance firm named on the IOUs, said in an online statement that it was merely a "money transfer channel" for lenders and borrowers, and did not request "naked collateral". Reuters could not reach Jiedaibao for comment.
Collection is also often enforced by violent thugs, according to parents and students.
"It was terrifying," said a first-year college student in Henan who owed 70,000 yuan, describing threats from loan collectors. "Some boys were tied up and beaten." The student said she had to drop out of university.
Fraudulent applications, in which students' personal details were misappropriated by others seeking loans, are also common, according to police reports.
In Zheng's case, the identities of 28 other students were used by him to secure loans, according to a lawyer who advised his family. The lawyer declined to be named as he was not authorized to speak with foreign media.
Return of state banks
The student loan problem is just a small part of China's massive financial system, but public anger over the practices of loan companies has prompted the government to act.
Guo Shuqing, chairman of the China Banking Regulatory Commission, said at a meeting of the regulator in April that campus loan companies had a "very bad social influence", according to an official with knowledge of the matter.
Two months later, the banking regulator announced the suspension of new loans by the companies, citing practices like usury, violent debt collection and naked collateral.
Fifty-nine campus lenders had left the market as of June 23rd, according to the People's Daily newspaper, citing statistics by Yingcan Consultancy. But there are believed to be dozens more still operating, according to industry sources and a review of finance companies websites.
Some loan companies are rebranding themselves as credit services to "young people", according to their websites.
It is not clear if the ban will become permanent.
Zeng Qinghui, co-founder of Wheat Finance and chief executive of Mingxiaodai (Shanghai) Financial Technologies Co, one of the largest online campus lenders, said his company had stopped making new loans to students for now. Mingxiaodai has extended nearly 10 billion yuan in loans since it was founded in 2013, he said.
Zeng defended his company and the industry, saying that most companies operated ethically and charged an annualised interest rate of 15-20 percent.
The state banks, meanwhile, have already returned to some campuses.
In September, Industrial and Commercial Bank of China announced it had started to offer loans to university students in 10 cities. And in May, China Construction Bank (CCB) and Bank of China announced loan programmes in selected universities.
CCB does not require collateral and allows students to apply for a maximum of 50,000 yuan, charging an annual rate of 5.6 percent. CCB said the bank was using a "rigorous internal control and compliance system to effectively prevent risks."
ICBC also does not require collateral, capping student loans at 20,000 yuan. ICBC declined to comment. BOC did not respond to a request seeking comment. The banking regulator did not respond to a faxed request for statistics and comment.
The Fallout
Zheng Xianqiao, the father of the student who committed suicide, is still reeling from his son's tangles with the loan companies.
Zheng, a farmer, used his life savings of 120,000 yuan to help pay back part of his son's loans.
"Campus loan companies ruined my child's wonderful life," he said. "We spent everything we had in the family to repay his debt." But, he said, "in the end he was still hounded to death by campus loans."
▼ Foreigner living in China 10 days vs. 10 years