SENDAI—Thirteen years after the Great East Japan Earthquake and tsunami disaster, many survivors are struggling to pay back public loans designed to help low-income earners rebuild their lives.

A truck driver in his 40s who lives here borrowed 1.5 million yen ($10,000) in February 2012, a year after the magnitude-9 quake struck the northeastern Tohoku region.

More than a decade after the disaster, the man is still saddled with about 1.2 million yen in debt, including interest payments.

While he was originally scheduled to pay off his loan by 2025, he will have to pay back for the next 20 years or so.

“While the cost of living keeps going up, salaries aren’t likely to rise,” he said. “I can’t afford to prepare for old age.”

The disaster relief loan program is funded by the central and prefectural governments. Municipal governments are responsible for extending and collecting loans.

Those who have been injured in a natural disaster or whose homes or household goods have been damaged are eligible to apply for a loan.

For victims of the Great East Japan Earthquake, these loans are free of interest—except for a 1.5-percent interest charged to those without a guarantor.

After the disaster, the program made about 29,700 loans worth 52.53 billion yen to affected people in nine prefectures, mainly Miyagi, Fukushima and Iwate, according to the Cabinet Office.

As of September, 9,700 loans, or about 35 percent of the loans that had come due, had not been repaid at least partially--totaling about 5.76 billion yen in arrears.

In principle, the loans must be repaid within 13 years with a grace period of six years.

Sendai, which accounts for half of the total number of loans made, lent out about 23.3 billion yen.

As of September, 4,700 loans, or about 30 percent of the loans due in the city, had not been paid in full, amounting to about 2.68 billion yen in arrears.

The program has annual income limits, requiring a single-person household to make less than 2.2 million yen a year to be eligible for a loan, meaning that many borrowers are in a low-income bracket.

The truck driver lives in an apartment in Sendai with his wife and two children, one in elementary school and the other in junior high school.

While his home escaped serious damage in the 2011 disaster, day-labor jobs became hard to find and his savings dried up.

In 2018, he received a collection letter from the city government that called for about 110,000 yen to be repaid over six months.

He consulted with the Sendai Bar Association and got his monthly payment reduced to 5,000 yen. 

The man earns 180,000 yen a month, while his wife makes 50,000 to 80,000 yen in part-time jobs.

But he said that little money is left after paying for his children’s education and for medical treatment for rheumatism and a hernia, which he developed after the disaster, on top of 50,000 yen in rent.

“I am just trying to survive at the moment,” he said.

In principle, borrowers are exempted from their debts only when they die or become bankrupt.

Lawyers have repeatedly called on the government to improve the disaster relief loan program.

In 2021, the Sendai Bar Association demanded that loan forgiveness be expanded to those on welfare and elderly people whose pension payments are below a certain amount.

“The current system, which continues to demand debt payments from those in need, is not truly helping disaster victims,” said Susumu Tsukui, a lawyer who sits on the disaster reconstruction assistance committee of the Japan Federation of Bar Associations.

Eiichi Yamasaki, a professor of disaster legislation at Kansai University, said that providing cash handouts is a better policy option to help disaster victims rebuild their lives.

He proposed an across-the-board benefit of 100,000 to 200,000 yen per household for living expenses and possible additional benefits depending on individual needs, such as medical treatment and reconstruction of homes.

“If we consider the cost of loan collection and the burden on disaster victims, we should adopt a benefit system to provide support to those who really need it,” Yamasaki said.

(This article was written by Jin Hirakawa and Hideki Motoyama.)