Since Prime Minister Junichiro Koizumi initiated structural reforms, the research system in Japan has prepared for extensive and rapid changes (see Nature 412, 364; 2001). In August, Koizumi's cabinet proposed a reduction in the national scholarship fund managed by the Japan Scholarship Foundation (JSF). The main components of the plan, to be implemented by 2005, are a reduction in interest-free loans, transfer of low-interest (3% per year) loans to the private sector, and abolition of repayment exemptions for scientists in the public research sector. Last month, abolition of JSF itself was added to this plan. In the budget plan for fiscal year 2002, there is a proposal to cut the number of interest-free loans and to reduce the total JSF budget by 9.9%.

In 2000, one-third of the graduate student population (75,290) received JSF scholarships and 66% of scholarship students received interest-free loans. The new scheme will hamper the ability of students to cover living expenses because most scholarship students will have to repay loans with interest, which could reach more than ¥6 million (US$50,000) by the time they leave graduate school.

Like the merger of Japan's three main space programmes and research institutions (see Nature 412, 843; 2001), the new proposal has shocked researchers and students.

The national scholarship system in Japan is poor compared with those in the United States and the United Kingdom. For example, there are few private scholarships, and the average JSF scholarship (about ¥1.2 million or US$10,000 a year) does not cover tuition and living expenses. A graduate science student on a stipend could expect roughly US$15,000–20,000 per year plus payment of tuition fees in the United States or £10,000 (US$15,000) a year in the United Kingdom — though of course there is competition for these. But in Japan, most students work part time and/or depend on their parents' financial support to supplement meagre government support.

Even so, JSF scholarships are the major source of funding for graduate students. One institute that aids promising young researchers, the Japan Society for the Promotion of Science, is increasing its numbers of PhD fellowships. But currently, only 5% of PhD students are recipients. In June, the government announced a plan to improve the stipend system, winning approval from graduate students. Not only has this plan not yet taken shape, however, but a reduction is already being implemented.

A national scholarship scheme that burdens graduate students will impede the progress of research in Japan. I foresee a time when only the rich can attend graduate school and many promising students will be excluded. Not only will students lack opportunity, but our country will be unable to maintain the quality of its research. If Japan wants to maintain and even advance its status in science and technology, it should expand rather than reduce financial aid for graduate study. The government should remember that although national investment in education and research shows no short-term results, it is a wise long-term investment.