China has issued a circular on waiving interest and allowing deferred repayment of state-subsidized student loan principal, the Ministry of Finance said Wednesday.

College students graduating in and before 2023 are exempt from paying the interest on loans for this year, according to the circular jointly released by the ministry and three other government organs.

These students can also apply to defer this year's repayments of the student loan principal for one year, said the circular, adding that no penalties or compound interest will be charged.

The measures followed a decision made in a recent State Council executive meeting to continue the policy of interest-free and deferred principal repayments for government-subsidized student loans.

The moves aim to alleviate the burden on college graduates from families with financial difficulties and improve employment services for the students, the circular added.