Abstract: China's student loans scheme has not yielded the expected results ever since its implementation throughout the country in 2000. This article, starting with the objective of student loans system, analyzes the existing problems of the present system. It is pointed out thatthe crux of the problems lies in the l ack of due attention to the target group in the system designing. Finally, the article proposes the guiding principles of achieving effective targeting the mea sures taken to prevent the behavioral effects of targeting.