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The Government is inviting public views on the improvement proposals put forward under Phase 2 public consultation to improve the operation of the non-means-tested loan schemes administered by the Student Financial Assistance Agency (SFAA).
A Government spokesman said today (November 14), "Having considered the views received during Phase 1 public consultation held between March and June 2010 on various issues relating to the operation of the non-means-tested loan schemes, the Government has drawn up a package of 10 improvement proposals and will be inviting public views from today until February 29, 2012."
The 10 proposed measures aim to (i) ease the repayment burden of student loan borrowers; (ii) reduce excessive borrowing of loan borrowers and ensure the quality of eligible courses; and (iii) tackle the student loan default problem more effectively. They are -
Ease the repayment burden of student loan borrowers
(1) Reduce the risk-adjusted factor rate of the three schemes from 1.5% to zero, and review the situation after three years;
(2) Extend the standard repayment period of non-means-tested loans from 10 years to 15 years;
(3) Relax the deferment arrangements such that those borrowers whose applications for deferment have been approved would be allowed an extension of loan repayment period without interest during the approved deferment period, subject to a maximum of two years;
(4) Revise the repayment interval from quarterly to monthly basis;
Reduce excessive borrowing of loan borrowers and ensure the quality of eligible courses
(5) Cap the loan amount in respect of each programme at the level of tuition fee payable for all non-means-tested schemes;
(6) Impose a life-time loan limit, with annual price adjustment mechanism;
(7) Remove the age limit from the relevant non-means-tested loan scheme;
(8) Suitably revise the course eligibility criteria to restrict the eligible courses to those with a reasonable degree of quality assurance;
Tackle the student loan default problem more effectively
(9) Sharing the negative data of defaulters with the credit reference agency under clearly defined circumstances; and
(10) Requiring the more mature first-time loan borrowers to produce credit reports for assessment of credit worthiness.
The spokesman said, "The package of proposals can significantly reduce the monthly payment of all 90 000 borrowers by about 40%. At the same time, the proposals aim to suitably prevent excessive borrowing, thereby reducing default.
"There are around 13 000 defaulters involving over $200 million in arrears. Our proposal to temporarily reduce the risk-adjusted factor to zero will effectively mean that the loss arising from irrecoverable default loans would have to be absorbed by taxpayers. With the continued development of the self-financing post-secondary sector, the number of borrowers and the amount of loans might increase over time. We consider that there is a need to prevent the default situation from worsening and to tackle the minority share of borrowers who default without reasonable cause. We therefore propose to adopt additional measures, which include exploring whether we could share the negative data of defaulters with the credit reference agency under clearly defined circumstances, as a deterrent against prolonged defaulting."
The Government also proposes to make related improvements to the Financial Assistance Scheme for Post-secondary Students, a means tested financial assistance scheme, in order to enhance support for needy students. The specific proposals are -
(a) Relax the age limit from 25 to 30;
(b) Remove the requirements/restrictions on prior academic qualification for the purpose of applying for assistance; and
(c) Remove the repayment requirement of grants for those students who fail to complete the programme and attain the intended qualification within the prescribed period.
The spokesman said, "We now invite views from the public on the above improvement measures. We would collate and consider the views received with a view to finalising and implementing the package of improvement proposals to the non-means-tested loan schemes in phases from the 2012/13 academic year onwards."
The non-means-tested loan scheme came into operation in 1998/99 academic year to provide an alternative source of finance to tertiary students who did not wish or failed to go through the means test as required under the financial assistance scheme concerned. Its ambit has been expanded over the years.
At present, SFAA administers three non-means-tested loan schemes - one for full-time students pursuing publicly-funded post-secondary programmes, one for full-time students pursuing self-financing locally-accredited post-secondary programmes and one for students pursuing an extensive range of continuing and professional education courses. In the 2010/11 academic year, a total of about $1.23 billion was disbursed under the three non-means-tested loan schemes for around 26 400 students. There are now around 142 500 active non-means-tested loan accounts with an outstanding loan principal of about $6.5 billion.
As at end of 2010/11 academic year, there were about 13 000 defaulters under the three non-means-tested loan schemes. The default rate was over 13%, the amount in arrears was $213 million and the total outstanding amount was about $652.7 million.
Details of the improvement proposals are available on a dedicated website on the Education and Training Cluster of the GovHK portal (www.gov.hk/en/residents/education/financialassistance/postsecondary/nlsreview.htm) and the website of SFAA (www.sfaa.gov.hk). Members of the public are invited to send in their views on or before February 29, 2012 by -
Online survey form: www.nlsreview.hk
Post: NLS Review Team, Non-means-tested Loan Scheme Section, Student Financial Assistance Agency, 12/F Cheung Sha Wan Government Offices, 303 Cheung Sha Wan Road, Kowloon
Fax: 2110 4716
Email: nlsreview@sfaa.gov.hk
Ends/Monday, November 14, 2011
Issued at HKT 21:01
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