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Following is a question by the Hon Cheung Kwok-che and a written reply by the Secretary for Education, Mr Eddie Ng Hak-kim, in the Legislative Council today (January 30):
Question:
It was reported in the press on October 17, 2012 that the Student Financial Assistance Agency (SFAA) had repeatedly attempted to recover a student loan from a social worker with disabilities. However, the social worker, who worked in a sheltered workshop with a monthly salary of some $500 only, was incapable of repaying her loan of $100,000. Being rejected time and again by SFAA for waiver of repayment of her loan, she had to bear undue mental stress persistently. Under the prevailing policy, SFAA will consider writing off student loans only under the following circumstances: the debtor has passed away; efforts to contact the debtor and his/her indemnifier(s) have failed; or writing-off action is advised by the Department of Justice (DoJ). Regarding the writing off of student loans, will the Government inform this Council:
(a) whether the authorities will exercise discretion in handling the aforesaid case to waive the borrower from repaying her loan; if they will, of the details; if not, the reasons for that;
(b) of the respective numbers of applications submitted to SFAA for waiver of repayment of loans in each of the past five years and the justifications for such applications, as well as the numbers of loans written off by SFAA and the amounts involved, and set out such information in a table.
(c) of the respective numbers of borrowers with permanent disabilities and those with disabilities granted waiver of repayment of their loans by SFAA in each of the past five years and the amounts involved;
(d) of the details of the time limit and the procedure set by the authorities for making efforts to contact a debtor and his/her indemnifier(s) and recover loans until such efforts have failed; how the authorities handle cases in which the debtors and their indemnifiers can eventually be reached after the loans have been written off;
(e) of the justifications based on which DoJ had advised writing-off actions in the past five years and the procedure involved;
(f) given that the authorities advised in July 2012 that a study on the existing policy on writing off loans was being conducted to explore ways of handling some special cases, and the task was expected to complete by the end of 2012, of the content of the study and whether it covers a review of granting waiver of repayment of loans for borrowers with disabilities and provision of special assistances to them; if so, of the details; if not, the reasons for that; and the time required for conducting and completing the study as well as the details and results of the public consultation conducted on this subject; and
(g) whether the authorities will make public the results of the study; if they will, when such results will be released?
Reply:
President,
In handling loan repayment from student loan borrowers, SFAA has been making every effort to assist individual loan borrowers who have difficulties in repaying their loans and has put in place an effective mechanism to provide such assistance. If loan borrowers are unable to repay their loans owing to financial hardship, further full-time studies or serious illness, they may apply to SFAA for deferment of loan repayment. SFAA will, on the basis of individual merits, consider approving deferment of loan repayment, temporary adjustment of the quarterly repayment amount or extension of repayment period to relieve loan borrowersˇ¦ financial burden. In the 2011/12 academic year, SFAA received a total of 10 034 deferment applications and 86% of them were approved. The aforesaid case reported in the newspaper has already been granted deferment of loan repayment in accordance with the prevailing policy.
Noting that some individual loan borrowers are still unable to repay their loans after repeated deferment of loan repayment due to special circumstances, SFAA has revised its write-off policy in December last year. Apart from reasons such as decease of loan borrower, if a loan borrower is permanently unfit for work on account of severe disability and can provide sufficient information to establish that he/she meets the definition of "100% disability" of the Social Welfare Department, SFAA will, on the basis of individual merits, consider approving the application for waiver of loan repayment on compassionate ground. For the aforesaid case, SFAA has contacted the loan borrower to discuss and follow up on her application for waiver of loan repayment.
(b) As student loans are funded by public money, SFAA has responsibility to make every effort to recover outstanding loans in order to safeguard the proper use of public money and to avoid abuse of the loan schemes. In the past five years, SFAA handled a total of 268 write-off cases amounting to about $10 million. The major reasons for writing off loans are decease of loan borrowers or upon the advice of DoJ. Details are set out in the table as listed at Annex.
(c) In the past five years, SFAA received three applications for waiver of repayment of loans from loan borrowers on the ground of permanent disability. SFAA has approved, in accordance with the deferment mechanism, the deferment of their loan repayment to help them tide over their difficult times.
As mentioned above, the revised write-off policy had been implemented in December last year. SFAA is now reviewing the above three cases. If it is confirmed that they meet the revised criteria for write-off, SFAA will write off the loans concerned on a discretionary basis.
(d) SFAA endeavors to make every effort to recover the outstanding loans from the defaulters and their indemnifiers. Where all efforts to contact the loan borrower and his/her indemnifier(s) have failed, and the loan proves irrecoverable, such as the lapse of time limit for taking recovery actions under the Limitation Ordinance (i.e. six-year period for loan borrowers or 12-year period for indemnifiers), SFAA will consider writing off the loan concerned.
As student loans are funded by public money, in order to safeguard public money, if the loan borrower or his/her indemnifier(s) can be reached after the loan has been written off, SFAA will initiate a new round of debt recovery actions against them unless the time limit for taking debt recovery actions under the Limitation Ordnance has lapsed or both the loan borrower and his/her indemnifier(s) are bankrupt.
(e) DoJ will advise SFAA to consider writing off loans under the following circumstances:
(i) if the debt is unlikely to be recovered despite all appropriate legal actions have been taken against the loan borrower and his/her indemnifier(s) by DoJ;
(ii) if the loan borrower and his/her indemnifier(s) have been discharged from bankruptcy and no further dividend will be distributed to SFAA or the distributed dividend is unable to fully settle the outstanding loan; or
(iii) the time limit for taking debt recovery actions against the loan borrower and his/her indemnifier(s) under the Limitation Ordinance has lapsed.
In the past five years, the main reason for DoJ to advise SFAA to consider writing off the loans is bankruptcy of both the loan borrower and his/her indemnifier(s). The bankruptcy applications were not petitioned by the Government and were initiated by the student loan borrowers for reasons not necessarily related to student loans.
(f) SFAA conducts regular reviews on the policy on recovering outstanding loans and the related write-off policy with a view to striking a better balance between safeguarding public money and assisting loan borrowers with repayment difficulties. SFAA has explored ways of handling some special cases, such as loan borrowers suffering from severe illness or disabilities, and has considered, without compromising the integrity of the loan schemes, whether there should be discretionary waiver of loan repayment for these loan borrowers upon application. In the course of the study, SFAA has taken account of the views on easing the repayment burden of student loan borrowers collected during the public consultation on the Review of the Non-means-tested Loan Schemes conducted earlier. SFAA has also studied in detail cases involving loan borrowers who suffer from severe illness or disabilities and have applied for waiver of loan repayment or have been granted prolonged deferment of loan repayment. As mentioned above, SFAA had completed the above study and revised the policy on writing-off loans on compassionate ground in December last year.
(g) SFAA has promulgated the revised write-off policy at its website. As the revised policy has been implemented, SFAA will examine the applications for deferment of loan repayment on the grounds of serious illness or disability in hand and will contact the loan borrowers concerned to grasp their updated situation. If it is established that the loan borrower meets the revised criteria for write-off, SFAA will approve his/her application for waiver of loan repayment on compassionate ground.
Ends/Wednesday, January 30, 2013
Issued at HKT 16:03
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