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LCQ18: Extension of repayment period of Start-up Loans

     Following is a question by the Hon Cheung Man-kwong and a written reply by the Secretary for Education, Mr Michael Suen, in the Legislative Council today (April 22):


     From the 2008-2009 academic year onwards, self-financing institutions which have received interest-free loans from the Government under the Start-up Loan Scheme may apply for extension of the repayment period of such loans from "no more than ten years" to "no more than 20 years", if it is proven that they have financial difficulties.  In this connection, will the Government inform this Council:

(a) of the up-to-date number of institutions from which applications have been received by the authorities, the justifications for the applications, the criteria and the average time taken for vetting and approving the applications, as well as the deadline for submission of applications;

(b) of the names of the institutions whose applications have been approved, as well as the extended loan repayment period and the resultant reduction in the amount of annual repayment in respect of each case;

(c) whether it has assessed if there is room for the institutions which have been permitted to repay loans over an extended period to lower the tuition fees of their self-financing post-secondary programmes; if the assessment outcome is in the affirmative, of the details; if the assessment outcome is in the negative, the reasons for that; and

(d) whether it has assessed the financial impact on the Government of the arrangement for extending loan repayment periods; if it has, of the details; if not, the reasons for that?



(a) Institutions were invited to submit applications for extension of repayment period of Start-up Loans in December 2008.  We have received applications from a total of eight institutions.  Applicants sought to reduce financial pressure so as to deploy more resources to improve the quality of teaching and learning.

     Applications for extension of repayment period of Start-up Loan are assessed by an independent Vetting Committee.  They will make recommendations to the Secretary for Education on whether to approve the applications.  In assessing the applications, key factors considered by the Vetting Committee include financial difficulties faced by the institutions and how resources are deployed to improve the quality of teaching and learning.  It takes around four to five months to complete the vetting process.

(b) The Vetting Committee is currently assessing the applications received and the process is expected to be completed within a month.  If the applications are approved, the loan repayment periods may be extended to 20 years and the institutions' annual repayments may be reduced by about one half.

(c) In assessing applications for extension of repayment period of Start-up Loans, the main considerations of the Vetting Committee are whether the extension can effectively improve the cash flow position of the institution and how resources will be deployed to improve the quality of teaching and learning.  The level of tuition fees of self-financing sub-degree programmes is set by institutions based on situations of individual programmes.

(d) Institutions may apply for extension of repayment period of Start-up Loan up to a maximum of 20 years.  An interest rate on a no-gain-no-loss basis will be charged for outstanding loans after the first 10 years of repayment.  Extension of loan repayment period will incur some loss of interests to the Government.  Interests forgone would depend on the amounts and the repayment periods of the applications approved.  As the assessment of applications is still in process, we are not in a position to provide amount details at this stage.

Ends/Wednesday, April 22, 2009
Issued at HKT 12:01


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