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LCQ14: Repayment of student loans

     Following is a question by the Hon Gary Fan and a written reply by the Secretary for Education, Mr Eddie Ng Hak-kim, in the Legislative Council today (November 7):


     I have received a request for assistance from a member of the public, who said that he had been granted loans by the Student Financial Assistance Agency (SFAA) when he attended a publicly funded undergraduate programme from 2001 to 2004; and he was subsequently issued a permanent Registration Card for People with Disabilities by the Labour and Welfare Bureau because of brain disease.  In the past few years, SFAA had all along rejected his application for waiver of repayment of loans on grounds of permanent disability and incapacity.  In this connection, will the Government inform this Council:

(a) whether SFAA has formulated any criteria for waiving repayment of loans; if it has, of the details, and whether applicants holding Registration Cards for Persons with Disabilities is one of the criteria; if not, the reasons for that;

(b) of the number of applications received by SFAA from loan borrowers in the past five years for waiver of repayment of loans on grounds of incapacity or permanent disabilities; and

(c) whether SFAA will review its existing mechanism and consider waiving repayment of loans by those people mentioned in (b); if it will, when it will complete the review; if not, of the reasons for that?



(a) It is the Government's student finance policy to ensure that no student is denied access to education due to lack of means.  Eligible students may, depending on their situations, apply to the Student Financial Assistance Agency (SFAA) for assistance in the form of grant and/or loan to pay for their tuition fees, academic expenses and/or living expenses.  Loan borrowers are required to repay their loans upon completion or cessation of studies in accordance with the terms for the loans.

     SFAA appreciates that individual loan borrowers may have difficulties in repaying their loans and therefore has put in place an effective mechanism for handling such situations.  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 borrowers' financial burden and help them tide over the difficulties.  In the 2011/12 academic year, SFAA received a total of 10 034 deferment applications.  Of them, 86% were approved.

     As student loans are funded by public money, SFAA has to consider each write-off case cautiously in order to safeguard the proper use of public money.  Under the prevailing policy, SFAA will only consider writing off student loans under the following circumstances:

(i) on compassionate grounds if the debtor (i.e. the student loan borrower) has passed away;  
(ii) where all efforts to contact a defaulter and his/her indemnifier(s) have failed, and the loan proves irrecoverable; or
(iii) where write-off action is advised by the Department of Justice.

(b) In the past five years, SFAA received three applications for waiver of repayment of student loans from loan borrowers on the grounds of incapacity or permanent disabilities.  SFAA has, in accordance with the prevailing deferment mechanism, approved the deferment of their loan repayment to help them tide over their difficult times.

(c) Loan borrowers suffering from illness or disabilities may apply for deferment of loan repayment through the existing mechanism if they encounter difficulties in repaying their loans.  In order to ease the repayment burden of loan borrowers, starting from the 2012/13 academic year, the Government has reduced the interest rate of means-tested living expenses loans from 2.5% to 1% per annum and that of non-means-tested loans from 3.174% to 1.674% per annum (subject to review after three years).  The new interest rates took effect from July 1, 2012.  The Government has also extended the standard repayment period for means-tested and non-means-tested loans from five and ten years respectively to 15 years.  Besides, the deferment arrangement has also been relaxed.  Loan borrowers whose deferment applications have been approved would be allowed an extension of the loan repayment period without interest during the approved deferment period, subject to a maximum of two years, meaning that their entire repayment period can be up to 17 years.  Loan borrowers who have difficulty in repaying their loans would benefit from these measures.

     Separately, SFAA is exploring ways of handling some special cases, such as loan borrowers suffering from severe illness or disabilities, and would consider, without compromising the integrity of the loan schemes, whether there should be discretionary write-off of the loans of these loan borrowers upon application.  The study is expected to be completed by the end of this year.

Ends/Wednesday, November 7, 2012
Issued at HKT 12:53


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