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Following is a question by the Hon Ip Kin-yuen and a written reply by the Secretary for Education, Mr Eddie Ng Hak-kim, in the Legislative Council today (May 20):
Question:
The Office of The Ombudsman issued a direct investigation report on March 24 this year, pointing out that the default situations of the non-means-tested loan schemes administered by the Working Family and Student Financial Assistance Agency (WFSFAA), especially that of the Extended Non-means-tested Loan Scheme (ENLS), are serious. The Office of The Ombudsman recommended that WFSFAA should consider afresh forwarding the negative data of the defaulters of the more serious cases to credit reference agencies for greater deterrent effect. It has been reported that the Office of the Privacy Commissioner for Personal Data (OPCPD) has objected to this proposal, pointing out that TransUnion Limited (TransUnion) is the only consumer credit reference agency in Hong Kong and it is not subject to monitoring by the Hong Kong Monetary Authority. WFSFAA will have no control over the impacts of the practice of forwarding the defaulters' very personal and sensitive data to TransUnion on the defaulters. In this connection, will the Government inform this Council:
(1) in each of the past five school years, of the respective numbers of people pursuing the following types of courses who (a) applied for loans and (b) were granted loans under ENLS, as well as (c) the number of the relevant borrowers who defaulted on repayment of the loans (set out the breakdown by school year in tables of the same format as Annex 1):
(i) courses accredited by the Hong Kong Council for Accreditation of Academic and Vocational Qualifications,
(ii) courses offered by institutions (including their schools of professional and continuing education) by virtue of their self-accrediting status or Programme Area Accreditation status,
(iii) courses under Yi Jin Diploma,
(iv) courses covered by the Financial Assistance Scheme for Designated Evening Adult Education Courses,
(v) training and development courses provided or funded by local statutory bodies, and
(vi) registered courses and exempted courses under the Non-local Higher and Professional Education (Regulation) Ordinance (Cap. 493);
(2) in each of the past five school years, of the respective numbers of working people who applied for and were granted loans under ENLS, as well as the respective percentages of this type of borrowers defaulting on repayment of the loans;
(3) whether WFSFAA will review the eligibility criteria for loans under ENLS to ensure that only people with genuine needs will be granted loans; if WFSFAA will, of the details; and
(4) how WFSFAA will respond to the views of OPCPD, and whether it will adopt the aforesaid recommendation made by the Office of The Ombudsman despite the objection raised by OPCPD; if WFSFAA will, of the reasons for that?
Reply:
President,
(1) The Government completed a review of the Non-means-tested Loan Schemes (NLS) in 2012 and implemented a package of measures to improve the operation of the schemes, including the revision of the course eligibility criteria of the Extended Non-means-tested Loan Scheme (ENLS). Since the 2012/13 academic year, the number of categories of eligible courses under ENLS has been revised from nine to five categories.
The number of applications, the number of students receiving loans and the number of defaulters (Note) in respect of eligible courses/course providers under ENLS from the 2012/13 to 2014/15 academic years are set out at Annex 2. The information pertaining to the 2010/11 and 2011/12 academic years is provided in Annex 3.
(2) ENLS provides non-means-tested loans to students pursuing specified post-secondary/continuing and professional education courses to meet their tuition fees. Eligible courses cover part-time and full-time courses. Eligible applicants, regardless of their employment situation, can submit their applications. We do not maintain information on the distribution of loan applicants, applicants with loans approved and defaulters by employment situation.
(3) Applicants who meet the eligibility criteria under ENLS and pursue eligible courses can apply for ENLS loans to meet their tuition fees.
Prior to the 2012/13 academic year, ENLS covered a wide and diverse range of courses, including continuing and professional education courses provided by registered schools, non-local universities and recognised training institutions in Hong Kong. Some of them were not locally-accredited and the quality of the courses varied. As mentioned above, the Government completed a review of NLS in 2012 and has tightened the requirements of eligible courses under ENLS by restricting courses on the Register of Eligible Courses to those with a reasonable degree of quality assurance since the 2012/13 academic year. Under the existing course eligibility criteria, only those who pursue the courses that meet the specified eligibility criteria can apply for loans under ENLS. This helps eliminate unscrupulous course providers and courses without quality assurance, prevent abuse of the loans, significantly reduce loan fraud and lower the credit risk of ENLS, and ensure the proper use of public funds.
(4) We welcome the recommendation of the Office of The Ombudsman that the Government should further discuss with the Privacy Commissioner for Personal Data (PCPD) with a view to implementing the proposal of providing negative credit data of the more serious defaulters to a credit reference agency (CRA) as soon as possible to strengthen the deterrent effect on defaulters. We agree with the Office of The Ombudsman that the current repayment arrangement of NLS is already very generous. To ensure proper management of public funds, we should devise effective measures to curb serious default cases involving relatively large outstanding amounts and longer default periods, and in which defaulters do not have sufficient grounds to apply for deferring loan repayment. It is a long established practice for private financial institutions to forward the credit data of debtors to CRA and this has a strong deterrent effect on the serious defaulters who have to bear the consequences of having a negative credit record. The public at large also understands how that practice operates. Therefore, in the overall public interest, we consider that in line with the practice adopted by banks and financial institutions to prevent excessive lending in the private sector, the negative credit data of the relatively more serious student loan defaulters (for example, loan borrowers who owe more than $100,000 and have ceased repayment for more than a year) should be forwarded to CRA provided that the requirements under the Code of Practice on Consumer Credit Data are complied with. This would deter student loan borrowers from defaulting loan repayment and prevent default involving government loans (hence public money). This can also convey the positive message of responsible financial management to students.
Student loans are unsecured and involve a substantial amount of public money. There is a need to adopt more effective deterrent measures to tackle the student loan default problem. We note the concerns of PCPD on the proposal and will continue to exchange views with PCPD with a view to addressing his concerns in order to implement the recommendation of providing negative credit data of the more serious defaulters to CRA in accordance with the law.
Note: Student loan borrowers who fail to repay two or more consecutive quarterly instalments/six or more consecutive monthly instalments are considered as defaulters. These do not include borrowers whose applications for deferment of repayment (e.g. due to financial hardship, pursuing further full-time studies or serious illness) have been approved.
Ends/Wednesday, May 20, 2015
Issued at HKT 16:31
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