LCQ21: Financial assistance and loans to post-secondary and tertiary students
23.11.2022

Following is a question by the Hon Tang Ka-piu and a written reply by the Secretary for Education, Dr Choi Yuk-lin, in the Legislative Council today (November 23): Question: Regarding the financial assistance and loans to post-secondary and tertiary students provided under the various schemes implemented by the Student Finance Office (SFO) of the Working Family and Student Financial Assistance Agency, will the Government inform this Council: (1) of the respective numbers of applications received and approved by the SFO, in each of the past five years, under the Tertiary Student Finance Scheme - Publicly-funded Programmes and the Non-means-tested Loan Scheme for Full-time Tertiary Students (the two Schemes), with a breakdown by the institution in which the applicant was studying; (2) of the respective average, lowest and highest amounts of financial assistance/loans disbursed by the SFO to the applicants under the two Schemes in each of the past five years, with a breakdown by the institution in which the applicant was studying; (3) of the respective ratios of the numbers of local students to Mainland students who made applications under the two Schemes in each of the past five years; (4) of the current number of persons who have been granted deferment of loan repayment under the various loan schemes for post-secondary/tertiary students implemented by the SFO, with a breakdown by the type of programmes (e.g. publicly-funded degree/higher diploma programmes, and self-financing degree/sub-degree programmes) that such persons were studying when they applied for the loans, and the total amount of loans for which deferment of repayment has been granted; (5) of the current respective numbers of persons who have defaulted on repayment of loans under the various loan schemes for post-secondary/tertiary students implemented by the SFO, and the penalty mechanism put in place by the SFO; and (6) in respect of the student loan schemes implemented by the SFO, whether the Government will consider making loan repayment relief arrangements for those persons who have regularly made on-time repayments, so as to alleviate their pressure from student loan debts; if not, of the reasons for that? Reply: President, The Government's policy on student finance is to ensure that no student is denied access to education due to a lack of means. The Student Finance Office (SFO) under the Working Family and Student Financial Assistance Agency currently administers five student financial assistance schemes for tertiary/post-secondary students, including the Tertiary Student Finance Scheme &ndash; Publicly-funded Programmes (TSFS), the Financial Assistance Scheme for Post-secondary Students (FASP), the Non-means-tested Loan Scheme for Full-time Tertiary Students (NLSFT), the Non-means-tested Loan Scheme for Post-secondary Students (NLSPS) and the Extended Non-means-tested Loan Scheme (ENLS), providing grants and/or loans to eligible students. Our reply to the question raised by the Hon Tang Ka-piu is as follows: (1) The numbers of applications received and approved under TSFS and NLSFT by institution in the past five academic years are set out at Annex 1. (2) The average, lowest and highest amounts of grants and/or loans disbursed to students under TSFS and NLSFT by institution in the past five academic years are set out at Annex 2. (3) Applicants of TSFS and NLSFT must have the right of abode in the Hong Kong Special Administrative Region. Alternatively, the applicant or his/her family must have resided or have had their home in Hong Kong continuously for three complete years prior to the commencement of the course. Nonâlocal students (including holders of student visas/entry permits, holders of visas/entry permits under the Immigration Arrangements for Non-local Graduates, and holders of dependant visas/entry permits which were issued to them by the Director of Immigration when they were 18 years old or above) are not eligible for the above two student financial assistance schemes. (4) To ease the cash flow burden of student loan repayers amidst the COVID-19 epidemic, the Government has arranged at the time of the second and sixth rounds of Anti-epidemic Fund the relief measures of interest-free deferral of loan repayment from April 1, 2020, to March 31, 2024 (suspension period). All student loan repayers under the five financial assistance schemes for tertiary/post-secondary students (except those defaulters against whom legal recovery actions have commenced) and those new loan repayers who would commence their loan repayments during the suspension period are provided with interest-free deferral of loan repayment automatically. In addition, the Chief Executive announced in his 2022 Policy Address a further extension of the current interest-free deferral of loan repayment for one more year until March 31, 2025 (subject to subsequent approval by the Finance Committee of the Legislative Council). As all eligible student loan repayers are automatically provided with interest-free deferral of loan repayment during the suspension period without the need to submit any application, there is no application for deferment of loan repayment from loan repayers at present. (5) Student loan borrowers with two or more consecutive overdue quarterly instalments, or six or more consecutive overdue monthly instalments, are regarded as defaulters. As of September 30, 2022, the numbers of defaulters under the five financial assistance schemes for tertiary/post-secondary students are as follows: Financial assistance scheme Number of defaulters TSFS 601 FASP 703 NLSFT 450 NLSPS 1 219 ENLS 3 323 As for the handling of defaulted student loans, generally speaking, the SFO will issue reminders to the loan borrowers concerned and their indemnifiers requesting them to settle the arrears by a specified date. For those who fail to respond to the reminders, the SFO will send SMS messages or make phone calls to contact them. Apart from urging them to settle the arrears, the SFO will also ask them whether any assistance is required. If no payment or response is received from the loan borrowers and their indemnifiers, the SFO will proceed to take legal recovery action against them by referring the cases to the Department of Justice or filing claims directly to the Small Claims Tribunal. For those defaulters who have genuine difficulties in repaying their loans, the SFO will provide them with assistance, such as deferring the loan repayment or extending the loan repayment period. Currently, those defaulters against whom legal recovery actions have not yet been taken are also eligible for the interest-free deferral of loan repayment during the suspension period from April 1, 2020, to March 31, 2024. They do not need to repay the principal and interest during the suspension period, but they are still required to repay the arrears accrued before the suspension period. (6) To alleviate the repayment burden of student loan borrowers, the Government has implemented a number of improvement measures in respect of loan schemes for tertiary/post-secondary students. These improvement measures include lowering the interest rate of the means-tested loan schemes from 2.5 per cent to 1 per cent per annum, and reducing the risk-adjusted-factor rate for determining the interest rate of the non-means-tested loan schemes from 1.5 per cent to zero. The prevailing interest rate of the non-means-tested loan schemes is 1.395 per cent per annum. On loan repayment, the standard loan repayment period has been extended to 15 years, and the repayment arrangement has also been revised from quarterly instalments to monthly instalments. With the above measures, the average monthly repayment amounts of loan borrowers of means-tested loans and nonâmeans-tested loans are around $460 and $710 respectively. On the other hand, to ease the financial burden of newly graduated student loan borrowers and allow them more time to secure a stable job, they are given the option to commence loan repayment one year after completion of their studies. Student loan borrowers who have proven difficulties in repaying their loans on grounds of financial hardship, serious illness or further full-time studies may apply for interest-free deferment of loan repayment for a maximum of two years, hence extending the total repayment period to 17 years. In addition, to ease the cash flow burden of student loan borrowers amidst the epidemic, the Government has provided interest-free deferral of loan repayment for four years since April 1, 2020. On top of that, an extension of the deferral arrangement for one more year until March 31, 2025, was announced in the 2022 Policy Address. Hence, eligible student loan repayers do not need to repay the principal and interest during the five-year suspension period, and their loan repayment period will also be extended correspondingly (i.e. the entire loan repayment period can be up to 22 years). The above measures can adequately alleviate the financial burden of student loan repayers.