Student loan agency criticised over HK$608m in default arrears

The Student Financial Assistance Agency has been criticised by the Director of Audit for slow loan recovery work, leading to default arrears totalling more than HK$608 million.

The audit report put the agency, which administers tertiary students' financial assistance schemes, under intense scrutiny. It singled out a series of shortcomings including wrong assessment of loan amounts, failure to promptly recover outstanding loans and insufficient action to deter applicants from providing inaccurate information.

The report covered five means-tested and non-means-tested financial assistance schemes for post-secondary and tertiary students.

It stated that the number of defaulters who failed to repay two or more consecutive instalments and had not applied for repayment deferment had risen by 35 per cent from 9,769 in 2007 to 13,263 this year. The defaulters from the five financial assistance schemes owed a total of HK$608.9 million, including principal, interest and surcharges.

After failed bids to recover loans from defaulters, the agency was also found to have been slow to refer the cases to the Department of Justice.

The government is entitled by law to collect outstanding student loans within six years of the due date of the first overdue instalment. The report showed that 114 cases, with a total loan amount of HK$5.7 million, would soon be approaching the expiry date of March next year.