Tackling student loans

PUBLISHED : Thursday, 10 November, 2011, 12:00am
UPDATED : Thursday, 10 November, 2011, 12:00am


The student loans agency is planning to restrict the amount of money that students receive, lower interest rates and extend the repayment period to try to sort out the problem of people not paying back loans.

The Student Financial Assistance Agency said the problem of bad debts is increasingly worrying, despite a healthy economy.

Up to the last academic year, about 13,000 people owed the government a total of more than HK$200 million. The rate of people not paying back loans stands at 13 per cent.

The agency said the new measures aim to ease the pressure on students who owe money and provide incentives for them to make repayments.

Under a proposal, 26,000 students will have their interest rate on loans lowered from 3.17 per cent a year to 1.67 per cent, and the repayment period lengthened from 10 to 15 years.

The extended repayment period only applies to new borrowers from the 2012-2013 school year.

Students can also apply for a two-year interest-free buffer which means they don't have to make any repayment in this time.

This would extend the total repayment period to 17 years.

To prevent excessive borrowing, there are plans to restrict the amount students can borrow to HK$300,000.