bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

urlAlias

moreOnThisArticles

sponsorType

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

Samuel Chan

The Hong Kong government’s student loan scheme is open to exploitation, the Ombudsman said, highlighting 13,000 default cases recorded over the past three years involving HK$200 million in unpaid debts at its peak.
Over half of the unpaid debts came from the extended non-means-tested loan scheme, which offers loans at lower-than-market rates – mostly to the working population to enrol in part-time courses.
The scheme, offered by the Working Family and Student Financial Assistance Agency, also accounted for between up to 69 per cent of default cases between 2011 and last year.
The remaining default cases came from the non-means-tested loan scheme for tertiary students.
The agency loaned out HK$1 billion to HK$1.3 billion annually over the past three years.
In 2013-14, the extended scheme accounted for about 70 per cent of default cases, and 40 per cent of 2,128 default cases that involve an amount of HK$100,000 or more.
Each Hong Kong resident is entitled to a maximum lifetime loan limit of HK$325,700.
The agency was also slammed by the Ombudsman for its loose vetting of loans applicants, with only 0.21 per cent, or 16 applicants, to the extended scheme asked to attend an interview in 2012-13. Despite an increase of the figure to 5.42 per cent last year, or 391 applicants, the Ombudsman said it was “still a small number”.
As of July last year, the agency had taken legal action on 7,383 default cases out of a total of 11,106, while about 90 per cent of 7,434 default cases overdue for 12 months or more had been taken to court by the end of last year.
Speaking at a media briefing this morning, Ombudsman Connie Lau Yin-hing called on the agency to forward negative credit data of the more serious defaulters to credit reference agencies to deter potential non-payers.
“Most [applicants for the extended scheme] have a job and should be able to repay the loans,” Lau said. “There should be specific measures in place to minimise the risk of default [associated with the extended scheme].”
The Ombudsman suggested other improvements to the system, including establishing a limit on the number of courses and loan applications students can file; a more stringent vetting process to be achieved by hiring extra staff; and computerisation of the vetting process to speed-up applications.


HK$200m student loan defaults show system is open to abuse, Hong Kong Ombudsman says

Defaults were recorded on some 13,000 student loans in the last three years. Photo: May Tse

News

Hong Kong

The Hong Kong government’s student loan scheme is open to exploitation, the Ombudsman said, highlighting 13,000 default cases recorded over the past three years involving HK$200 million in unpaid debts at its peak.
