THOUSANDS of Hong Kong-born students who have taken permanent residency in Australia to study at university will lose access to financial assistance unless they become Australian citizens within three years. Hong Kong and other overseas-born students who are permanent residents, but not Australian citizens, will also be required to pay the yearly A$2,500 (HK$14,350) Australian Higher Education Contribution Scheme upfront rather than defer it, as they can now, until they have completed their study. The announcement yesterday in the Federal Government's 1995-96 Budget is part of a campaign to encourage Australian residents to take out citizenship, and to crack down on alleged cheating of the education system by overseas-born students. Full fee-paying students will not be affected. Under the changes, the Australian system of income support for students, known as Austudy, will not be available to permanent residents who do not take out citizenship within three years. Under the means-tested scheme, students are eligible for up to A$400 per year in public assistance. Introduction of mandatory upfront payments for non-citizens comes after allegations that some Hong Kong and other students had taken up the option of deferring payment until completing their studies, but had then returned home without paying. It was also alleged in an academic report early this year that some rich Hong Kong migrants, as well as some Australian-born families, were able to 'adjust' their taxable income so their children could qualify for Austudy. The Minister for Schools, Vocational Education and Training, Ross Free, said that Austudy would be 'targeted to students who have a long-term commitment to contributing to the Australian community'. The new rules will come into effect on January 1.