Officials are examining the feasibility of opening up the student loan market, Legco's finance committee was told yesterday. The Student Financial Assistance Agency said in a written reply to a question from non-affiliated legislator Audrey Eu Yuet-mee that they would examine whether borrowers could benefit from terms more favourable than those currently offered by the Non-Means Tested Loan Scheme (NLS). An NLS loan is available to any university student regardless of his or her financial situation. It was introduced in 1997 to complement the Local Student Finance Scheme (LSFS), a means-tested loan based on a student's financial needs. However, the NLS loan carries a higher interest rate of 8.25 per cent a year, compared with 2.5 per cent charged on the LSFS loan. The agency also said it would examine whether the Government can engage the private sector in operating the scheme. A consultancy study conducted in 2000 said there was a case to outsource the non-means tested scheme, which would benefit student borrowers and the Government. However, the current scheme has been extended twice since then. The agency said it would now try and gauge the interest of banks in operating the scheme and the likely terms and conditions for loans. The exercise is expected to be completed by the end of June. The administration also confirmed it will review whether the fixed interest rate of 2.5 per cent for the NLS should be adjusted in the face of shrinking interest rates. The review is due to be completed before the next academic year, members were told.