STUDENTS deterred from attending the Open Learning Institute (OLI) by the high cost would benefit under a proposal to set up a multi-million dollar loan fund. Professor Gajaraj Dhanarajan, the OLI's director, said the scheme would help 3,000 to 5,000 students a year. ''This is an investment in Hong Kong's present and future,'' he said. Government sources said only tens of millions of dollars would be needed to set up the low-interest loan fund and the money could be recouped. A spokesman for the Education and Manpower Branch said: ''The Government will take into account the merits of the proposal put forward by the OLI in the light of all the other competing demands for the Government's scarce resources. ''Detailed consideration will also be given to the eligibility criteria, assessment mechanism and other rules to be adopted for operating the proposed student loan scheme of the OLI.'' At present, among the nine tertiary institutions in Hong Kong, the OLI is the only one not funded by the Government. Students at the other eight institutions are eligible for financial assistance under the Local Student Finance Scheme. Sources said the Government had not considered funding students at the OLI before as it had been established with the understanding that it would be self-financing. The eight funded institutions are Hong Kong University, Chinese University, Hong Kong University of Science and Technology, Hong Kong Baptist College, the two polytechnics, Lingnan College and the Academy for Performing Arts. An OLI student has to pay about $70,000 for a degree programme, representing 90 per cent of the total cost. ''You need to earn at least $8,000 to $9,000 a month so your living would not be affected in order to study here,'' Professor Dhanarajan said. ''This burden of having to pay the full cost for an OLI education is fast narrowing our open access policy. ''And we fear it will mean that many thousands of adults who have the talent, motivation, desire and ambition to study will alas be prevented from fulfilling their potential because the costs are prohibitive,'' he said. The OLI had distributed about 300,000 prospectuses, but had only received 20,000 application forms. About 15,000 took up the OLI's offer, he said. ''There are many reasons for the drop, but one practical reason I think is the cost,'' he said. Professor Dhanarajan said there was a student assistant scheme to issue grants to those in acute need, but only about 15 to 17 students benefited each year.