When the number of student loan defaults doubles over a period of six years, there is cause for concern. Around 13,000 university graduates had failed to repay their loans in the previous academic year, up from 4,914 in 2004-05. The money involved totals HK$213 million. Some 2,000 recovery cases end up in the courts every year. No doubt the global financial meltdown has caused similar problems in other sectors during this period. But a 13 per cent default rate, compared to 8.6 per cent in the US and 9 per cent in Britain, is worrying. The government is right to consider revamping the decade-old borrowing scheme amid concerns the interest rate level and repayment period may have exacerbated the problem. Under a proposal by the Student Financial Assistant Agency, the interest rate would fall to 1.7 per cent and the repayment period would be lengthened from 10 to 15 years. A HK$100,000 loan, for instance, would translate into a monthly payment of HK$650, down from HK$1,040 at present. In times of soaring inflation, the concession would come as a welcome relief to many young graduates who often struggle in the first few years after leaving university. Understandably, a lower interest rate would fuel worries of excessive borrowing. The existing rate, at 3.174 per cent, has been blamed for tempting some students to use the borrowed money to make reckless investments. Some simply opt for bankruptcy when they cannot repay. To tackle the problem, a loan cap of HK$300,000, a level based on the tuition fee, has been proposed. To create a stronger deterrent effect, defaulters may also have their records shared with other credit reference agencies, which may seriously affect their personal finances and, in some cases, their future careers. An effective loan scheme is one that can help students who genuinely need the money, but on a basis that ensures it will be repaid.