Just one in six Hong Kong students who take on student loans will be able to repay the full amount within the stipulated time, a survey has found

October 25, 2013 Leave a comment

Students with loans feel the squeeze
Hilary Wong 
Friday, October 25, 2013
Just one in six who take on student loans will be able to repay the full amount within the stipulated time, a survey has found. The Hong Kong Federation of Youth Groups said yesterday the average loan of 727 students interviewed during August and September was HK$110,000, while those on self-financed programs borrowed about HK$190,000. Only 16 percent said they would be able to pay back the loans on time, it found. According to the Student Financial Assistance Agency, students have two ways to apply for a government loan.One is through the Tertiary Finance Scheme, which is only available for publicly funded programs at specific institutions. The loan is dependent on family income and comes with an interest rate of 1 percent per annum.

The other way is the Non-means-tested Loan Scheme, which is open to those in all locally accredited, self-financing, full-time post-secondary education programs at associate degree, higher diploma or degree level. This loan carries a higher interest rate of 1.395 percent per annum.

Students applying for a non-means-tested loan, or those studying in self-funded tertiary programs, have a heavier financial burden due to higher interest and more expensive tuition fees.

According to the survey, around 55 percent took non-means-tested loans and 61 percent studied self-funded programs.

Both groups estimated they will still be making loan repayments after they pass their 30th birthday.

In one case, a 22-year-old student on a self-funded tertiary program, said borrowing through the non-means-tested scheme was the only way. “I applied for the Tertiary Finance Scheme but was granted only HK$5,000. The total tuition fee is HK$180,000,” she said.

Amy Fung Dun-mi, deputy executive director of the federation, said the Student Financial Assistance Agency should simplify application procedures.

“Although government financial schemes help a lot of students, the application procedure discourages those from families with unstable incomes,” she said.

Fung also suggested that the government include in the loan scheme those studying in post-secondary courses below associate degree level.

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