|
No free lunch 7.575% student loan scheme criticised By Clara Loon |
Clara Loon Ms Poon: Student voices are ignored. |
The new scheme is a complement to the present means-tested loan scheme in which income, expenses and family assets are taken into account. There is no limit on applicants’ family income. Students can apply for the new scheme as long as they are willing to pay the 7.575 percent annual interest rate. The rate is based on a risk-adjusted Civil Service Housing Loan Scheme interest rate of 6.075 percent. An extra 1.5 percent risk charge is added because the loans are “unsecured”. |
|
To avoid abuses, loans will be disbursed to institutions concerned directly for settling tuition fees, with interest being charged immediately. Recipients of the new scheme have to repay their debts in 40 quarterly instalments within 10 years of graduation. If a student borrows the maximum tuition fee for three years of undergraduate university education, he will have to repay about $1,700 each month, or $5,600 quarterly. The new loan scheme is expected to disburse around $1.3 billion in 1998/99, benefiting about 50,000 tertiary students, or 79 percent of the student population. Deputy Secretary for Education and Manpower Matthew Cheung Kin-chung said, “It is government policy that no qualified students will be turned away from tertiary education because they lack the money.” The new scheme, according to Mr. Cheung, will operate on a “no-gain-no-loss and cost-recovery basis”. However, there is strong opposition from some students. Ms Maggie Yung Hiu-kuen, president of the Student Union at the Chinese University, said, “Why should the interest rate be linked to the Civil Service Housing Loan Scheme? The interest rate of the scheme is not fixed. This is simply insecure for us.” She also said the scheme’s “no-gain-no-loss” and “cost-recovery” principles are unfair. She said, “The risk charge is partly for covering currency deflation to prevent any loss. The Government should not make a profit from the scheme. “Since the extended loan scheme would be cancelled, those enjoying the existing 4 percent interest rate will have to shift to the new scheme and pay a higher interest rate. I am afraid that the Government will push students to have high interest loans and pay higher tuition fees.” She also said that it is illegal for the Government to disburse loans directly to the institutions concerned because the loans should be transferred through the recipients. Ms Deborah Poon Suk-ying, internal vice-president of the Student Union at the University of Hong Kong, voiced similar concerns. Said she: “I do not know why the Government added the 1.5 percent risk charge into the interest rate. Students’ bad debts have been low under the existing scheme.” Ms Poon is also concerned that the students’ voices are ignored. “As representatives in the Joint Committee on Student Finance, we were not informed of the new scheme by the Government before it was announced. We reject imposing the administration fee and the proposed 7.575 percent interest rate.” Ms Lit Ming-wai, president of the Hong Kong Polytechnic Students’ Union, said, “Grants should include both tuition fees and education related expenses, while loans should be for personal expenses.” She said, “The new scheme should also finance students’ expenses apart from tuition fees. “Needy students will take on more part-time jobs. As a result, their studies will be affected.” To Kwai-hang, chairperson of the Youth Group of the Democratic Party, said that the Government has no vision in education. “Seemingly, it is providing a free lunch, but in fact, the new scheme is a cost-recovery scheme.” |
Beware!
Scrapped legislation
January 1998
[Editorial] [Letters] [Answer] [News] [Social] [Photo] [Culture] [Education] [Channels] [Science] [Celebrity]
Comments Editor-in-Chief Electronic Editor