The Non-means Tested Loan Scheme (NLS), a form of financial assistance provided by the Hong Kong government through the Student Financial Assistance Agency (SFAA) for payment of tuition fees, was introduced in 1998. Around HK$1.39 billion borrowed and the 44,949 loan applications successfully processed up to the academic year 2001/02 best define the scheme's success.

Apart from full-time university students, students pursuing part-time programs, professional and continuing education courses are all eligible for the loans, and there is no requirement for assessment of an applicant's income and assets.

Applicants need to have the right of abode, the right to land or permission to stay in Hong Kong without restriction; or be a Hong Kong resident for at least three years continuously. Students studying in Hong Kong holding student visas are not eligible.

Courses include part-time publicly funded programs, self-financing, local award-bearing programs, training, development, professional, and continuing education courses. Course-offering institutions can be publicly funded institutions, registered schools in Hong Kong, non-local universities with distance learning courses taught in Hong Kong, and recognized training organizations.

The fee of the course for which the loan is being applied for must not be less than HK$1,000 and the course's duration must not be shorter than one month.

Low interest rate

The NLS operates on a full-cost-recovery basis. Interest is charged at two per cent below the average best lending rate (BLR) of the note-issuing banks, together with a risk-adjusted factor (currently at 1.5 per cent), throughout the repayment period. The interest rate is variable in accordance with the BLR. The loan is restricted to the payment of tuition fees and is repayable together with the interest accrued in 40 equal quarterly installments within 10 years.

An application fee of HK$165 is required on application and the same amount will be charged annually as an administrative fee until the NLS loan is fully repaid.

Application procedures

The deadline for loan applications is four weeks after the payment due date of the first fee installment of the course covered by the loan application or the last date of an academic year, whichever is the later. If one of these two criteria is satisfied, students can apply for an NLS loan after tuition fees have already been paid, as long as the course has not been completed at the time of application. Current loan applications are available for the 2002/03 academic year.

In addition to completing the application form and producing the required documents, an applicant needs to provide a guarantor who will be obligated to pay the government the amount borrowed and its related costs in the case of a loan default. A guarantor for NLS should be or Hong Kong permanent resident of or over 21 years of age, gainfully employed, financially sound, and able to supply a local business address.

Neither the loan applicant nor his/her guarantor can be bankrupt or subject to a bankruptcy petition at the time an application is filed.

Loan repayment

The successful applicant can collect in person a cheque that is made payable to the course-offering institution. Payment can be made directly to an applicant's bank account to cover the tuition fees already paid. Students can be required to repay the loans upon graduation, completion of required credits/courses, or six years after the first disbursement of the loan, whichever is the earliest. However, the loan will be called upon immediately if a borrower withdraws from the course/program of study.

An installment calculator is available on the SFAA web site (http://www.info.gov.hk/sfaa/calc/nls/index.htm) to help estimate future quarterly repayments. The estimation can extend to individual amounts borrowed for up to three years and be based on different lengths of repayment periods. An example assuming a borrowing of HK$20,000 for each of the three years, payable in 10 years by 40 equal quarterly installments, and with the current interest rate remaining unchanged at 4.625 per cent throughout the entire life of the loan would yield a quarterly repayment of HK$2,020.77. The due dates for quarterly repayments fall on the first of January, April, July, and October of each year. Students can opt for early repayment. The repayment can be made in one lump sum before the commencement of the repayment period or during the repayment period. The former settles the principal of the loan plus interest up to the date immediately preceding the settlement and any outstanding annual administrative fee. The latter makes the final payment of all amounts owed for the current quarter up to the date immediately preceeding the settlement date. No early repayment penalty is imposed.

For further details please refer to the SFAA website at http://www.info.gov.hk/sfaa/schemes/nlss.htm or Non-means Tested Loan Scheme Section, Student Financial Assistance Agency at 11/F Cheung Sha Wan Government Offices, 303 Cheung Sha Wan Road, Kowloon. Hotline enquiry numbers: 2150-6222/6223.

Taken from Career Times 2002/10/11