For information
on 15 November 1996



This paper provides a summary of the public feedback on the Consultants’ Report on the Local Student Finance Scheme (LSFS) collected by the Student Financial Assistance Agency (SFAA) from the end of May to the end of October 1996, and a brief report on the improvements made to the existing LSFS since the publication of the Consultants’ Report in May 1996.


2. The Joint Committee on Student Finance (JCSF) received the Consultants’ Report on the LSFS at its meeting on 27 May 1996 and decided to meet again in August to discuss the recommendations of the Report after a period of consultation. Members of the LegCo Panel on Education were also informed of the key findings and recommendations in the Report on 30 May 1996. In response to requests from the Panel as well as student and institutional representatives on the Committee, the JCSF subsequently agreed to extend its consultation period to end-October 1996 to allow more time for student bodies and institutions to consider the recommendations and formulate their views.


3. The SFAA received feedback on the Consultants’ Report from local institutions of higher education, student bodies, Members of the Legislative Council, Sha Tin District Board, political parties, academics, the press and other organisations. A broad summary of their views is given below -


While most institutions and student bodies found the idea of a non-means tested loan scheme rather attractive, others were concerned about the possibility of abuse and students’ ability to repay a large amount of loan after graduation. Some proposed that non-means tested loans should be made available as an additional option for students, but not as a replacement of the means tested loans provided under the existing LSFS.


LegCo Members, institutions and student bodies generally supported the proposal to charge higher interest rates on non-means tested loans from the date when the loans were drawn down. However, they also thought that the Government should continue to offer means tested loans to needy students at lower interest rates, preferably the present 2.5% under the LSFS or 4% under the Extended Loan Scheme. There was also some support for the repayment period to be extended to 15 years for non-means tested loans and the amount of annual repayment to be made income contingent.


There was little support for the Consultants’ recommended Model A, which reverses the existing policy by targeting means tested grants on living costs and academic expenses instead of fees. Most LegCo Members, institutions and student bodies thought that grants should cover tuition fees.


Some supported the adoption of the Adjusted Family Income formula, which is simpler and more transparent. But others considered it unfair because, unlike the Annual Disposable Income formula, it does not take into account certain expenditure items of the students’ families, such as medical expenses, grandparents allowances and mortgage payments.


There were mixed views both for and against the Consultants’ other recommendations, e.g. a single asset limit at $2.5 million for means tested grants, reimbursement of accommodation expenses, and the abolition of the requirement of a guarantor for loans.

4. The JCSF will consider the public feedback at its meeting on 13 November 1996 before deciding on the way forward.


5. At the same time as it was collecting public feedback on the Consultants’ Report, the SFAA has considered, planned and/or implemented a number of the Consultants’ suggested improvements to the existing LSFS. These include -

(a) targeting prospective students from poorer households and their parents with publicity to inform them of the scheme’s availability - the Agency will launch a programme of school visits to deliver talks on the LSFS to Secondary 5 to 7 in early December 1996. Initially, it has selected 18 secondary schools from among those that have relatively higher proportion of students receiving senior secondary fee remission for inclusion in the programme. The Agency has also set up an automated telephone enquiry hotline since early September 1996 to handle more efficiently and cost-effectively students’ enquiries about the LSFS. It will also print more publicity leaflets on the Scheme for distribution through the district offices of the Education Department and Home Affairs Department. ;

(b) allowing the SFAA to react quickly to provide assistance when a student’s family situation changes suddenly - the Agency has recently consulted the institutions and formalised the procedures of reassessment of assistance under the LSFS. Needy students who experience sudden changes in financial circumstances after having been notified of the results of their applications for assistance should now apply to the Agency direct for a review of their applications using a standard form. The Agency will invite the institution concerned to comment or provide clarification on a student’s application for review where necessary, and inform the student of the result of the reassessment within one month from the date the review application is received; and

(c) simplifying and speeding up the appeals process - the Agency will also ask students who are not satisfied with the results of their applications for assistance to submit their appeals in the standard application for review form. Moreover, it will announce the target to complete processing an appeal from student within three months from the date of receipt in its performance pledges for 1996/97.

6. In addition, the seven University Grants Committee-funded institutions have introduced new measures in the 1996-97 academic year to assist needy first-year students in paying tuition fees. They either allow students concerned to defer paying part of their first instalments of fees or provide a bridging loan to help them meet the payment before their applications for assistance under the LSFS could be determined.

Education and Manpower Branch
8 November 1996

Last Updated on 14 August 1998