Abstract
Education is an important investment in “human capital” and “social capital.” Higher education in Hong Kong has expanded rapidly since mid-1980s. However, education is expensive and public resource is limited. Students should gradually take up a greater share of the costs for higher education. However, the education loans market is not perfect, and is particularly unfavorable to the poor. Government participation in student loans scheme is important. This article examines the Hong Kong student loans scheme from the perspectives of adequacy, efficiency, and equity. The repay burden is about 11% at the beginning of employment and 5% after ten years, and the default rate in Hong Kong is not serious. But it is not feasible for the scheme to be self-sustaining, and government should continue to invest in the scheme. Besides, there should be possibilities for the participation of commercial banks in the student loans scheme so that more social resources can be mobilized for higher education.
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