Consequences of Failing Timely Loan Repayment
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Loan borrowers have the responsibility to repay in full the loan and interests according to the Undertaking. The indemnifiers have the obligation to repay the same as if he/she were the principal debtor according to the Deed of Indemnity.
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Failure to repay loan instalments by the due dates will result in surcharge (for loans under TSFS and FASP) / overdue interest (for non-means-tested loans).
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The SFO reserves the right to withhold processing applications for or disbursing new student financial assistance / loan to loan borrowers with arrears and their indemnifiers.
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If no payment or response is received after reminders (such as letters, short messaging services and/or phone calls), the SFO may initiate legal proceedings against the loan borrowers and/or their indemnifiers for recovering in one lump sum the full amount of the outstanding loan together with interests, surcharge, administrative fee (if applicable) and any recovery costs (including legal costs and related expenses) having regard to the circumstance of each case.
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Failure to receive the demand notes / notifications does not relieve loan borrowers and indemnifiers of their obligation to repay.
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The SFO will refer the cases to the Department of Justice for legal action if the outstanding amount exceeds $75,000, and file claims directly with the Small Claims Tribunal if the outstanding amount does not exceed $75,000.
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Once legal proceedings are instituted, case information may become public. The legal actions may lead to permanent legal consequences, and may impact on one’s reputation and prospect.
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For statistical purpose, the SFO maintains the figures of defaulters being loan borrowers who have failed to repay two or more consecutive quarterly instalments / six or more consecutive monthly instalments without the SFO’s approval for deferment of loan repayment. However, the SFO has the right to demand immediate full repayment of the entire outstanding balance through reminders and/or legal means once the instalment due date is missed without waiting for six months of failed repayment.