Foreign student defaulters face work and residency ban

Foreign students who received generous scholarships from the Singapore government could be banned from living and working in Singapore if they deliberately default on their ‘bond’ obligations, a senior education ministry official said last week in the wake of revelations that a number of students were in default.

The latest report of Singapore’s Auditor-General released late last month showed some 27 foreign students who benefited from scholarships to study at Singapore’s two top universities had defaulted on Ministry of Education loans.

According to the auditors’ report, unpaid loans by former foreign students at Singapore’s main universities, National University of Singapore or NUS and Nanyang Technological University or NTU – which both rank highly in Asian university rankings – amounted to around SG$228.04 million (US$170 million) to 30 June 2015.

The total default by foreign students from all institutions in Singapore amounted to SG$511.49 million (US$380 million), the auditors’ report said.

Bond conditions can vary according to the kind of scholarship, but foreign students receiving Ministry of Education tuition grants must in addition work for a Singapore-registered company for three years “immediately upon graduation”.

Medicine and dentistry graduates receiving scholarships are ‘bonded’ to work for the Singapore’s Ministry of Health for six and five years respectively.

The ministry’s Parliamentary Secretary for Education Low Yen Ling told parliament on Monday in response to a parliamentary question that the proportion of defaulters was low – around 1%.

“We are also in the process of contacting another 4% to determine their bond service status. The rest – 95% – service their bonds, have applied for deferment or are unable to serve their bonds due to reasons like illnesses,” she said.

For defaulting students “who continue to not serve their bond obligations” universities will proceed to recover the value of the scholarship plus damages from students and their guarantors, she said, “failing which, defaulters will not be able to work or reside in Singapore”.

Bond terms

Around 16% of higher education students in Singapore are from overseas but for science and engineering subjects at universities such as NUS and NTU the proportion is closer to 25%, according to official figures.

The report said the Auditor-General’s office had found the Ministry of Education “did not maintain adequate oversight ” of NUS and NTU to ensure recipients who failed to serve their bonds “were reminded of their scholarship obligation” or impose damages to liquidate the bond “where warranted”.

Instead the universities relied on the administering banks to recover outstanding loans and they submitted lists of proposed loans to be written off to the Ministry of Education “after recovery efforts had been fully exhausted”, the auditors’ report said.

The report did not say which countries defaulting students were from. However, the majority of scholarships disbursed to foreign students by the Singaporean government are to students from ASEAN – Association of Southeast Asian Nations – countries, which include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Thailand and Vietnam, as well as to students from India and China.

A recent report by the bank, HSBC, found that Singapore ranked alongside Australia, the United States and United Kingdom as one of the most expensive countries globally for foreign students to obtain an undergraduate degree once the high cost of living in the city state is taken into account.

But Acting Education Minister Ong Ye Kung told parliament on 15 August that the rate of default on student loans was not high, pointing to student loan default figures of “about 40%” for the UK and 10-20% for the US. Foreign student access to such loans is “deliberately made easy to help as many students as possible”, he said.

"This was never meant to be a commercial operation, but part of our policy to help students with their education, and it also serves a social objective," he said.

The Ministry of Education had said in an earlier statement in response to the auditors’ report that it “will continue to work closely with all the universities to tighten and enhance the processes in monitoring and enforcing the scholarship bonds”.