Asked why the monthly borrowing limit had not been raised from VND800,000 to VND1-1.2 million as proposed earlier, Ly said the current cap was being retained as tuition fees would not be going up this year.

However, he said, the limit would be raised if tuition became more expensive, and noted that price inflation generally had become less of a threat than before.

Ly pointed out that the monthly interest rate, just 0.5 percent, was much lower than commercial bank rates.

He added that students did not have to begin repaying their loans until after graduation.

Concerning the way that debts are collected, Ly said it could be done through the students’ families and their local authorities.

Ly said the government ministries and agencies concerned were working on a debt-collection plan and would likely submit it to the government by the end of April.

Some of the planners, he said, thought the banks should be able to keep the students’ degree certificates until the money was repaid, but this idea was rejected as it would be illegal.

The Ministry of Education and Training and the Bank for Social Policies would use a special software package to keep tabs on the loans and repayments, Ly said.

Problems with implementing the student loan scheme were also mentioned.

To be eligible, students must produce documentation from their local authorities proving that their families are truly financially disadvantaged.

This system is open to abuse as shown by the fact that some provinces certify students as being eligible even though their families are relatively well off.

Last semester, Ly’s bank discovered more than 4,000 cases of ineligible students receiving loans. Still, that was only 0.35 percent of all borrowers.

In a review conference last August, Huynh Thanh Hung of the University of Agriculture and Forestry said certain provinces were notorious for certifying ineligible students in return for cash under the table.

Hung urged local authorities to get the situation under control for the sake of the legitimate needy students.

Trinh Minh Thanh from Ca Mau Province suggested that the government broaden the scope of the loans and make them available to postgraduate students, for whom the monthly limit could be VND1.5 million.

The delegates from Can Tho City said the Education Ministry and the Policy Bank should consider lending to students once a year rather than several times as they do now.

Cheap government-backed loans for poor students have been available in Vietnam for more than a decade. In the 15 months to December 2008, they helped some 1.3 million students.