The Ministry of Education (MOE) plans to review all long-overdue university tuition fee loans by June.
It is also working with banks and universities to more clearly define their responsibilities and work processes for recovering loans.
The Auditor-General had earlier flagged MOE in its annual audit of public agencies for not promptly following up on outstanding loans to tertiary students, which amounted to over half a billion dollars.
In a report released yesterday, Parliament's public accounts watchdog listed the measures MOE is taking to address issues raised by the Auditor-General's Office (AGO).
MOE told the Public Accounts Committee (PAC) that it has reviewed 20 per cent of the outstanding loans since last September.
The ministry is also dropping a review of a formula used to calculate fees payable to banks for administering loans for the universities.
The fees due to the banks are a percentage of outstanding loan balances. AGO flagged this formula six years ago, saying it discourages banks from doing their best to recover outstanding loans as the fees due will be reduced when any loan amount is recovered or written off.
MOE said it has decided tweaking the formula alone will not incentivise the banks to recover loans. Instead, the ministry will work with universities and banks to monitor loan administration and track borrowers more closely.
It will also introduce penalty clauses to enable it to take action against banks that do not meet a certain service standard. The ministry aims to finalise this agreement with banks and universities by July.
The PAC, noting that the ministry had scrapped a review after six years, urged it to "closely monitor the effectiveness of the new measures on a yearly basis".
It also noted that Nanyang Polytechnic, an MOE statutory board, allowed the name of a registered charity to be used to solicit donations for needy graduates, which was unauthorised. MOE told the PAC that it had instructed the chairman of the polytechnic's education fund to inform donors that their donations could not be used for the initial purpose, and will be channelled to approved purposes.
The PAC, comprising eight MPs, said the issue occurred because some officers did not understand the rules and the Government's instructions. To address this, the polytechnic has sent officers handling donations and fund-raising matters for courses, so they are up to date on relevant guidelines.