- Published on Tuesday, 30 August 2016 08:25
The debacle between the National Higher Education Fund Corporation (PTPTN) and students is almost never-ending. But it looks like the corporation has come to its final straw, thanks to irresponsible borrowers – at least 50,000 deserving students will miss out on benefitting from PTPTN loans.
Last week, its chairman Datuk Shamsul Anuar Nasarah announced PTPTN do not have the funds to give full loans to new students and are forced to make cuts. And sadly, this news comes after various rebates and programmes including awareness campaigns, incentive reimbursement, enforcement actions, which had been put into action by the corporation to give a second chance for borrowers to redeem themselves.
He stated until December 2015, PTPTN only managed to collect RM8 billion, less than their target which was RM15 billion from the RM56 billion loans disbursed. Hence, the corporation could only approve 95 per cent of the study costs for students in public higher learning institutions (IPTA) and 85 per cent to students in private higher learning institutions (IPTS).
Shamsul added if the corporation did not take this measure, it could face insufficient funds to provide loans and offer lower repayments in the future. And only after the corporation have reached their repayment goals, they would consider disbursing full loans to new students.
While this decision came as a shock to some new students seeking loans, strong opinions had concluded this is the best way to move forward. Malaysian Digest asked the stakeholders what they had to say about PTPTN’s decision and their suggestions moving forward in hopes of resolving this matter once and for all.
PTPTN Cutting Loans Is The Best Solution
The issue on reducing the percentage of loans is nothing alien and many enforcements have been made up until today, President of Peninsula Malaysia Malay Students Association (GPMS) Mr Zambri Mohd Isa explained.
“Previously in 2014, PTPTN had reduced its loans disbursed by five per cent for students in IPTAs and 15 per cent for students in IPTS, due to insufficient funds as a result of borrowers who had failed to pay up their loans.
“Two years later, here we are facing the same problem where PTPTN is forced to take the same measure – because its recovery rate has not reached its target,” Zambri heaved a sigh.
PTPTN had already listed 1.25 million borrowers who have yet paid what they owed as per the contractual agreement in the system in stages since June last year, on the Central Credit Reference Information System (CCRIS), and this will reflect badly on their credit history.
Loan defaulters who do not pay up six months after they graduate are also barred from leaving the country as the corporation are in co-operation with the Immigration Department of Malaysia to encourage borrowers to prioritise repaying their PTPTN loan.
“It is a good move by PTPTN to list the defaulters on CCRIS. We effectively saw many starting to pay up their loans,” Zambri asserted.
Despite the measure taken, he further stated discussions have taken place with PTPTN in regards to looking for alternatives for the loan repayment.
“GPMS have offered to be the middle person for graduates who have problems repaying their loan.
“We could be their facilitator, for example set up an appointment to meet with PTPTN officers for those who wish to discuss about deferment.
“We also think that PTPTN could look into whether the new students are eligible to receive Bantuan Rakyat 1Malaysia (BR1M) so they could get a full loan,” he added.
Zambri stressed that it would be just for PTPTN to take further stern action, and carefully monitor students applying for loan.
“PTPTN must follow through by taking legal action, then perhaps many borrowers would repay their loans.
”They should check applicants thoroughly, for example if family members had borrowed and had a bad track record, before disbursing the loans,” Zambri opined.
Currently, the corporation issues three notices before taking legal action and blacklist those who have not made repayments. Defaulters who fail to approach PTPTN will then be taken to court.
Will Students Borrow Money From Loan Sharks?
Following PTPTN’s decision, PKR Youth chief Nik Nazmi Nik Ahmad made a statement that without financial aid, in dire straits students would be forced to borrow money from their family, friends or loan sharks.
“I urge the government to review this decision and take measures to resolve the problem in a more holistic manner. Don’t jeopardise Malaysia’s future because of PTPTN and the government’s poor management. Correct your mistakes before punishing the increasingly-oppressed masses,” said Nik Nazmi who had been advocating free tertiary education and abolishing PTPTN loans.
Nevertheless, Zambri refuted this statement, saying students would not end up doing so, as furthering education is a matter of choice, and new students can always pursue it in other institutions that are affordable.
“When push comes to shove, I don’t believe students would be borrowing money from loan sharks, because pursuing tertiary education is a matter of choice.
“If students cannot afford to study at a higher learning institution, they still have the option of studying at community or vocational colleges.
“I believe there are solutions and I am confident that neither students nor their family will seek help from loan sharks,” he said, adding the statement by the PKR Youth Chief was baseless, and lacked research as well as proof.
Echoing Zambri’s stance, Universiti Utara Malaysia (UUM) Economics lecturer Professor Datuk Dr Amir Hussin Baharudin also believes students will not resort to borrowing money from loan sharks, as they have the option of seeking financial aid from banks.
“I feel that there is no need for students to borrow money from loan sharks because we have education loan provided by banks,” he told Malaysian Digest.
Further commenting on Nik Nazmi’s point of providing free education, Professor Amir feels, “Looking at Malaysia’s economy, we are not ready to provide free education like in Germany and Norway.
“These countries could provide free education because of high income tax whereas the highest percentage of income tax is 24 per cent.
“As an economist, I do not see the possibility of us enjoying free education at the moment, unless we all agree to pay 50 per cent income tax.
“So, are we willing to pay that much?,” he posed the question, adding otherwise with the current situation, “the government would have to increase the income tax in order to provide scholarships.”
Stop Giving Excuses And Pay Up
PTPTN requires RM5 billion every year to financially aid students. However, as of February 2016, the corporation had only received RM7.9 billion of RM15.8 billion. In the same month, 115,279 PTPTN borrowers received court summons with a total loan amount worth RM9.8billion.
The common excuses cited by majority of graduates were low salaries, high cost of living, unresponsive administrators, tedious procedures and annoying paperwork, for not being able to repay their PTPN loans.
Meanwhile, in May last year, Minister in the Prime Minister’s Department Abdul Wahid Omar revealed 400,000 people are unemployed in the country, and among them, 161,000 graduates or 8.8 per cent of youths, aged between 20 and 24 years, who had yet to find a job.
Hence, these findings could sum up the fact why graduates are also struggling to make repayments of their loans, just as well as they are struggling to make ends meet.
Regardless the reasons, Professor Amir asserts that PTPTN have made the right decision, to not disburse full loans.
He then condemned debtors saying it is unfair for those who had benefitted from the loans but had failed to pay what they owed, as PTPTN are always open for negotiation based on an individual’s financial commitment.
“If they (graduates) are having difficulties, or for any reason they have for not being able to repay their loans, they should approach PTPTN, so at least the corporation would know about it and offer assistance,” he said.
He added that no Malaysian graduate would be denied full loans if borrowers were more diligent in paying their debts.
“I urge those who had received the funds and are working, to try make repayments even if it is a small amount so that other students can enjoy the same benefits as you did,” he advised.
After all, as Wilbur Ross, prominent investor and billionaire puts it: “You cannot just keep borrowing more and more and keep spending more and more without eventually having a day of reckoning.”