Students Refused To Repay PTPTN Loan

Refusing to settle National Higher Education Fund Corporation (PTPTN) loans will lead to non-sustainable higher education financing, said economist Dr Madeline Berma.

Not only that, she said defaulters who failed to fulfil their responsibility would cost future borrowers a chance to get better education and this, in turn, would affect the economy in the long term.

“Your refusal to settle debts now will cost others their future. The culture of indebtedness among youth will reduce the probability of providing education funds for future graduates. This will reduce the ability of Malaysians to benefit from the knowledge-based economy and Fourth Industrial Revolution.”

Berma said there were two approaches to resolve the issue: incentives and penalties.

She suggested a “student loan forgiveness programme” that provided leeway for graduates of specific courses. “This programme would cater for students pursuing careers in fields needed to keep our economy running, like teachers, doctors, nurses and engineers.”

As for penalties, Berma agreed with PTPTN’s previous method, which was imposing travel bans on defaulters. But you must give them a warning and not let them find out when they are at the airport.

About 356,000 people, or 16 per cent, of National Higher Education Fund Corporation (PTPTN) defaulters have never paid their loan instalments even once. And they owe RM2.8 billion to the corporation.

PTPTN chaiman Wan Saiful Wan Jan, who revealed these figures, said that up to December last year, 32 per cent, or 616,000 borrowers, had been inconsistent in servicing loans.

This group has RM3.5 billion in outstanding payments, and has settled only 58 per cent of the amount it owed to the PTPTN.

“Up to the end of last year, the outstanding amount reached RM6.3 billion, with 68 per cent of defaulters having not paid for more than a year. This contributes to a widening gap between the cumulative amount of loans that can be disbursed and loans that have been repaid. Only 32.5 per cent of the RM56 billion disbursed has been repaid.”

Wan Saiful said the number of students requiring loans from PTPTN was expected to grow from 180,000 to 250,000 by 2040, according to a projected enrolment growth trend stated in the Higher Education Blueprint.

It was reported that 655,000 out of the one million loan defaulters had settled their loans, with collections totalling about RM1.9 billion.