Pitfalls In Govt Pledge On PTPTN

The Star

A PROMISE is a promise. Arguably more so if it is an election pledge because lots of impatient and demanding voters are expecting the ruling party to stay true to its word.

But what if there are significant risks in weighing a promise in isolation? What if there are unintended consequences when the promise is hastily fulfilled?

This may well be the case with the recent move by the National Higher Education Fund Corporation (PTPTN) to lift a travel ban on almost 430,000 loan defaulters.

The concession is part of the stream of policy changes that started flowing soon after Pakatan Harapan won GE14 held on May 9.

Promise No.6 is a two-parter – to allow graduates with monthly salaries below RM4,000 to postpone repayment of their PTPTN loans and to abolish the corporation’s practice of blacklisting errant borrowers.

The immigration blacklist has been “whitened” and the defaulters are now free to leave the country. This measure seems to be low-hanging fruit.

However, PTPTN is still working on how it can allow the suspension of repayments for those with monthly incomes below the RM4,000 threshold. It will make a final announcement on this matter by the 100-day mark in mid-August.

Indeed, Pakatan’s Promise No.6, as a whole, warrants more thought and planning. To do its job well and serve all stakeholders, PTPTN has to maintain a delicate balance.

While it has to be understanding and considerate about its borrowers’ circumstances, the corporation cannot afford to be seen as a push­over when it comes to debt collection.

The overriding principle here is that PTPTN must be able to continue giving loans without being a drain on government resources.

It cannot be justified that graduates who are already employed deserve more consideration than younger people who need financial aid to pursue higher education.

Restricting defaulters from leaving the country made it clear that people who refuse to honour their debts will not go unpunished.

Of course, some defaulters genuinely cannot afford to repay their loans, and for these cases, there are options such as negotiating for lower monthly sums or a rescheduling of the repayments.

But it is hard to believe that there are more than 400,000 people who belong in this category.

In the absence of other cost-effective steps to go after persistent defaulters, the lifting of a travel ban can easily be misconstrued as a signal that PTPTN is now willing to go easy on the recalcitrants.

And what about borrowers who have been disciplined and consistent in meeting their obligations? Can anyone blame them for feeling that the system is unfair?

Consider the fact that the corporation’s average monthly collection dropped after the release of the Pakatan manifesto, which suggests that some borrowers have decided to stop their repayments in the hope that Pakatan would win and Promise No.6 would kick in.

The trouble with this wait-and-see attitude is that these borrowers are more focused on the Pakatan promise than on their promise to settle their debts.

This does not sound much like the new Malaysia, does it?