EPF deductions for PTPTN repayment still being negotiated

The National Higher Education Fund (PTPTN) today denied that it has closed in on using Employees Provident Fund (EPF) deductions to solve the issue of unpaid student loans.

PTPTN chairperson Wan Saiful Wan Jan said that this proposal was only submitted to the Education Ministry and is still being negotiated.

Wan Saiful was responding to a Free Malaysia Today report, which claimed that the "best possible solution" had been found to reduce the debt owed to PTPTN.

Quoting an unnamed official "in the know of the proposed solution," FMT said repayments would also come from debtors' monthly EPF contributions.

"I don't know who the source of this story is," Wan Saiful said when contacted by Malaysiakini.

"We have only presented it to the Education Ministry, and PTPTN officers are still negotiating this with the ministry.

"Whoever made those comments seems to have more information than us at PTPTN."

Wan Saiful also declined to verify details listed in the media report, including the salary-based percentage of EPF deductions.

Instead, he advised all parties to wait for the official announcement of the final decision.

"Leaks or rumours are not going to help. The decision will come from the Education Ministry," he said.

'Not financially viable'

In the FMT report, the official was quoted as saying that a full write-off of PTPTN student loans is "simply not financially viable," since "doing so will cost the government tens of billions over the next five years."

According to the report, the repayment system would be used for debtors earning more than RM2,000 a month.

Under the system, a deduction of between two to four percent will be made from the combined EPF contributions of debtors earning between RM2,000 to RM4,000. Up to eight percent could be deducted for those earning more than RM4,000. 

Borrowers would also be able to opt for repayments combining EPF deductions and cash payments.

"FMT’s source said loan defaulters need not fear being placed on a travel blacklist," the report read.

"However, there would be stricter enforcement of loan repayments, including the possibility of legal action."

Public consultation

PTPTN is slated to present its newest repayment scheme proposal for public consultation soon, as it said it would do so by the third quarter of the year.

Previously, Wan Saiful said a public consultation paper had been drafted after roundtable discussions with economists, banks, NGOs, parents, and students.

This came after the cabinet decided to put off a contentious repayment scheme involving scheduled salary deductions, which was supposed to have come into force in January 2019.

A few months ago, PTPTN came under fire after it was revealed that it was considering reimposing the travel ban on loan defaulters.

The ban, however, was merely one of several proposals mooted during a series of public consultations organised by PTPTN. - Mkini