Incentivise PTPTN repayment, don’t write off study loans

 

There are two news items that are most read by Malaysian readers of news sites. One is when additional public holidays are declared or when there is an offer of discounts for summonses or the writing-off of loans at the expense of revenue for the nation.

The public rejoiced when Prime Minister Anwar Ibrahim declared a holiday after being sworn in. This was in addition to the two days declared by his predecessor for polling in the recently concluded general election.

Did Malaysians actually need the holidays, at the cost of court cases and hospital appointments postponed, disruption of international trading days and classes in schools and colleges, and an increase in operational costs for businesses? Definitely not!

Discounts offered payment of years of accumulated traffic summonses and local government dues is a reward for offenders instead of the law-abiding citizens who settled their dues promptly. This really makes a mockery of the whole process.

So when there were calls to write off student loans from the National Higher Education Fund Corporation or PTPTN, it was a little worrying, especially now that Barisan Nasional is part of the government.

The pressure to write off loans may grow as many of those who took student loans are new voters.

BN had declared in its election manifesto that all students from B40 (low-income) households would be given free tertiary education. That promise was a little dicey as BN did not specify if the offer is only for future students or includes those already owing the corporation.

BN can now claim that they are not in absolute control of the government and has no say. But the point is, it made the promise and since it is in the government, the voters will expect a thing or two from those in power.

Call it poor management or by any other name, PTPTN failed to be self-sufficient as intended when it was started 25 years ago.

Today, the corporation has more than RM40 billion in debts on its books. It has warned that the liability might shoot up by an additional RM30 billion in 20 years if the tardy repayment or non-payment is not addressed. Last year, PTPTN said about 500,000 of the defaulters have never repaid a sen.

According to data from the PTPTN’s Strategic Plan 2021-2025, there were a total of 2.1 million borrowers who should have repaid loans amounting to RM24.3 billion, as of December 2020.

About 30% of them have fully settled their repayment, 10.3% are actively servicing loans based on the predetermined schedule, 41.3% are inconsistent paymasters, while 18.1% or 383,907 borrowers are categorised as defaulters amounting to a debt of RM4.6 billion.

In this dangerous situation where PTPTN might collapse if it operates in the current manner, the taxpayer would be heavily burdened if loans of the B40 students are written off, or if they are offered free tertiary education.

As I said, Malaysians love anything free even if it is to the detriment of the nation. It is generally felt that they do not value things they don’t have to pay for and will keep on demanding discounts or the writing-off of loans and fines. This has become a Malaysian culture, no thanks to them being mollycoddled by the authorities for votes.

Instead of completely writing off loans or offering free education for any category of Malaysians, the government should introduce discounts based on the performance of the students in their studies.

Right now, only those graduating with first class honours have their loans written off, irrespective of which category of household they come from.

While the T20 students should not be given any discount at all, those from the B40 and M40 households should be offered certain privileges based on their performance and final results.

It could be structured in such a way that if a student graduates with a cumulative grade point average (CGPA) of 3.75 to 4.0, he or she should be exempted from paying the whole sum. Those scoring a CGPA of 3.5 to 3.75 can be asked to pay back 25% of the sum, while graduates with a score of 3.25 to 3.5 can pay back a slightly higher percentage of their loans.

However, the cut-off point for no discounts should not be below a CGPA of 2.5 to keep the students in check. Why, this kind of incentive might even spur the students to put in greater effort so that when they start working they would pay much less.

Currently the available initiatives to encourage borrowers to repay their PTPTN loans include:

• 15% discount for full repayment;
• 12% discount if borrowers settle at least 50% in a single payment; and
• 10% discount for scheduled salary deductions/direct debit

The reality is that the country is expected to face a recession next year which will be made worse by domestic political battles that lie ahead. One must understand that the nation is at its economic and political crossroads, with a global recession expected to hit next year.

So, it’s time to ask what we can do for Malaysia, as we have been asking what the country can do for us for far too long.

If you borrow money, you have to pay it back. That’s not only a norm but it’s plain decency. And if you took a loan from the government to get your degree, then for God’s sake just start paying it back as soon as you can afford a decent sum commensurate with your income.

On the spiritual side, most religions rightly preach that you must have a clean sheet when you leave this world.

There is a need to emphasise here that the PTPTN study loan is a privilege given by taxpayers and not a right. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.