For young Malaysians, getting a tertiary education often involves applying for a loan from the National Higher Education Fund Corporation (PTPTN), if their parents are unable to sponsor their expenses.
For some, problems start to kick in after graduation, as they try to carve out a niche in the workplace, set aside money for the future, while repaying their education loans.
The PTPTN has come under the spotlight, particularly given how more than 400,000 borrowers are said to have defaulted on their loans.
The agency has RM39 billion (US$9.6 billion) in outstanding loans, almost equivalent to the amount lost by 1Malaysia Development Berhad. With the nation currently saddled with over RM1 trillion of debt, these unpaid loans pose a huge dilemma for the government.
The Pakatan Harapan (PH) coalition, in its election manifesto, promised borrowers that they will only have to service their loans once their salaries hit RM4,000 a month.
However, the coalition later backtracked, saying this would place a massive burden on national finances.
PTPTN was founded in 1997 with the aim of assisting students with funding their undergraduate degrees. Since its establishment, PTPTN has financed more than 60 per cent of Malaysian students pursuing their studies, both in private and public higher education institutions.
On average, an undergraduate degree from a local public university can cost RM30,000 (US$7,364) upwards, whereas a degree from a private university can range from RM50,000 to RM100,000.
Prime Minister Mahathir Mohamad made headlines in September when he branded loan defaulters as “untrustworthy” people.
In November, the PH government said it would introduce more flexibility into repayment schedules.
This would include the option of payment through deductions of between two per cent and 15 per cent from the borrower’s salary, based on monthly income.
The rule, which has yet to be enforced, will only be applicable to borrowers earning more than RM2,000 a month.
Channel News Asia spoke to four young Malaysians who took out a PTPTN loan to fund their undergraduate degrees – each with a different perspective on the issue.
Some see it as a matter of personal responsibility to keep up with the repayments.
For others, including those without a steady stream of income or find themselves between jobs, it can be a real struggle to make payments regularly.
As a fresh graduate venturing into the job market, Ms Nursyaireen Binti Radzi credits the PTPTN for helping her obtain a degree.
The 31-year old – who holds a Bachelor of Science in Finance and Management from Upper Iowa University in collaboration with SEGI University Malaysia – admits that completing her tertiary education would not have been possible without PTPTN.
Ms Nursyaireen began her degree in 2014 and graduated with First Class Honours in 2018.
Prior to commencing her studies, she was a primary caretaker for her ailing father. When she decided to apply for a PTPTN loan, Ms Nursyaireen was determined to obtain a first class degree, which would exempt her from repaying the approximately RM70,000 loan.
“PTPTN had eased my mind greatly, in that I wouldn’t have to worry about how I would afford the tuition fees,” she admits. “I believe I share this sentiment with many other Malaysian students as well.”
Ms Nursyaireen said that as a fresh grad, she is only too familiar with the struggles of the rising cost of living in Kuala Lumpur and the difficulties in securing a well-paying job. However, she does not think this should be PTPTN’s concern.
She points out that the agency’s primary aim is to provide financial aid for those who couldn’t afford to pay for their studies on their own.
“It is the responsibility of the loan-takers to repay their loans so that the government can continue providing the same opportunities to future generations.”
My loan, my responsibility
For Mr Gilbert Tong, all the fuss surrounding PTPTN loans is uncalled for. He sees it as his personal responsibility to service the loan.
In 2009, he was granted a RM55,000 PTPTN loan to fund his diploma and undergraduate degree in Tourism Management at Taylor’s University Malaysia and is now dutifully repaying his loan on a monthly basis.
“If not for PTPTN, I definitely wouldn’t have been able to pursue my studies,” said Mr Tong, 30.
“The loan eased an enormous financial burden off my parents’ shoulders as it would have been really strenuous on them.”
The advertising executive graduated in 2014 and paid off a small lump sum, but only recently started a regular repayment plan after requesting for an extension as he was between jobs in the last few years.
His current payment plan – agreed to in consultation with the agency – sees him paying a monthly sum of a little over RM200 for two decades via direct debit authorisation.
“What I think students should bear in mind is that they won’t always be earning a measly pay as a fresh grad. There are always opportunities to work their way up the career ladder and earn a higher salary as they go along,” he said.
He added that he is also motivated to maintain consistent repayments as failure to do so may leave a mark on his credit record, resulting in unsuccessful car and house loan applications in the future.
“It may be a long road for me till I’m debt free but I have no complaints. Slowly but surely, I will pay off my PTPTN loan completely.”
Currently, only around 55 per cent of borrowers are repaying their loans.
Frustrating journey for a freelancer
Not everyone has found it easy to keep up with the repayments.
For 29-year old Sheena Prasannan, she is appreciative of PTPTN’s assistance but said it has been an exasperating journey since she graduated six years ago.
As a Psychology Major at HELP University, Kuala Lumpur, Ms Prasannan received a loan of RM48,000 to help pay for her tuition fees of approximately RM60,000.
Upon graduation, she managed to pay a small lump sum as well as a few monthly payments while she applied for jobs.
Over the years, Ms Prasannan, a certified yoga instructor, has made her loan repayments as regularly as she could. She held a corporate job for a few years before pursuing her passion for yoga.
However, she said that continuous and regular payments can be onerous given that as a freelance instructor, she does not have a steady flow of income.
She is not asking for a ‘free ride’. One must understand and bear in mind the difficulties Malaysian fresh graduates face when entering the job market for the first time, she said.
PTPTN’s policy states that students must start repaying their loans once they start working and they are given until a year after their graduation to start repayment.
The agency will draw up a payment plan for students, or the latter can opt to pay off the whole debt in one lump sum. However, there are no policies governing freelancers or part-timers.
In the past, the government has taken drastic measures to ensure students do not miss their payments, including blacklisting the defaulters and preventing them from leaving the country until they have made up-to-date payments.
“A monthly payment of a few hundred ringgit is actually about ten per cent of most millennials’ salaries,” she noted.
“Factor in the high cost of living, not to mention a demanding wok environment – the pressure of ensuring payments are made every month can really be stressful on a person’s mental health.”
The struggle is real
Mr Madhavan, 32, a graduate of INTI International College Subang, completed his degree in 2011. He begun working and repaying his loan in the same year itself.
In addition to his PTPTN loan, the operations manager is also paying off his car and house loans which he took out in 2013 and 2014 respectively.
“I’m lucky to have landed a job almost immediately upon graduating, but it’s still tough,” Mr Madhavan said.
He lamented that the cost living in Malaysia keeps increasing each year and has skyrocketed from what it was a decade ago.
To make ends meet, he also works as a personal trainer. In 2015, he was laid-off from his job and was unemployed for several months while he desperately applied for a full-time position.
“That was perhaps one of the bleakest periods of my life and if not for my additional income as a personal trainer, I wouldn’t have been able to pay off any of my debts,” he said.
“One of my colleagues was barred from leaving the country to attend a business meeting, whilst a number of my friends have been thus far unsuccessful in securing a bank loan for a car purchase simply because their PTPTN loan repayments were inconsistent,” he recounted.
“The financial struggle is worrisome as it is, but the negative impact this leaves on our professional and personal lives just makes it worse.”
For now, the PTPTN has been directed by the Cabinet to carry out a detailed study on what should be done to fine-tune repayment mechanisms.
On one hand, it is reasonable for the PTPTN to expect borrowers to service their debts promptly.
Every year, as more new students apply for loans, the agency is finding it difficult to secure funds given its huge outstanding loans.
In the meantime, there are also calls for PTPTN to be more flexible.
In December, Youth and Sports Minister Syed Saddiq was reported as saying: “I believe we need to pay forward our debts. But the payment should be fair, not burdensome … especially to those who have been diligently paying their loans on time.”