Why settle study loans
BEFORE we talk about the National Higher Education Fund Corp (PTPTN), let’s understand that it is primarily a rolling fund. This means it can only dish out money that it gets back.
Thus, if borrowers don’t pay or service their loans, it will reduce the amount available for the next batch of students. In other words, those paying their PTPTN loans are not just servicing a loan, they are also putting a freshman through college.
In March 2017, 660,000 Malaysians had not paid a single sen of their PTPTN loans. And by last November, PTPTN announced that 410,500 Malaysians had not paid a single sen, amounting to RM6.84 billion.
For last year until Sept 30, the amount collected was RM12.13 billion, instead of the full amount of RM18.97 billion. This means there will be less for students this year. Thus, with more student pursuing tertiary education with less funds for loans we will see more households bearing more costs.
This was made worse by announcement of a further extension for repayments to 12 months during the tabling of Budget 2018. Also announced was an extra RM200 million for the Bottom 40 (B40) group of households.
We were also informed of a tax exemption of up to RM6,000 for those saving in 1Malaysia Education Saving Scheme.
There was an announcement for discounts and rebates for people to pay back their loans. All of these will further erode the ability of PTPTN to cope with increased costs of students to eke out a living, perhaps even triggering another starving student (Mahasiswa Lapar) movement.
Pakatan Harapan manifesto has a promise to allow Malaysians to start servicing their student loans when they earn RM4,000 a month. This raises a few questions.
First, for the period between a student’s graduation and the time he gets a job and earns RM4,000, will the PTPTN loan be subject to compounded interest per annum?
Will there be an increase in minimum payments to cope with the increased amount in their loans?
What’s the duration for a working class borrower to start earning a RM4,000? I ask because that is how long we will be exempting more Malaysians from paying a single sen and reducing funds for students.
So a Pakatan Harapan government will delay PTPTN repayments and regularly inject funds into it to allow future batches of students to gain access to the loans.
If it is yet another government backed loan, injecting more funds will increase national debt, and while the compounded interest on the loans to students working to earn RM4,000 will also increase individual or household debt.
The manifesto will also allow Malaysians to buy a car without getting flagged by bad credit scores, get assistance from the government to buy a house, and fly overseas without being blacklisted.
Consider a few things that come to mind.
First, how do we view debt? Do we see it as something serious to the point that we consider it something that must be paid as a monthly cost, or do we see it as an elastic cost that should only be paid when you have disposable income?
Should debt be elastic without a time period, without penalties? After all, you can’t take back a graduate’s degree or diploma to make them repay their loans, can you?
What’s your stance on debt?
Now, if you have answered that question, I will put forward another?
Do we believe PTPTN should assist students who don’t have parents with high incomes – the middle and lower-income groups, at no added costs to manage the debts, payouts and paybacks, or even interest rates which will eventually allow the funding of future students?
Or, do we believe in the government pumping in more money to fund future students while allowing debtors to not have to pay their dues for three or four years?
Or, do we believe in writing off billions and let the government foot the bill and making tertiary education free?
Have a hard think.
Hafidz Baharom is a public relations practitioner. Comments: firstname.lastname@example.org