Wednesday April 18, 2012
PTPTN should stick to its guns
QUESTION TIME By P.GUNASEGARAM
The most efficient way to educate those who canít afford it is through loans as it ensures that future generations will similarly benefit.
ITíS a bad part of human nature that the more you get the more you want, especially when you get something relatively easily.
And since according to common wisdom elections are supposedly around the corner, nowís the time to demand and hope that the Government will accede simply to please in the hope of getting more votes.
But there is a need to be more responsible than that. If goodies are handed out every time they are demanded, we are going to have problems, real problems.
We should not be going anywhere near forgiving other peopleís debts as an election manoeuvre but thatís exactly what is being asked for.
There are many hundreds of thousands of people who have taken loans from the National Higher Education Fund (Perbadanan Tabung Pendidikan Tinggi Nasional or PTPTN) but now incredibly they want their loans to be waived Ė just like that. I wish my housing loan was waived too.
Not only should their requests be flatly turned down, the Government should review its entire system of scholarships on which it spends tens of billions of ringgit yearly in favour of a system of loans.
The PTPTN loans require repayment only after those who have taken them get jobs or six months after graduation whichever comes first and is to be paid through the Inland Revenue Department. They carry low rates.
We are talking about really big amounts Ė as at end of February, 1.9 million students had loans totalling RM43.6bil from the PTPTN. Thatís a huge amount to be written off and the Government simply cannot afford to do so.
Based on the figures, the average loan per borrower works out to around RM22,000 and it should be possible for PTPTN to work out some arrangement with the borrower if it is not possible to repay the loan within the prescribed period due to unemployment or other reasons.
Eventually, most graduates do get employed and when they get jobs, they will stand to earn a lot more than non-graduates and they should be made to repay society for the help they received in getting a leg up.
Many others were unfortunate enough not to get a proper education because they could not afford to pay the fees or take time off from work to study. They often never earn graduate salaries in their entire lifetimes.
The attitude of borrowers who have taken money from PTPTN and now do not want to repay is selfish because they deprive other similarly disadvantaged students from financial assistance in the future.
The PTPTN was conceived as a fund that will be largely self-financing from repayments and thatís the way it should be operated so that the most number of people benefit from it.
Most of the loans are taken by borrowers in public universities to cover the cost of living as fees are already low in these universities. The timely repayment of such loans ensures that future students will continue to benefit from the programme.
The politicisation of this issue is terribly unfortunate not only because it puts pressure on a scheme, which if properly administered, will result in the emergence of a sustainable operation largely funded by repayments but because it inhibits consideration of loan schemes to replace scholarships.
The scheme can be made more attractive by making repayments completely interest-free and free of any maintenance fees as is the case in countries such as Australia for their own citizens.
The Government can then expand this scheme so that all qualified students are eligible for loans and even extend the scheme to those who want to study overseas.
Then it can reduce the amount of scholarships allocated and restrict these largely to a select list of merit scholarships and to fund those it wants to employ in future.
That way the Government will be able to help more people get access to higher studies without having to break its financial back by providing outright scholarships and grants.
However, that would require some courage because the rolling back of scholarships which were relatively freely made available earlier would meet with a considerable amount of opposition from all quarters.
You can sometimes give too much but try and take that away and you can get a lot of problems.
Governments all over the world are moving towards interest-free loans to help needy students. Itís the right way to go because only those serious about their education would take such loans and they will tend to limit their loans to what they need because it has to be repaid.
Thatís a good way to allocate scarce resources by making people who canít afford it take interest-free loans and defer payments until later. Instead, those who have taken loans are demanding they be turned into scholarships instead. Thatís really too much.
Acceding to such demands would be populist, what move would not be when you give something valuable away for free, but it would be wrong simply because it is going to deprive future generations from access to education.
Resources are finite after all and we must find the best way to allocate them. Sometimes, you have to be cruel to be kind.
> Independent consultant and writer P. Gunasegaram believes that both lender and borrower have a joint responsibility to ensure that funds are properly used.