PETALING JAYA: The National Higher Education Fund Corporation (PTPTN) already has the legal power to collect from errant borrowers, say education experts who urged it to use such avenues to reduce its mountain of debt.
They said PTPTN could complement a strict approach, such as by deducting payments based on a borrower’s income so as to lighten the burden of those earning low salaries.
Such short-term measures can be readily rolled out to help the fund be sustainable in the long term, said ex-PTPTN chief Datuk Wan Saiful Wan Jan, adding that reforms were necessary.
These measures had been proposed to the Cabinet in February 2020, he said, one week before Tun Dr Mahathir Mohamad resigned as prime minister, and one month before the country went into pandemic-triggered lockdowns that hurt the economy.
Now that that the country has passed the post-Covid-19 recovery stage, he said the government must decide on what direction they want to take in recovering PTPTN debts.
“There is an urgent need to structurally reorganise PTPTN so that its forward movement is not hindered by historical baggage,” said Wan Saiful, who headed PTPTN from 2018 to 2022.
“And, parallel to that, is to nudge society away from dependency on debt to a culture of saving for education.”
Since it was started in 1997, PTPTN has had a decades-long problem of collecting on the loans it has given out to borrowers.
Last month, PTPTN chairman Datuk Seri Norliza Abdul Rahim was quoted as saying that about 430,000 borrowers had never made a single repayment, resulting in RM5.46bil in arrears.
A study by PTPTN in 2019 found that only 49% of borrowers had repaid their loans.
Norliza said there were borrowers who had yet to settle their loans even by the time they retired.
Labour activist Datuk Shafie BP Mammal said Norliza’s latest revelation about negligent borrowers reflects how PTPTN must review its procedures and operations.
“If you have identified borrowers who have not paid or finished paying until they retired, then whose fault is that?”
“Why did you not go and collect from them? Why allow them to work till they retired without settling their debts?” said Shafie, who heads the UNI-Malaysia Labour Centre.
Hamidi Mookkaiyah Abdullah, who is the Education Association of Malaysia secretary, said the government should formulate a law compelling employers to help deduct salaries of employees who owe PTPTN.
“The application process should be made more stringent. They and their guarantors should be briefed that it is mandatory to pay up,” said Hamidi.
He said the guarantors must also take responsibility for the payment.
“Presently, PTPN only goes after the borrowers and not guarantors.”
Wan Saiful echoed the proposal to deduct such repayments as PTPTN has always had the power to do so even though it has never exercised it.
“A 2019 public consultation found that support for such a scheme is high. Borrowers see salary deduction as a convenient way to pay their loans, and they are open to it being made more widely available.”
To make the repayment more affordable, the salary deduction scheme should be based on how much a borrower earns, he said, adding that such a plan had already been discussed internally during his term.
“If this scheme is adopted, the ceiling rate should be set at 8% of a borrower’s monthly income. Borrowers will only be required to pay when their monthly income goes above a certain threshold.”
Such a scheme would be more fair and affordable than the existing arrangement that disregards a borrower’s income, Wan Saiful added.
