IT is not right to abolish the 1% interest in administrative costs for National Higher Education Fund (PTPTN) loans as it is shariah-compliant, said chairman Shamsul Anuar Nasarah.

“The shariah-compliant interest on the loans was decided by the National Fatwa Council. 

“It is not right to abolish the 1% interest because the cost is minimum and it’s not to make a profit, as claimed by those who took the loans.

“It is to cover the staffing and administrative costs of those who are managing the accounts,” he told The Malaysian Insight.

The Lenggong MP was responding to calls by borrowers for the agency to put a stop to the high administrative charges, which they say feels more like usury.

Borrowers are charged between 1% and 3% interest, and additionally, their loan amount will increase if they fail to pay their instalments.

Shamsul said the agency had absorbed the 5% interest rate charged after taking loans from financial institutions in 2003.

“Borrowers should understand that the agency has not received any grants from the government since 2003, and PTPTN has been taking long-term loans from KWSP, CIMB, Ambank, RHB and Maybank, and sukuk distribution in order to give out study loans.

“We have been charged as high as 5% interest on loans taken. However, borrowers are not charged our interest charges.

“The interest is being absorbed by the government and PTPTN, and not the borrowers.”

He added that the costs being charged were lower than other financial institutions.

PTPTN borrowers sign an agreement to pay administrative charges of between 1% and 3%, depending on their level of tertiary education and other considerations, on their loans after a grace period of six months following their graduation.

After the agency’s establishment, administrative costs had amounted to 4% a year. It was gradually reduced to 3% a year since January 1, 2004.

Now, the interest is only 1% a year, beginning June 1, 2008.

Bernama had reported that PTPTN was expected to collect RM4 billion by the end of the year.

Higher Education Minister Idris Jusoh said the target was achievable as the agency had collected RM3.4 billion last year, when its target was only RM2 billion.

“Since March this year, 284,210 borrowers, who had been blacklisted, have paid back their loans after joining the ‘‘Boleh Bincang’ (Can Discuss) programme,” he told the Dewan Rakyat.

According to the latest Immigration Department statistics, more than 50% of the 622,768 Malaysians barred from travelling abroad since 2010 were PTPTN loan defaulters. – August 9, 2017.