WITH a debt “time bomb” hanging over its head, it’s time the National Higher Educa­tion Fund Corporation (PTPTN) gets tough on borrowers, stakeholders said at a public hearing on ways to get defaulters to pay up.

PTPTN is currently on a roadshow holding stakeholder consultation sessions in various states and wants to hear from others, besides students, on how to tackle defaulters which led to the fund’s current debt of RM40 billion.

By 2040, this is expected to grow to RM76 billion, jeopardising the chances of future students to obtain loans.

At a stakeholder session in Penang yesterday, a job recruitment and training agency boss said PTPTN should stop being “so kind hearted” in the way it gives out student loans, considering its high debts due to borrowers’ failure to repay their loans.

Michael Heah, chief executive officer of InterManpower.com Sdn Bhd, said the corporation needs “very stringent” policies to collect repayments.

“Borrowers don’t understand the magnitude of the debts (incurred by PTPTN), which can take down a government. 

“The 1MDB (1Malaysia Development Bhd scandal) debt is RM38 billion. PTPTN’s is RM40 billion,” he said at the public consultation at Penang’s Universiti Sains Malaysia.

Heah was among some 50 participants, mainly students, who attended the second session organised by PTPTN’s public con­sultation independent advisory panel. 

It was the second stakeholder consultation after the first one at Universiti Malaya last week, which reviewed 10 proposals on securing loan repayments.

At USM, several people voiced their support for some of the proposed measures while criticising others.

Heah supported the proposals that calls for loan repayments to be deducted by employers before salaries are paid to borrowers.

This is similar to how scheduled monthly deductions are made to the Inland Revenue Board, Employees’ Provident Fund (EPF) and Social Security Organisation (Socso).

“You need very stringent policies like that. Borrowers have money. They just don’t want to pay. 

“You have to do it. You cannot be so kind hearted,” he said, adding that employers would also want their employees to repay their loans responsibly.

Selective loans

PTPTN should be more selective about giving out the loans to prevent oversupply of graduates earning certain degrees, Heah said.

The oversupply of graduates in a particular job would, in turn, lead to many becoming unable to repay their student loans.

“There are many degree holders working as factory operators in Bayan Lepas (industrial park). I also recently met a (medical) doctor driving for Grab.

“There are also many students who choose not to work in the fields they had studied in. The study loan they get goes to waste,” Heah said.

PTPTN should also cut down on loans given to students taking courses “irrelevant” to market demands, he said.

The current demand now is for graduates with technical skills, since the government is talking about the Industrial Revolution 4.0 and big data analytics, he said.

Heah also advised students to consider studying part-time while working if they failed to get the courses they wanted, because a job will help them support themselves.

Debt across generations

KDU Penang University College assistant manager Shuhada Ismail, 39, who deals with student loans at her institution, said she herself defaulted on her PTPTN loan and almost got blacklisted before she spent more than 10 years to repay back the money.

She also supports proposals to be stricter with borrowers to encourage them to repay their loans.

“I would not have been able to pursue my higher education in engineering without PTPTN… and today, my job involves dealing with students applying for PTPTN.”

Shuhada has even dealt with parents, who are worried about their children’s chances of getting a student loan because they still owed PTPTN money themselves.

“We are now dealing with more than one generation of borrowers.

“I think the approach by PTPTN all these years has been very soft on borrowers. So much so, it has become a political tool and a sensitive issue.

“I support bringing back harsh measures to get borrowers to repay their loans, especially those who ‘tak faham bahasa’ (still don’t get it) for so many years,” she said during the session.

Shuhada said Skim Simpanan Pendidikan Nasional (SSPN-i) can be both a tool for borrowers to make repayments and savings.

She also said borrowers can always reach out to the corporation through its many branch offices nationwide if they have difficulties repaying back consistently.

“I try to change students’ mindset on paying back their PTPTN loan when they start working. It’s a mindset change that we need.”

Panel chairman Sheikh Shah­ruddin Sheikh Salim, who listened to the feedback, said the various views will be presented to the corporation.

PTPTN has given out loans to three million students since 1997, spending RM56 billion as of February this year. It needs RM3 billion annually to give out the student loans.

The corporation faces financial difficulties to keep this up, as it needs to continue borrowing from banks to provide the loans, paying an annual interest of RM1.7 billion while dealing with a large number of defaulters.

Only 49% of the borrowers have repaid PTPTN, of which RM5.9 billion is in complete repayments and RM2.5 billion in consistent repayments, while the remaining 51% have defaulted.

Of the 51%, 32% have not paid for over six months, owing RM3.5 billion and 19% have never paid a single sen, owing RM2.8 billion.

As a result, PTPTN with its RM40 billion debt is one of the largest entities guaranteed by the federal government. – May 26, 2019.