YOUNG people have spoken about their heavy financial commitments after a recent survey revealed that the majority of the youngsters polled were in debt.

They told The Malaysian Insight they are burdened with the high cost of living and finding it difficult to pay off loans. They urged the government to come up with a special scheme to help them pay off their debt.

UCSI University Poll Research Centre revealed that 73% of Malaysian youths were in debt and could not afford to keep up with their financial commitments.

The survey highlighted several main reasons for youngsters to take out loans: financial constraints, inflation and living beyond their means.

UCSI Head of Research and Postgraduate Studies, Faculty of Business and Management, Hassanudin Mohd Thas Thaker said the study also found that most of the respondents were taking out loans to buy cars and pay for education, or even taking on a mortgage to buy their first home.

E-hailing driver Mohd Azril Rahmat, 38, said the survey was accurate as he finds it hard to manage his finances due to the high cost of living.

He said currently he is servicing debts on his house, car, Amanah Saham Bumiputera and personal insurance loans.

Azril, from Segambut in Kuala Lumpur, said in a good month, and with long hours, he can earn up to RM6,000 but his monthly commitments are RM4,000.

“I can’t afford to buy all but the most necessary items. If I do shop, it will be at online stores offering instalment payment plans.

“The balance of RM2,000 is also used for food and utility bills, so everything goes on my monthly commitments.”

He said that he has yet to see anything from the government.

“During Covid-19 pandemic we did get something, but this time we have not heard of anything.”

Allow EPF withdrawals

The same tone was taken by P. Ramachandran, a 37-year-old marketing executive who had just got a new job at an advertising company.

Ramachandran said he lost his job in 2020, two months after Covid-19 hit the country.

He said he could not pay off his loans, especially that for education.

“After graduating, I worked and I was able to slowly pay off my education loan. Then I bought a car with a bank loan.

“A few years later, I bought another car under my name for my parents.

“However, when the pandemic hit my contract was terminated and I had no job. I wanted to work as an e-hailing driver but my parents were worried about my safety during the outbreak.

“When the government gave us the opportunity, I withdrew from my Employees’ Provident Fund (EPF).

“Yet recovering from the financial constraints is not easy. The government must allow another withdrawal for people to pay off their debts to escape brutal interest rates.”

Ramachandran said he was in the M40 group, adding that B40 and M40 people are often ignored when the government prepares the budget.

“There is more help out there for small and medium enterprises (SMEs) but none whatsoever for B40 and M40 people.

“Just giving extra tax exemption every year will not help them to break away from their financial woes. Private-sector employees can go years without a proper salary increase or bonus. Perhaps the government can look into this,” he said.

Out of the 1,077 young people in the UCSI survey, 73% are paying off loans – 83% of which were making payments on time.

“Vehicles and education are the two main reasons why young people apply for loans. It is alarming to see vehicle loans at the top of the pyramid because, according to the Insolvency Department, vehicle loans (14.39%) were the number two cause of bankruptcy after personal loan (42.24%) in 2022,” Hassanudin said.

He added that the Covid-19 pandemic played a major role in greater financial constraints for the youth.

He added young people do not have the savings to begin a new chapter in their life, which means they are then forced into applying for loans.

Meanwhile, Sharifah Nor Idayu said while inflation has risen, salaries are stagnant.

She said many low-income families could benefit from free education if the government is serious in assisting the marginalised.

“High cost of living and inflation are real, but my salary has not increased. Not everyone can get government aid because of the red tape.”

“Education has always been a burden. Once you finish studying you are in debt. With the unnecessary interest rates, student loans should help, not cause more trouble.

“If the government can find a way to address this issue, I think many will benefit from it,” the 35-year-old said. – February 1, 2023.