The PTPTN dilemma?

The only reason why PTPTN is facing so much trouble is because of its lack of enforcement in loan recovery.

Let’s examine the term “free education” that student activists have been shouting themselves hoarse the whole of Saturday. In economics, one has to learn that the word “free” simply means that the product or service you’re using is being sponsored by someone, somewhere.

It could be an organizational body but mostly it’s sponsored by taxpayers. That’s right, by citizens like you and me – and of course, corporations who have their businesses set up.

When the PTPTN protesters marched from Masjid Jamek to Dataran Merdeka, did they ever consider that in Scandanavian countries where education is free (the very thing they are fighting for), the fees are extracted from the high taxation rates the government imposes on its citizens?

In Scandanavian countries, it’s not unusual to see citizens taxed up to 57% while Malaysians only experience up to 21%.

This may be in-line with their economic progressions compared to ours but if raising the prices of petrol by 10 sen can cause an uproar among fellow Malaysians, imagine what higher taxation rates can lead to.

The demands of the PTPTN protesters are simple: abolish PTPTN and government-loan systems as well as set up free education in Malaysia. It sounds great on paper but unfortunately; carrying it out may not be as simple.

The sad reality of the majority of those who take the PTPTN study loans is that the money (after deduction from fees) is used towards leisure as compared to essentials such as food and transportation.

It’s not unusual to hear my fellow peers moaning about their depleting cash after at least two months of receiving their loans. And why wouldn’t they be ecstatic if someone suddenly tells them that their loans of thousands of ringgits have vanished into thin air?

Of course, one cannot deny that there are those who spend the loans responsibly but the majority of those who receive the loans are usually blinded by the fact that they’re living off borrowed money. And when it comes to paying back, this is when excuses are made and protests are held.
Lack of enforcement

Our prime minister announced that it will take the government RM43 billion to pay off all the PTPTN loans as aspired by the opposition. When you think about it, that’s a substantial amount of money and it is bound to be cut from our subsidies and taxes.

It may sound like a great plan but short-term solutions are always proven not to work in the long run, just like empty campaign promises.

PTPTN loans make it possible for those who don’t have the money to access tertiary education that are by no means costly. Abolishing PTPTN will simply mean removing one of the means that has made it possible for many graduates to get themselves through tertiary education that they or their families could have otherwise not afforded in the first place.

The only reason why PTPTN is facing so much trouble is because of its lack of enforcement in loan recovery. Though the corporation has tried many methods, including blacklisting that prevents defaulters from leaving the country – this has been met with criticism and backlash by the very same people who borrowed from the money.

If PTPTN wants to be serious about recovering its loans from defaulters, they need to implement a more effective system.

They could take a leaf out of the EPF’s mechanism that deducts a certain amount of money from a graduate’s monthly salary until the loan is settled and makes it compulsory. Waiting and expecting defaulters to pay back on their own initiative will be a long and painful process that makes no difference to the current situation.

Loan sharks, bank corporations and anyone who has ever loaned money to another can all agree on one thing: If you’re willing to go through the trouble of borrowing money, be responsible enough to pay it back.
Aziff Azuddin, 21, is a UiTM student who is currently pursuing his Bachelor’s Degree in Journalism.

By Aziff Azuddin