This statement drew provoked backlash from the public and even ministers like Khairy Jamaluddin.
Yesterday, Education Minister II Datuk Seri Idris Jusoh said PTPTN recipients from 1998 to 2010 will be given three months to start repayments before being blacklisted in CCRIS.
Notwithstanding the fact that the idea of CCRIS listing does not bode well with the people, a bigger question arises. Is it a bad idea?
To the uninitiated, CCRIS is a Bank Negara database that stores financial records of Malaysians digitally for references by financial intermediaries in prospect of a new loan issuance.
Every individual who has taken a loan from any financial institution will be listed under CCRIS. And so far, it has become a “custom” for any finance provider to refer to the CCRIS system before sanctioning a new loan application.
It has to be made clear that CCRIS is not a bankruptcy listing system. Only the Department of Insolvency can declare a person as a bankrupt.
So, will an individual with a bad financial track in CCRIS be given a loan in future? That depends on the financial providers’ discretion.
The insinuation of errant PTPTN loan takers to be listed under CCRIS is a good idea and should be welcomed.
Such a move will hopefully create awareness among the loan takers to repay their debt as per the contract.
Commonly, these errant PTPTN defaulters will be warned by three (3) notices before any further action is taken.
Thus, defaulting in loan repayment should never be an option.
But, it has to be reminded that only CCRIS listing will not do much good. Why, it could even lead to more problems if reforms in PTPTN do not precede it.
And here are my proposed reforms for a better PTPTN scheme.
Payment starts six (6) months after getting a job
First, PTPTN which aims to be a helpful medium for higher education dreams of younger Malaysians should never be a “stumbling block” in crashing their future.
For a better service, PTPTN should come up with a better repayment schedule.
At present, PTPTN loan takers are required to repay six months after graduation.
Looking at the current pace of Malaysia’s institutions of higher education churning out more graduates, more are likely to be unemployed for the first six months or even one year after graduation in some extreme cases.
Hence, if system resumes, more defaulters will emerge and more will be hurt financially. Thus, in my opinion, it is best if the graduates are only required to repay their debt six months after landing a job.
Abolish the current 1% administrative cost under Ujrah scheme
Next, as PTPTN is a government body for a special purpose, it is best that interest rates are done away with for the PTPTN loans.
Although a 1% flat rate is imposed under a new plan, it can still be considered as a burden for loan takers.
It is understandable that PTPTN has management and operational costs but it is best for the government to absorb these costs to allow no interest for loan takers.
This is much better than providing free education.
Set a threshold for loan conversion into scholarship
PTPTN has introduced a commendable plan prior to this, by allowing students achieving first class degrees to convert their loans into scholarship.
However, this has failed to be effective as in the current practice, the institutions of higher education have different threshold cumulative grade point average (CGPA) to indicate first class degree, that is, UM – 3.75, UiTM – 3.50.
Thus, the CGPA threshold for converting loan to scholarship should be standardised at 3.50 (for Arts subjects) and 3.30 (for Science subjects).
If such move is to be introduced, a level playing field can be better fostered.
Mandatory payment only after a certain salary limit
While it is understood that one is bound to repay one's loan as promised, the struggle of the current and coming graduates should be focused on.
With skyrocketing cost of living coupled with slow increase in salary, the financial burden of a new graduate is of grave concern.
Many, if not most graduates, can only expect a starting salary of about RM 2,000.
Thus it is proposed that PTPTN should allow borrowers to repay only after their monthly salary hits RM 2,500.
This is to ensure that the loan takers do not default and are in financially stable situation.
Top up PTPTN fund annually
PTPTN’s highest-level administration often voice out that due to actions of defaulters, the fund amount is quickly shrinking and affecting future borrowers.
This should have never happen. The unethical actions of defaulters (although some are financially troubled) should not be allowed at the expense of others.
Thus it is recommended that the government should top up the PTPTN fund every year to make sure all financially vulnerable students’ loan application be sanctioned.
Critics may claim that such approach is counter productive to the fiscal consolidation measures of the government because it increases spending.
However, all quarters should understand the importance of higher education and provide access to financially struggling students through such an approach.
Scholarship recipients should not receive PTPTN loans
PTPTN ought to make sure that any recipient of scholarship, particularly from the Public Service Department should not be entitled to PTPTN loans.
Certain cases have been noted that those receiving the PSDs PIDN scholarship are also receiving PTPTN loans.
The worst part is where the loans are invested in higher interest-yielding trust funds to earn money. This is how some students are becoming “financially creative”.
There could be more cases of unscrupulous students “stealing” the opportunity for education financing from those whom are more in need.
Conclusion
PTPTN needs reform and its crystal clear. Pursue all these reforms and other appropriate measures before listing the defaulters in CCRIS. This will ensure the sustainability of PTPTN fund. – October 10, 2014.
Comment by Ganeshwaran Kana, a third-year economics undergraduate in University of Malaya. He blogs at universlathboss.blogspot.com.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.
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