Yes, I am referring to outstanding personal debts which we all tend to accumulate.
To get straight into it, everyone has to manage their debt. Be it a little debt, you have to keep up your payments and make sure it doesn’t get out of control. On the other hand, when you have too much debt, you have to put more effort into paying off your debt while juggling interest payments on the debts you are not paying right now.
We should all know the basics of who and how much we owe, to pay our bills on time each month, create a monthly bill payment calendar, make at least the minimum payment, decide which debts to pay off first, use a monthly budget to plan your expenses and the list goes on.
The problem is, do we have the courage to make the first move?
It was recently reported that a total of 137,609 National Higher Education Fund Corporation (PTPTN) borrowers got discounts totally MYR12mil via a measure announced in Budget 2017.
PTPTN chairman Datuk Dr Shamsul Anuar Nasarah said a scheme to offer the discounts was introduced on 22 October. Borrowers who make full settlements of their loans will get a 15% discount, while 10% discount will be given to borrowers who agree to monthly salary deductions, The Star reports.
Clearly the government is trying to make it easier for those of us who have yet to make any effort to pay back our PTPTN loans to start doing so.
While most of us only think of our own outstanding debts, what we owe and don't pay back can deprive someone else's dream to pursue their education.
With the year drawing to a close and New Year resolutions looming, what better time to encourage Malaysians to start paying off their student loans.
We sought professional help and feedback from those who have been in this same situation to share their experiences with our readers.
Pay Up Your Student Loan So That Future Students Can Get A Loan Too
Before we start settling our loans and debts, surprisingly out there, are some whom are desperate for a student loan. I don’t blame them though. I understand why someone would choose to apply for one. However, it’s a shame when one’s loan application is rejected.
Now that the government is offering a discount, perhaps more borrowers will start paying back so that others can have the opportunity to finance their studies too.
Nik, 21, a Banking and Finance student shares his story.
As to why he thinks he failed to get a PTPTN loan, Nik explains how he was apparently told that his father has the means to afford his education, hence, the rejection.
“Even if he can, that's not the point. In my case, it's my wish to be somewhat independent once I enroll in college and also to lessen my dad's burden. I think they used this as an excuse to avoid stating the actual reason,” he added.
For alternative sources of financial aid to fund Nik’s studies, he then resorted to MARA and banks but the requirements for bank loans are tough and as for MARA, he explained that they have changed the whole system and regulations to a point that one person receives a different information from another.
“So it has been unnecessarily confusing because it's not thoroughly explained and standardised,” he frustratedly added.
As to whether other former PTPTN borrowers are to blame for his rejection, Nik admittedly said he won’t use the term blame but they are partly responsible as to why a lot of students had their PTPTN loans rejected.
“The way I look at it, if you used the money and refuse to pay up, where do you think the entity get their funds to support future students?” he questions.
I must say, he makes a fair point.
Nik believes authorities concerned should play their role accordingly in order to encourage others to pay back sooner. He then shares a few suggestions.
“Heftier punishment. Increase the interest rate. Prevent them from applying for future loans or perhaps make it difficult to get a job.
“Something that literally blocks them from moving on to the next chapter of their lives due to unpaid debts. They don’t need to pay fully right way, but as long as there's consistent payment activity, that should be good enough.
“And now with PTPTN and their incentives that deducts your loan from your salary, this ought to make it easier for borrowers,” he encouraged.
PTPTN has put in stricter controls like linking the outstanding debt to one's credit rating and even barring defaulters from leaving the.country so Nik's suggestions are reflective of the current situation.
I understand where he’s coming from. So now that you have used up every cent from that loan, maybe it’s time to pay the piper, Malaysians?
“The Faster You Settle Your Loans, The Lower The Interest Rate,”- AIA Financial Planner
Adele Khor, 25, AIA Financial Planner helped this writer put the matter into perspective. She strongly believes that once you have loans, it is always best to settle it as soon as you can.
“This is because it is better to owe yourself as opposed to owing someone else. Also most importantly, the faster you settle your loans, the lower the interest rate.”
Like everyone else, Adele also has debts.
“As of right now, I am only left with my housing and car loan. Whenever there is extra cash spillover, I like to push it all into settling the loans as I don't have to delay the payment duration,” she honestly said.
There are countless methods out there you can use to be more efficient in settling loans but this savvy financial planner had a strategy of her own in which she was kind to share.
“I have set aside a few funds in order to manage my finance. There is emergency funds, savings, leisure and loans. For my loan fund, I usually put in more than necessary for that month. For example, if my loan payment is MYR500, I will force save MYR600.
“After a few months, it would not feel like such a pinch. So depending on the income I am making at that point, I will take 50% into savings after deduction of the basic necessities like bills, petrol and loans,” she added.
Now let's not overestimate financial planners. Of course it has been a slight burden too during the process of paying back for Adele.
“When you have loans to pay, that chunk of money goes to another person instead of your own leisure. So instead of indulging myself, I had to pay someone else and live on maggi mee.
“But now, it is an enlightenment to know I do not owe anyone. Now, my money is my own to enjoy at my heart’s content,” she firmly added.
Defaulters Be Warned - Once You Are Supposed To Start Repaying, PTPTN Will Put Your Name In The Central Credit Rating System
We all have our own financial challenges. As for Nik, his was the study loan rejection, whereas for Kay, 26, life as a student loan borrower has been an insightful journey.
Paying back requires high tolerance and commitment. If you lack either, mind you, it won’t be a stroll in the park.
Kay explained how it all started when she realised her name was in the Central Credit Reference Information System (CCRIS) system.
In an article by The Star, about 1.3 million PTPTN borrowers listed under the CCRIS system have a black mark on their credit rating because they failed to pay back their study loans on time, if at all.
National Higher Education Fund Corporation (PTPTN) deputy chief executive officer (policy and operations) Mastura Mohd Khalid said that once blacklisted in CCRIS, one’s credit rating could take a nosedive as one could be deemed a “bad paymaster”.
This can lead to financial institutions denying the person loans or other credit facilities.
She added that all PTPTN borrower would be listed in CCRIS once it was time for them to start paying back, which was six months after graduation. “Once someone is supposed to start repaying, we will list their names in CCRIS,” as reported.
“I wanted to apply for a car loan roughly 8 months ago. I had to pay the arrears of MYR4k in order for the bank to approve my loan. I had to use MYR2k from my savings to pay 50% of the arrears. At the PTPTN Centre, the officer told me to pay the full sum which amounts to MYR4k," said Kay.
“Since I can only afford half, the process then became negotiating an agreement to pay back or deduct MYR100 from my savings account monthly. I was able to give my car dealer a copy of my agreement. A couple of months later, I finally got my car,” she gratefully added.
So with the outstanding student loan, a supposedly easy process becomes a hassle. Reflecting on the experience, Kay shares a few tips on managing finances to settle loans or debts.
“You have to work hard to get your salary and pay MYR100 per month in order for you to not be blacklisted again. I plan my monthly expenses by making PTPTN as one of my priorities.
“You will feel less burden when you plan your expenses and the guilt of not paying won’t be there. We are adults afterall, so have the initiative to be responsible,” she advised.
Kay admits it was the government that triggered her conscience to start paying back her study loan. Otherwise, the car she drives to work everyday would not exist.
“When they (PTPTN officers) asked how much I was able to pay, just be honest. Know of your budget and what you are capable of. As I said before, we are adults now.
“Although I am not the sole breadwinner of the family, there are still other sacrifices I have to be willing to make in order for an easier life years ahead,” she added.
Confessing Is The First Step To Redemption
Here’s an ugly truth I have been delaying to admit to myself. Since leaving university in April, I have an outstanding debt of MYR20,000 in student loan. And here’s an even uglier truth, I have yet to start paying any of it back.
Don’t get me wrong, I do intend to start. In fact, I have only just recently went over to the National Higher Education Fund Corporation (PTPTN) offices to discuss my monthly financial arrangement to start paying them back. I am not making any excuses but as I have only just started my working life, I needed to owe some others first in order to get me on track. So to make matters less confusing, life has been basically one debt at a time. And as of now, my priority is my study loan.
I am well aware I have to make some drastic adjustments to ever whittle it down. The rate was not very impressive or efficient, but it helped me differentiate between necessities and luxuries. I do not regret this debt I have accrued. Lets face it, without it, I could have been more reckless today.
While my debt may keep me awake at night and give me panic attacks during the day, I can never say I regret my decision or if I would even change anything after looking back.
As of now, I have ensured a certain amount of my pay is automatically deducted monthly so that way I wouldn’t have to procrastinate any payments. My focus now is to settle the arrears of my PTPTN so that at least it won’t cause any restrictions if say I plan to travel.
I won’t let my debt be in vain. Otherwise, I may be looking at one very expensive regret.
The need to travel and find meaning in life burns brightly but one of the biggest hurdles is money. Money is vital. Like health, it doesn’t ensure happiness, but without it, makes happiness very difficult.
So yes, debt matters. It just requires time, sacrifice, and possibly working a few jobs, like a Mexican. And taking control over your debt is the first step.
As the wise Adele Khor also mentioned, loans should be settled immediately as it is like ripping off a bandaid. The slower the process, the more intense the feeling.
“If you are capable of paying just a little bit more each time you settle your monthly installments, you will realize that it becomes easier to save as well as decrease the loan period.
“Always settle as soon as you can and no one can boss you around,” she added.
To get myself properly motivated, I like to think of a life where I am debt and loan free.
Imagine no longer feeling guilty for traveling across the globe. The freedom to choose to engage in grown-up sounding pursuits like investing in mutual funds and individual stocks! Saving for a house now just became a reality! You could buy all the fair-trade coffee to your heart’s extent.
When you are debt free, your life is truly yours again.
-mD
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