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Let’s reap and pay the price for loans

PTPTN offers loans to those pursuing tertiary studies, but the high number of defaulters is forcing the corporation to come up with a comprehensive plan to recover long overdue arrears.

IT aims to help deserving young minds in the country gain access to higher education for a brighter future.

All the National Higher Education Fund Corporation (PTPTN) is asking for in return is simple – that borrowers repay their loans.

However, PTPTN’s kindness has led to an uptrend in default rates since it first started collecting back the loans in 1999.

This is taxpayers’ money taken by the same people who promised to repay it the day they receive their first paycheck.

PTPTN first started disbursing loans in 1997 for diplomas all the way to doctorate level.

“If it is the Government’s money, then it’s my money as well” is a philosophy embraced by some who had borrowed from the corporation, but are now refusing to service the loan.

This attitude, among others, led to PTPTN’s pool of funds drying up over the years until it had to put a cap on the loan amount they could disburse.

Last month, PTPTN chairman Datuk Shamsul Anuar Nasarah announced that the corporation could not provide full loans because of the poor rate of repayment, as only RM8bil was recovered from the RM56.4bil disbursed since November 1997.

PTPTN even tried to make repayment easier by allowing e-payment through banks.

Apart from e-payment, PTPTN loans could be repaid through Pos Malaysia, bank counters (CIMB, Bank Islam and Bank Simpanan Nasional), financial payment exchange (FPX) services (CIMB, Hong Leong Bank, Public Bank, Bank Islam, Maybank) or the One Stop Centre in KL Sentral.

Borrowers working in government agencies, government-linked companies, as well as public and private higher education institutions could also be paying off their loans through salary deductions.

As of July this year, there are 2.49 million PTPTN borrowers.

Mastura says that more borrowers have started paying back their loans since PTPTN decided to take more drastic measures.
Mastura says that more borrowers have started paying back their loans since PTPTN decided to take more drastic measures. 

However, PTPTN deputy chief executive officer for policy and operations Mastura Mohd Khalid says there are no specific studies on why people refuse to repay. But those who have approached PTPTN to restructure their loan repayments have claimed they have yet to land a permanent job, or simply can’t afford to service their loans based on their current salary.

“They would say that they have a lot of other commitments as well, ranging from housing to car loans,” she adds.

The corporation had been very gentle in its approach to retrieve the arrears, but after having their reminders ignored by some stubborn defaulters, they decided to get tough.

However, PTPTN does face obstacles such as borrowers changing addresses, while some defaulters had relocated outside the country.

PTPTN used to publish the names of stubborn defaulters in the newspapers if they ignored the Letter of Demand sent by lawyers appointed by the Higher Education Ministry.

However, this practice was stopped in 2006 as the move was found to be ineffective, said then PTPTN chief executive Yunos Abd Ghani.

Mastura says PTPTN will issue at least three reminders to defaulters before it takes more drastic measures.

“We also take legal action by bringing defaulters to court,” she adds.

Other than marking them out on the Central Credit Reference and Information System (CCRIS), a move that began in 2015, PTPTN will also contact the Immigration Department to bar defaulters from leaving the country.

Following regulatory amendments, Section 22A of the National Higher Education Fund Corporation (PTPTN) Act stipulates that the PTPTN chief executive can issue a certificate to the Inspector-General of Police or the Immigration Department director-general to prevent the defaulter from leaving Malaysia. In 2008, the names of the first batch of 81 defaulters who graduated in 1999, were submitted to the Immigration Department.

Defaulters who are denied the opportunity to leave the country cannot even apply for a new passport, or renew their existing passports.

Mastura says that once they have been blacklisted, these defaulters would have to either settle their outstanding balance, or approach PTPTN to restructure their repayment.

“About 40% of borrowers who are blacklisted have approached us to pay or restructure (their loans),” she says.

She strongly advises those with arrears to contact PTPTN and negotiate a new repayment schedule if they really want to travel.

However, removal from the Immigration Department’s travel blacklist is neither immediate nor swift.

“It takes at least seven working days for a defaulter’s name to be removed from the travel blacklist,” says Mastura.

As for CCRIS, the borrower’s name will only be there when they are supposed to start their repayments, Mastura adds.

According to the PTPTN website, borrowers are supposed to start paying back their loans six months after graduation even if no payment notice is sent from the corporation, though in practice, the notice is typically sent on the seventh month after graduation.

Mastura says those who are good paymasters need not worry as their credit record on CCRIS would be deemed as “good”, and they should not have any problems obtaining loans from financial institutions just because they are listed as PTPTN borrowers.

“CCRIS is only a database which is used by financial institutions to evaluate those who apply for loans.”

She adds that repayments which are done through PTPTN counters will be reflected immediately, while repayments made through bank counters or Internet banking will take between three to seven working days to be updated.

Other measures to encourage more people to settle their loans include special discounts as announced in the 2013 and 2015 Budgets. PTPTN borrowers who obtain a bachelor’s degree with first class honours are also eligible for exemption in loan repayment.

To encourage earlier repayments, the 1% ujrah (fee) will be waived if the loan is fully settled within six months after graduation.

Likewise, there will also be a reduced fee for borrowers who settle their loan earlier than the stipulated period.

However, this option is not available to borrowers who are already subject to enforcement action, as well as those who had breached previous loan agreements (cancelled loans, failed in studies, quit studies and obtained another sponsor).

Though some borrowers had criticised PTPTN for changing its terms and conditions without prior notice, Mastura says that no change will be made without the consent of borrowers “unless it is in their favour”.

“Borrowers are then required to sign a new agreement to convert their loan from a conventional one to ujrah.

“They are also required to discuss with PTPTN if they want to apply for a loan restructure,” says Mastura.

Responding to how long it takes PTPTN to settle the myriad of complaints hurled against it, Mastura says that complaints are usually dealt with as promptly as possible.

“The complainant will be informed if the issue requires a long time to be solved.”

Related story:

Not always our fault, say borrowers

Education , PTPTN , loan payment , students