New model needed for study loans

  • Nation
  • Wednesday, 30 Aug 2006

KUALA LUMPUR: The current mode used by the National Higher Education Fund Corporation (PTPTN) of giving out loans can no longer cope with the increasing demands of students.  

The Higher Education Ministry said it was looking for a new model to manage the fund and was discussing with the Treasury on finding a solution. 

Minister Datuk Mustapa Mohamed said part of the problem was the large number of borrowers from both the public and private higher education institutions. 

While more and more loans were being disbursed to students each year, repayment from those who had graduated was slow, he said. 

“Even if 100% of the students pay up, the inflow of funds from repayments would still be a lot less than the outflow,” he said in an interview here. 

Mustapa lamented that the current rate of repayment – which stands at less than 50% – was “very unsatisfactory”, adding that borrowers, in general, were reluctant to repay loans.  

He acknowledged, however, that there was improvement in repayment after the names of defaulters were published in the newspapers in April last year. “But this, too, costs money,” he added. 

Mustapa said the PTPTN had disbursed loans to more than 900,000 students since its inception 10 years ago. He is hopeful that amendments to the PTPTN Act 1996 would give the agency greater clout to go after study loan defaulters. 

The fund was initially for students of public universities, but was later opened to those from private institutions as well, hence the leap in numbers. 

A sum of RM17bil was approved for the PTPTN, of which RM11.8bil had been disbursed. 

Mustapa also expressed disappointment with the poor response to the National Education Savings Scheme launched two years ago. 

The savings scheme allows families from low income groups (earning less than RM1,200 a month) to plan ahead for their children’s higher education and is administered by the PTPTN. 

The main benefit of the scheme is a matching grant by the Government up to a maximum of RM10,000 to each eligible depositor. Depositors also receive dividends, amounting to 4% last year and 3% in 2004. A minimum deposit of RM20 is required. 

“The response has not been good. There are only 49,863 depositors. They have saved RM14.3mil,” Mustapa said.  

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