To pay or not to pay?


  • Nation
  • Sunday, 06 May 2012

Along with the criticisms against the PTPTN, there have been calls for free higher education in Malaysia. But is this viable?

FOR nearly two weeks last month, a tent at Dataran Merdeka was home to Universiti Selangor (Unisel) student Jamila Rahim at night.

Every morning, the 20-year-old would take the LRT, switch to KTM’s commuter train, hop onto a bus and then take a taxi to reach her campus in Kuala Selangor.

The tedious journey took two hours and Jamila barely had time for a shower at her hostel before heading for classes.

When lectures ended at about 5pm, Jamila would make another two-hour journey back to Dataran Merdeka where she joined other students in their cause – to demand that the National Higher Education Fund Corporation (PTPTN) be abolished and for free tertiary education.

“Education is not supposed to be a commodity. It is a right,” opines Jamila who is training to become an English teacher.

The students had put up banners at the square, among them one labelling the PTPTN as a “loan shark” and another stating that “education is not for sale”.

A final year student, Jamila took on a RM20,000 loan for her diploma course. Now, she believes that the PTPTN loans should be abolished for those studying in government universities.

When asked about others who have paid back their loans, she says they should be reimbursed.

When questioned further on whether those who used their own money to pay for their education should be reimbursed, Jamila says no.

“We can’t be fair to everybody but by abolishing these loans we can reduce the unfairness,” she says confidently.

Firdaus, 23, a final year economy student at the International Islamic University Malaysia (UIA), also believes it is viable for the government to provide free education, including tuition fees and accommodation for students.

“The government can afford it. We have a lot of resources such as petroleum and palm oil,” says Firdaus, who has taken a RM35,000 loan from PTPTN. He adds that countries like Sri Lanka provide free education.

The Nordic countries as well as Greece and Argentina are among those nations that currently provide free education at all levels for their people.

During their sit-in at Dataran Merdeka, many of the students justified their claims for free education by highlighting scandals involving public funds such as Port Klang Free Zone (PKFZ) and the National Feedlot Corporation.

Lau Yi Leong, 20, highlights a case mentioned in the auditor-general’s report where the Marine Parks Department (JTLM) paid RM56,350 for night vision marine binoculars although the estimated market rate for the item was RM1,940.

He says the government should check corruption and invest the money in education.

The students’ action, however, did not receive much support, and many critics chided them for being unreasonable. The point they raised was: if you borrow money, you have a duty to pay it back.

Even Lau, who is pursuing a law degree with a PTPTN loan, will pay it back when he starts working. “I believe it’s the right thing to do,” he says.

Parent Action Group for Education (PAGE) chairman Datin Noor Azimah Abdul Rahim says students should snap out of the subsidy mentality. The former accounting student says she paid her Mara loan diligently and doesn’t see why other students can’t settle their loans.

“You appreciate something when you have to pay for it. When it’s free, people don’t place a value on it,” she says, adding that having a degree has its benefits.

She believes the one thing that can be learned from this discussion is money management and learning to live within one’s means.

“If you don’t pay for it (your education), then there wouldn’t be any need to work hard and pass. If you have to pay back, then you would work hard for your degree and get a job to pay back the loan,” she reasons.

Bryan Yeow, 31, a Universiti Malaya science graduate who borrowed RM21,000 from the PTPTN, says he has been paying back his loan, settling about RM2,000 each year. “I can pay RM150 a month for 15 years if I choose to. It is not an unreasonable amount. Some mobile (phone) plans can cost you that much,” he says.

Monthly instalments

He observes that even graduates who claim to earn paltry salaries splurge on expensive items such as cigarettes, phones and cars.

“If you buy an expensive phone, then you might not be able to pay off your loan,” he says.

Ikbal Farid, 30, a former Universiti Kebangsaan Malaysia student borrowed RM22,000 from PTPTN for his accountancy studies. He has been paying off RM100 monthly instalments for the loan, a sum he believes is affordable. The minimum payable amount for PTPTN is RM50 monthly.

While Ikbal believes students have the right to demand free education, he says it is not justifiable at this point of time because the taxpayers’ money should be spread out for the public.

He believes that public funds should benefit at least two-thirds of the country’s population and it would be better for the Government to use these on fuel subsidies or consumer products, for example.

“Not everyone qualifies for further their studies,” he reasons.

“I would love free education but there are many more important things out there. Every taxpayer would want to feel satisfied with how their money is being spent,” adds the businessman who believes that public universities currently charge reasonable fees.

PTPTN meanwhile says it is not easy to abolish the loan scheme as this would affect about 200,000 students dependent on loans to further their studies annually.

As of last year, PTPTN has approved loans totalling RM42.96bil for 1,926,054 students in both government and private learning institutions. The disbursement of the loans until last year was RM28.69bil, with another RM14.27bil to be disbursed until 2014.

PTPTN is funded by federal government grants and lending from financial institutions.

From 1997 to 2002, PTPTN received grants totalling RM5.3bil from the Government.

In 2003, the Government decided that the PTPTN funds would come from financial institutions. Between 2003 and 2011, a total of RM25.7bil was borrowed from such institutions.

A spokesperson says PTPTN borrows from these financial institutions at interest rates of 4% to 5% yearly.

“These interest rates are borne by the Government and not the students,” says the spokesperson.

Facts and figures

From 2004 to 2011, the Government spent RM3.62bil on paying the interest. This year, the amount to be paid is RM1.09bil. The PTPTN spokesperson says that 227,209 students received loan approvals last year – 138,375 from public colleges and universities and 88,834 from private learning institutions.

He adds that the majority of parents and students appreciated the loan facilities provided by the Government through the PTPTN.

The spokesperson also says that the amount being repaid has been increasing every year – from RM553mil in 2009 to RM638mil in 2010 and RM737mil last year.

He adds that graduates who obtained first class honours are exempted from paying back the loans, which would be converted into scholarships.

In the case of those who could not afford to repay the loans, the PTPTN is always open for negotiations, he explains and reminds that the PTPTN accepts a minimum payment of RM50 monthly.

The spokesperson says that until last year, 21,838 blacklisted borrowers had negotiated with the body on repaying their loans and subsequently made payments totalling RM163.97mil.

As for free tertiary education, Wan Saiful Wan Jan of the Institute for Democracy and Economic Affairs (Ideas) thinks that even if it is viable to provide free education, it is not justifiable because someone has to pay for it.

“In the case of education, the Government takes money from different sources to pay for it. So, it is not free at all. Maybe the students or their parents don’t pay, but somebody else pays for them,” he says.

Chief economist of Ratings Agency (RAM) Dr Yeah Kim Leng agrees with Saiful, adding that the Government would also have to cut back on development expenditure, healthcare and infrastructure, among other things.

Citing the countries that provide free education for their people, he highlights that the Nordic countries impose tax rates of 40% to 50% on their population whereas Malaysia’s maximum is only 28%. This, he believes, is not enough for such a venture as free education.

“From an economic perspective, borrowing is more effective in access to tertiary education,” says Dr Yeah, adding that the PTPTN loans provide an opportunity for those who are eligible for it to further their studies.

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