A privilege, not a right
It’s time to ask what we can do for Malaysia, as we have been asking what the country can do for us for far too long.
IF you borrow money, you have to pay it back. That’s not only a norm but it’s plain decency.
And if you took a loan from the government to get your degree, then for God’s sake just start paying it back as soon as you can afford a decent sum commensurate with your income.
Under the current practice, the sum you wish to repay is your choice. So if someone takes a loan of RM54,000 and opts to pay RM100 a month, it will take that person 45 years to finish paying it off if they decide not to raise the amount of the repayments in tandem with salary increases. He or she will be about 70 years old by then.
If this person has four kids, all five members of this family may be paying their National Higher Education Fund Corporation (PTPTN) loan till death, I think. Can you imagine that?
On the financial front, the government would have lost a lot of money on paper considering how much the purchasing power of the ringgit would change in 45 years. On the spiritual side, most religions rightly preach that you must have a clean sheet when you leave this world.
There is a need to emphasise here that the PTPTN study loan is a privilege and not a right given by taxpayers.
In a move announced last week which has come under heavy criticism, PTPTN detailed the percentage of deductions depending on the income of borrowers from next year.
Borrowers earning between RM2,000 and RM2,499.99 must pay 2% of their salary each month towards the loan, which works out to RM40 to RM49.99.
For an income of RM2,500 to RM2,999.99, it will be 3% (RM75 to RM89.99); for RM3,000 to RM3,999.99, it will be 5% (RM150 to RM199.99); for RM4,000 to RM5,999.99 it will be 8% (RM320 to RM479.99); for RM6,000 to RM7,999.99 it will be 10% (RM600 to RM799.99); and for those earning RM8,000 upwards, it will be 15% (RM1,200 and upwards).
However, Education Minister Maszlee Malik announced that the new repayment scheme has been suspended pending further consultation after much uproar from many groups.
“The ICLR (Income-Contingent Loan Repayment) PTPTN scheme
will be suspended for the time being until we receive the collective input and feedback from all stakeholders,” he said in a tweet on Friday.
There are hundreds of thousands of Malaysians out there waiting for that money to pay for their education. If you don’t return a decent sum monthly and the government continues to mollycoddle these borrowers, the PTPTN hole will just get bigger and bigger.
If not checked, this fund may swallow the nation one day. Why do I say this? Because the total unpaid loans today stand at about RM39 billion. And about 660,000, or nearly half of these, have not paid back even one sen.
The government has taken too much of a populist approach, as it did not want to rock the group which obviously consists of a huge vote bank. But this is the perfect time to move away from this political game to make it very clear that the government means business.
Obviously the students are agitated because Pakatan Harapan (PH) has failed to keep its pre-election pledge of allowing borrowers to start repaying only after they begin
earning RM4,000 a month.
But, hey, we all know that the mess left behind by the former government has made it very difficult for PH to fulfil some pledges that have huge financial implications. So is it too much to ask for some compassion under the circumstances to give the new a government some space to manoeuvre, at least for now? This is about the country that you live and breathe in, which is more important than YOU.
Let’s take the politics out of this currently hotly debated issue and look at it rationally. What makes these borrowers so special that they deserve so much leeway to settle their loans at their own pace and not meet the needs of the nation? They needed a loan to ease their parents’ burden at a crucial time in their lives and the government set up this fund. Students only pay 1% of their loan as processing fees.
If they had taken these loans from a bank, we all know what the consequences would be. Many would have been declared bankrupts by now and their lives would be in a mess if they were as lethargic in paying back the banks as they currently are paying back PTPTN.
And if the money came from a Malaysian loan shark ... well, I need not elaborate here on the consequences if you are reluctant to settle such loans.
This brings us to a pertinent question: Are there any other countries that have a national education fund which provides loans for tertiary education?
In Australia, there has been a highly successful government scheme in place for decades. The repayment terms are simple and straightforward, similar to the one that Malaysia was set to impose from January.
Once you start earning a certain minimum sum, the process of automatic settlement kicks off with the help of the Inland Revenue Department. And on top of that, graduates have to start paying income tax the moment their annual income hits a national wage threshold. And, mind you, taxes start at the 19% bracket, which is twice what Malaysians are subjected to. You do not see students there hitting the streets wearing graduation robes, protesting against the government and asking to raise the minimum salary requirement to start repaying the loans.
Nearer to our shores, Singapore does not have a national education fund. However, it subsidises a scheme which is operated by participating banks. The repayment period is a maximum of 20 years and the students have to start paying back the loans with interest as soon as they complete their studies, except under special circumstances.
India has a similar scheme to Singapore but the interest rates and repayment period are also much higher than the processing fee of 1% levied by PTPTN. The quantum of loans is also much lower compared to PTPTN’s. And Indian students have to start paying back as soon as they are employed. No grace period given by the banks on the panel.
So the new Malaysian automatic deduction plan is a win-win thing: You get to settle your loans much earlier in your life, while the government can recoup the money and lend it to others. After all, PTPTN is just asking for its money back and not taking yours.
But I do think that PH is wrong in doing away with the discount incentive if one wants to settle the loan in full or big chunks of it, as this encouraged many borrowers (or their parents) to settle the loans earlier. It is similar to settling housing loans early, they make huge savings on interest payments.
Let’s not just wait for free handouts or loans to be changed into grants by marching in the streets with ludicrous banners hanging on you – because you don’t look nice, really. Work really, really hard like some do and go for first class honours instead. Then you don’t have to repay your loan.
Perhaps we have been fed with government handouts and special privileges for far too long. The moment reality sets in and we have to tighten our belts for the larger interest of the nation, we are finding it so hard to accept it even if it is for a right reason.
When are we going to display dignity, class and grace and start making decent repayments to PTPTN and be proud of it? I feel it is time to ask ourselves what we can do for Malaysia, as we have been asking what the country can do for us for far too long.
PTPTN should go ahead with its intended plan despite the pleas from Prime Minister-in-Waiting Datuk Seri Anwar Ibrahim and Sports Minister Syed Saddiq Syed Abdul Rahman for it to be put on hold for now for reconsideration.
As Malaysians like to remind debtors with a mix of sarcasm and humour: “Pandai pinjam, pandai bayar balik lah!” (if you are smart enough to borrow, be smart enough to repay).
K. Parkaran was a deputy editor at The Star. He is now a producer at Al Jazeera TV.