The amount is worrying as PTPTN’s total loan has reached RM40b, says chairman

By AFIQ AZIZ / Pic By TMR

The National Higher Education Fund Corp’s (PTPTN) held some RM6.4 billion worth of non-performing loans in 2018 attributable to one million former tertiary students.

PTPTN chairman Wan Saiful Wan Jan (picture) said the amount is worrying as its total loan has reached RM40 billion — among the highest with a government guarantee after 1Malaysia Development Bhd.

Wan Saiful stated that it is crucial to find the right policy and mechanism to collect the outstanding money to ensure PTPTN is able to continue providing loans to future applicants.

“We have found that for every RM7,000 loan waived, one application will have to be rejected. So if we were to waive one borrower with a total RM21,000 loan, we would have to reject three applicants in the coming year,” he told reporters at the Public Consultation Paper briefing in Kuala Lumpur yesterday.

The Pakatan Harapan government, in the 14th General Election, had promised to defer payments of all graduates earning below the RM4,000-a-month threshold.

Last December, the government published a fresh paper called the Income-Contingent Loan Repayment scheme, which was meant to come into force in January.

The proposed mandatory salary deduction scheme was halted due to public outcry.

PTPTN then held an internal review and roundtable sessions with stakeholders such as student groups, MPs and financial experts.

The session summarised 10 new ideas that took into account issues of an affordable repayment scheme, ways to improve consistency of repayments, helping PTPTN loan holders to reduce the cost of funds and increasing revenue.

PTPTN deputy CEO (policy and operation) Mastura Mohd Khalid said as of 2018, some 616,000 borrowers failed to repay loans in a consistent manner, leading to around RM3.6 billion of arrears, while about 356,000 borrowers did not pay a single sen to PTPTN with RM2.8 billion of arrears.

“That comprised 51% of the total borrowers, while 26% of them or 499,000 students managed to settle RM5.9 billion to PTPTN. Another 438,000 or 23% have been paying consistently to the fund,” she said.

Mastura added that the travel ban helped encourage repayments as it affected about one million borrowers last year.

PTPTN managed to collect a total of RM2 billion from 684,000 borrowers, who account for two-thirds of the total one million defaulters.

The Pakatan Harapan administration has done away with the travel ban as it created inconveniences to the public at immigration checkpoints.

New proposals to increase loan recovery include barring defaulters from renewing their passports, driving licence and road tax.

The PTPTN has also been advised to turn down applications from the next-of-kin of defaulters, implement a guarantor system and increase the current 1% “ujrah” for student loans for new borrowers, as well as new of mandatory salary deduction schemes.

Established in 1997, PTPTN provides education loans to around 200,000 students annually.

Wan Saiful said the amount collected annually will dive to RM950,000 from RM3 billion, should the income threshold be set at a higher bracket of RM2,000.

He said Putrajaya would need to inject RM2.1 billion for a new batch of applicants, not inclusive of the RM3 billion to RM6 billion of principle needed to serve PTPTN bonds.

If not, PTPTN would have to opt for greater financing or cut the number of applicants.

“Taxes may have to be increased to serve the high debt as the loans are being guaranteed by the government,” he said.