PTPTN urged to refine its loan collection

Economist says the education fund lender needs to shift its approach to a result-oriented mechanism


The National Higher Education Fund Corp’s (PTPTN) needs to implement a re ned loan collection system to address the ballooning amount of debts, analysts said.

Economist Prof Dr Rajah Rasiah (picture) said the education fund lender needs to shift its approach to a result-oriented mechanism, rather than its current management practices which had made the defaulters desensitised on the current situation of outstanding loans.

The economist said the programme could include rigour strategies to address the root of the unsettling debts, while ramping up the lender’s operation to tackle the issue.

“The management has to look for strategies on how they can revert this conducts. If they need more people operation-wise, give them the resources that they need to undertake the programme.

“The defaulters need to have a sense of responsibility and an understanding of this. If we look at the successful instruments, they would have all of these elements and it would snowball from there,” he told The Malaysian Reserve in a phone interview recently.

Rajah believes the current practices have created a negative environment, which made some borrowers feel comfortable in not paying their debts because others are not doing so.

“PTPTN needs to look at the real reason on why this is happening and change certain aspects of their practices.

“The outstanding loan looks like a colossal sum of massive amounts, which could be used to stimulate efficiency in other sectors, but has been denied because you have a shortfall following that amount.”

In tackling the unemployment issue, Rajah said the tertiary education segment also needs to play a role in analysing the quality of students that are being produced.

“The impression is that some of the defaulters did not secure jobs and that tells us whether we are promoting universities that create market-oriented graduates or simply in the activities of accumulating unemployed graduates.

“In addition to that, the government has also come up with some sort of fund to finance the unemployed graduates, which delays the pressure of securing jobs,” he said.

Meanwhile, economist Prof Dr Barjoyai Bardai said the lender should have a tighter engagement level between the lender and borrowers.

“There must be a tighter engagement process, as well as a better approach to address this as some of the defaulters are actually able to pay the loan.

“The problem with PTPTN is the same as any other unsuccessful system, where no real engagement is being put forward. If we can do that, maybe we can improve the number of collections,” he said.

Last week, PTPTN said the fund’s non-performing loans had amounted to RM6.4 billion as of December 2018, which were attributable to about one million higher education students.

The fund’s total outstanding loan had reached RM40 billion, while the defaulters represent more than half of the total borrowers at 51%.

Out of the total defaulters, 32% or 616,000 borrowers have paid inconsistently, while 19% have yet to begin their payment.

To date, PTPTN has funded three million tertiary level students since 1997 and disbursed RM56 billion, as at February 2019.

The education fund lender has begun a public consultation through an online survey between May 16 and June 13, 2019, to collect public information and feedback on measures to improve the lender’s financial viability and collection management.

Last year, PTPTN introduced a direct salary-cutting mechanism for borrowers who earn above RM2,000 to service their study loan, which later was scrapped following a public backlash.

The lender is known to exercise an international travel ban for defaulters, which was lifted on over 400,000 loan default borrowers in June last year.