According to Penang Institute, 35% of all private universities are running on negative reserves
by AFIQ AZIZ / pic by MUHD AMIN NAHARUL
PRIVATE universities and colleges, which have been serving about half a million students yearly, might be facing challenges if the National Higher Education Fund Corp (PTPTN) ceases to provide assistance to students, as suggested by certain quarters.
Quite a high percentage of respondents to PTPTN’s recently published Public Consultation Paper (PCP) suggested that, financing and loans for certain institutions and courses with low employability should be discontinued.
The recommendation is among ideas that have been forwarded by the public to PTPTN as the answer to the increasing number of errant borrowers who have not adhered to the national fund’s repayment schedule.
According to PTPTN’s recent figures, 51% or 972,000 borrowers either failed to repay the loans in a consistent manner or did not pay a single sen to the fund, which had led to RM6.4 billion in arrears.
Debts owing to PTPTN currently stands at RM40 billion, yet it is forced to provide more to some 200,000 students of all accredited courses annually via the Malaysian Qualifications Agency (MQA).
The PCP has also proposed that on top of the MQA, recipients of loans should be those taking courses that must meet the minimum Setara or MyQuest ratings and performance targets (the Ministry of Education’s rating systems that measure the performance of universities, university colleges and private colleges).
“The suggestion would be worrisome for many private higher education players. PTPTN does not have a choice but to provide the loan for enrolled students, without discrimination.
“Setara and MyQuest would, however, provide a better benchmark for private higher institutions,” an industry insider told The Malaysian Reserve (TMR) recently.
Currently, the quality of higher education is assured through the MQA which undertakes the implementation of the Malaysian Qualifications Framework.
MQA is also responsible for quality assurance and the accreditation of courses and other related functions, covering both public and private higher educational institutions.
Last December, Deputy Education Minister Teo Nie Ching told the Dewan Rakyat the government will make it mandatory for all private institutions of higher learning to be rated via Setara and MyQuest.
“What we are looking into is to make it mandatory for all IPTS (private institutions of higher learning) and IPTA (public institutions of higher learning) to participate in either Setara or MyQuest so that we can have a more comprehensive rating.
“It would make it easier for (prospective) students to make the best decision in choosing quality IPT (institutions of higher learning) to further their studies,” she said.
Meanwhile, Malaysian Employers Federation ED Datuk Shamsuddin Bardan (picture) said such a move could be the answer for the industry to avert any job mismatch among fresh graduates who are joining the workforce.
“We should look into employability before we encourage students to take up any particular course. There is no point for us to actually allow students to follow certain courses while we know that employment for them could be very challenging.
“At the end of the day, PTPTN may not be able to recover the loan given to students if they do not look into employability issues,” he told TMR.
However, according to PTPTN, implementation of such a plan may need at least a three-year buffer period.
For the time being, based on its existing data, PTPTN would only publish the list of affected courses for public reference, to ensure that loan applicants could make better informed decisions.
An industry source said once a proper list is determined, certain private education institutions businesses would surely be affected.
The source said many of the institutions are already in the red for the past years — especially after the government cut the level of student loans by 5% for public universities and 15% for private universities in 2014.
In 2015, a study conducted by Penang Institute revealed that such a move would cause private universities and branch campuses to be “technically insolvent”.
Of the institutions, three quarters are foreign branch campuses and 70% are other private institutions.
The study also stated that 35% of all private universities were running on negative reserves, which means their total debts exceeded their total assets.
“This may be due to poor management from the top and tight financial conditions, which are taking their toll on the quality of education in Malaysian private universities, leading to high graduate unemployment and poor international rankings,” Penang Institute stated.
The think-tank also revealed that one university college was even forced to cease operations due to funding issues, affecting 2,000 students and 500 staff.
Penang Institute reported the number of students enrolled in financially distressed institutions could rise from 120,000 to 215,000, 44.5% of total private sector enrolment.
As many of them are struggling to maintain educational standards amid a deteriorating financial situation, Penang Institute suggested that merging institutions, and consolidating the universities by areas of expertise could help them survive.
Last year, TMR had reported on cases of “profit-driven” private colleges which had failed to comply with certain provisions within the Private Higher Educational Institutions Act 1996.
Education Minister Dr Maszlee Malik said the ministry will look into the issue and pledge his commitment to uphold academic integrity, together with business sustainability of IPTS via the upcoming “IPTS Roadmap 2019-2025”.
Currently, there are 20 public universities and more than 400 private higher education institutions in the country.a