by FAREZZA HANUM RASHID
BACK in the day, applying for loans was the go-to for parents who want to send their children off to colleges or universities.
This would take one burden off the parents’ shoulders, as their children will be able to reimburse the loans once they enter their respective fields of employment.
Fast forward to current times, however, with the downward-spiralling economy and increasing cost of living, including education, this may not be the best option.
According to mnsaves.org, it is always better to start saving for education from earlier on than borrowing only when you need the money.
“When you’re saving, interest can work for you. When you’re borrowing, interest can work against you.
“In the same way that compounding interest over a long period of time can significantly increase your savings, repaying interest on a loan over a long period of time can significantly increase your debt,” it said.
Malaysia Youth Council fellow Adli Amirullah said Malaysians have a critically low savings habit.
He quoted a Ringgitplus survey which said that seven out of 10 Malaysians save less than RM500 a month.
“If Malaysians’ savings is generally low, it is also very difficult for them to have savings dedicated specifically for education,” he told The Malaysian Reserve (TMR), attributing this habit to two major factors, namely low income and low financial literacy.
Adli noted that while savings for education is important, one must understand the priorities of a household.
“The top need of a household is food and shelter. For lower income households, they must cover these expenses before they can even think about education. Whereas higher income groups should have enough to prioritise education,” he said.
He added that the habit to save must start from an early age as it requires discipline.
“Parents and schools play an important role in educating children on financial literacy.
“Other than discipline, teaching our children to move away from consumerism is equally important,” he added.
Meanwhile, Provost at Malaysian University of Science and Technology Professor Geoffrey Williams noted that these days, with universities producing many graduates, the labour market is more competitive and graduates’ starting salaries are very low.
He told TMR that in some fields such as law, graduates are often not paid for their professional training so they struggle to repay loans.
Williams, who is also a Senior Fellow at the Malaysian Institute of Economic Research said an alternative is to promote saving accounts for education.
“The National Higher Education Fund (PTPTN) has a good scheme under Simpan SSPN. It is a long-term saving scheme where parents can save around RM200 per month over a period of time to have enough for their children’s tertiary studies,” he said.
Universiti Kuala Lumpur (UniKL) Business School economic analyst Assoc Prof Dr Aimi Zulhazmi Abdul Rashid agreed that having savings for education is every parent’s dream. Unfortunately, he said, most Malaysians are unable to save enough for that purpose and rely heavily on government assistance and bank loans.
“The B40 group and to some extent the M40 income group are having tough challenges to overcome the rising cost of living, with the former most likely putting more priority on food, clothes and shelter,” he told TMR.
He added that besides parents, children as young as preschoolers must be taught financial planning and instilled with good spending habits.
To encourage Malaysian to start saving at the early stage, PTPTN has launched the “Cabutan WOW! Simpan SSPN 2023” campaign to support this initiative.
With cash prizes totalling almost RM500,000 for 138 winners, PTPTN will hold one annual draw and five series draws throughout the year, starting with “WOW! Gong Xi Ang Pow” from Jan 1 to Feb 28, 2023.
Other draws to be launched soon are “WOW! Syoknya Raya”, “WOW! Merdeka”, “WOW! Superheroes” and “WOW! Y.E.S 2023”. Meanwhile “Cabutan Tahunan” starts from 1 Jan to Dec 31, 2023.
This is to show PTPTN’s appreciation to all Malaysians for choosing Simpan SSPN as their choice for savings.
For “WOW! Gong Xi Ang Pow”, 23 winners will be picked to take home almost RM50,000 in cash prize.
It is open to Simpan SSPN Prime and Simpan SSPN Plus depositors who opened their accounts or made deposits within the campaign period.
Depositors only need to open an account or make additional savings during the campaign period. Every RM100 for Simpan SSPN Prime saved during the campaign period will be eligible for one draw and RM50 for Simpan SSPN Plus will be automatically eligible for two draws.
Even more interesting, this campaign also gives the advantage of multiple draws to users of the myPTPTN mobile app. Simpan SSPN Prime depositors who deposit RM100 through myPTPTN, will get five draws, while Simpan SSPN Plus depositors who deposit RM50 through myPTPTN will get ten draws.
Opening an account and adding a Simpan SSPN deposit can be done online more easily, quickly and securely through the myPTPTN mobile app. For more information, visit the website https://www.ptptn.gov.my/CabutanWOW2023/