Govt's 'salary deduction' scheme on PTPTN borrowers necessary alternative - Borrowers

SHAH ALAM - The government may be introducing an automatic salary deduction scheme for the repayment of student loans obtained from the National Higher Education Fund (PTPTN) through the Income Contingent Loan (ICL) programme.

Prime Minister Datuk Seri Anwar Ibrahim said the government was considering to implement a monthly salary deduction for borrowers who were currently employed.

The National Higher Education Policy Review Committee (NRC) recommended that the monthly wage deduction be made through the Inland Revenue Board (IRB).

“Furthermore, ICL would additionally offer an incentive to the people and employer to repay the loan while encouraging debtors to do their civic responsibility and for future students who are interested in continuing studies but do not have the funds for it," he said through his speech at the Higher Education Ministry’s Open Day closing ceremony in Putrajaya yesterday.

The speech text was read out by Deputy Prime Minister Datuk Seri Fadillah Yusof.

NRC was established in January to improve governance and restructure the education sector in the face of new challenges. It has also been entrusted with reforming the national system of higher education.

Anwar who was also the Finance Minister said securing ongoing money for education had been one of the government's toughest problems and PTPTN was currently the largest contributor, allowing many individuals to pursue their studies.

"We fear that in the long run, this outstanding debt might impact the long-term sustainability of the revolving fund.

“The percentage of loans that were repaid was low. Approximately 2.5 million new tertiary students might be sponsored by PTPTN loans if the outstanding debt of borrowers, totalling RM66.9 billion, is recovered,” he said.

Previously, it was said that the government will provide an incentive in the form of a reduction on PTPTN loan repayments from Oct 14 to March 31, 2024.

A total of 10 per cent will be deducted from the remaining debt for complete settlement, 10 per cent will be deducted for paying off at least fifty per cent of the remaining debt in a single payment and 15 per cent will be deducted for those who signed up for a monthly deduction or scheduled direct debit.

There were various reactions towards this schemes, with most of them supporting the implementation of the scheme.

President of the UiTM Student Representative Council Session 2022/2023 Mohamed Yusuf Hassan Roslan said the government's 'wage deduction' scheme associated with the PTPTN issue was the most practical and effective method to encourage borrowers to pay back their loans more quickly.

"The government needs to ensure sure that this method of salary deductions does not burden PTPTN borrowers.

“If the minimum rate offered is merely in the range of the low and average bar, it is acceptable as the repayment will not negatively impact the borrowers' daily financial circumstances.

“The reason is because debtors may be forced to ration money owing to the commitment of other daily essentials such as house rental fees, electricity bills, water bills and other expenditures,” he said adding that he was concerned that other borrowers might feel constrained by this implementation.

Yusuf further highlighted that if the situation remained the same, old borrowers with outstanding PTPTN commitment would make new borrowers' access to financial resources restricted.

A PTPTN borrower and student Batrina Antasya said she believed that it was a necessary step by the government.

"While others ague that it would be a burden, it is understandable why the government must take such measures.

“Prior to this, there were borrowers before us who refused to pay back the loans which led to others feeling the burden too," she said.

She also hoped the government's incentives of discounts of up to 15 per cent off will lead to the settlement of the debts.

Meanwhile, a former PTPTN borrower who wanted to be known as Farhana said the proposal for an automatic salary deduction scheme was appropriate.

“Sometimes you can forget to complete a financial transaction due to the hectic nature of your job and even daily life. If the deduction is done automatically, it will be easier for all parties and borrowers and they will no longer have to worry," she said.