The Malaysian Insight

A UNIT trust scheme might be the best way for PTPTN to recover loans, a town hall on the fund’s financial woes heard yesterday.

There were suggestions that the National Higher Education Fund Corporation (PTPTN) emulate Permodalan Nasional Bhd’s successful Amanah Saham Nasional scheme to encourage borrowers to repay their student loans.

Such a scheme will also encourage borrowers to save and earn annual interest, said PTPTN borrower Zekiel Kushan at the town hall in Kota Kinabalu.

PTPTN could introduce a unit trust fund and charge borrowers the standard commercial interest rate for the loan scheme, he said.

This way, said the 30-year-old teacher from the Sabah capital, PTPTN will encourage borrowers to settle their loans and pay off the amount taken out to buy the unit trusts.

Borrowers will make enough money from the unit trusts to settle their study loans, as well as loans taken out to buy the unit trusts, he said.

“The good side to this is that the fund will encourage borrowers to invest and earn extra from the annual interest.

“Borrowers can also opt to use the annual interest to service their education loans,” he told the PTPTN independent advisory panel, which has been tasked with gathering public feedback on resolving the fund’s RM40 billion debt.

However, this would be applicable only to new borrowers, said Zekiel, adding that it would not fully resolve the fund’s debt, but certainly stop it from growing.

Present at the town hall, held at Universiti Malaysia Sabah, were about 50 people, comprising borrowers, university students and staff. It was PTPTN’s fourth public consultation to date.

At present, PTPTN borrows from the financial market and is charged 5% interest. The funds it raises are disbursed as student loans, with borrowers having to repay at only 1% interest.

Despite its debt burden, the fund is still able to borrow from the financial market as it is backed by the government. PTPTN lends to up to 200,000 borrowers annually.

Another borrower, Allan Martin, suggested that the fund revise its policies and approve loans only for those from B40 families, whose household income is less than RM4,000 a month.

“Although many think it is their privilege to enjoy PTPTN loans, the fund should prioritise those who are poor,” he told The Malaysian Insight after the town hall.

He said PTPTN must take note of the disparities in the cost of living, income and prices of goods between Sabah, Sarawak and the peninsula.

Goods are pricier in Sabah due to geographical factors, he said.

Most of the participants supported the idea of a mandatory pay cut to settle PTPTN loans.

However, the percentage should be adjusted based on borrowers’ cost of living, they said.

Another suggestion given was for PTPTN to emulate loan-shark tactics, such as promoting repayments from as low as RM1 a day. – May 30, 2019.