The National Higher Education Fund Corporation (PTPTN) has taken its first steps in recuperating unpaid education loans amounting to almost RM867 millions. On Feb 1, 1,000 defaulters from the pioneer batch of loan recipients in 1997 will be placed on the Credit Tip Off Services Sdn Bhd (CTOS) and Bris Information Services Sdn Bhd (BRIS) lists.
“We will take legal action against these defaulters and if they don’t show up in court we may seize their properties or put them is jail” said PTPTN chief executive Yunos Abdul Ghani (The Star January 27, 2007)
If borrowers fail to settle the outstanding amounts, arrest warrants may be issued and they may face the consequences of being jailed, declared bankrupt or the confiscation of belongings and assets. Those who are blacklisted would also not be able to get loans from any reputable legal financial institutions.
Actually, this is the scenario facing many university students today. Upon graduation, they have to think about how and when to pay back their loans. To threaten punishment is very simple but in order to dispense justice is another matter which very few people are afforded.
Certainly the government does encourage graduates to be self employed, for example; in biotechnology, young entrepreneur schemes, etc. However, before embarking on their own, they need some financial support. Where can they get the funds if they are unable to produce the required pay slips, collateral, 20% cash deposit from the total projected cost. Unless, graduates come from the well-off and well connected families, it is unlikely that many will succeed in securing the necessary start-up capital.
From a different perspective, the enforcement to pay back PTPTN loans may contribute to social maladies. As teenagers, borrowers can become easily involved in various negative activities such as prostitution, as guest relations officers (GRO), tempted by corruption (abuse of power while working with a meagre income), underworld activities and the like in order to garner quick profits and huge sums of money to settle their education debts. One day, perhaps Malaysian jails will sooner, will be filled with graduate loan defaulters.
We still remember, that in the 70’s, job opportunities were abundant and the government at the time provided scholarships. In contrast, from the 90s onwards, job availability was limited, education loans (with 4% interest rates plus a processing fee) were made available instead.
From a political point of view, perhaps this is the perfect time for the Opposition parties to influence those students (borrowers) and urge them to get involved in politics. They may make use of them to oppose the government. In the long-term, Malaysia could lose the intellectual element and therefore knowledge will no longer contribute towards civilization.
In Germany, for example, education is provided free to people who intend to pursue knowledge. Most European countries charge tuition fees, but Austria, Germany and the Scandinavian countries offer university students the best possible deal. Free education.
Meanwhile, the British government admits that the fear of debt is deterring poorer students from going to university. They’ve decided for a full review of the student support arrangements introduced in 1997 whereby reforms will probably see the end (or the substantial reduction) of student fees. The British government is saying that this year 50% of students will pay no fees at all. Maintenance grants (student allowances) will also be reintroduced for lower-income students, possibly on a universal basis. The Guardian reports that future graduates may be required to pay extra income tax for 20-25 years after leaving university. They would be required to pay this graduate tax regardless of whether or not they take out a student allowance, but it would be “a pebble, rather than a millstone”.
From my past working experience in New Zealand, the New Zealand government contributes to society under Part 1 of the Social Security Act 1964, which includes unemployment benefits, sickness benefits, New Zealand superannuation, veteran’s pension, transitional retirement benefits, living alone payments, accommodation supplements, child disability allowances, rent rebates certified under the Society Act of 1964, disability allowances, transition to work allowances and tenure protection allowances.
This PTPTN Study Loans program was established in 1997 and is mainly focused on students who have gained admission to local universities but are unable to further their studies due to financial constraints. The mechanism of repaying the loan should be studied by the government. The current situation applied by the PTPTN is similar to the recovery method of financial institutions.
Maybe, the Grameen Bank system introduced by Nobel Laureate, Muhammad Yunus, could be of use. The Grameen Bank provides credit to the poorest of the poor in rural Bangladesh, without any collateral. As of May, 2006, it had 6.83 million borrowers, 97 percent of whom were women. With 2283 branches, GB provides services in 73,609 villages, covering more than 88 percent of the total number of villages in Bangladesh. The NPL (non-performing loans) ratio was apparently less then 2%. The Grameen bank has no CTOS, BRISS, no bankruptcy orders, no seizure of property and no imprisonment or the threat of imprisonment.
In the contact of the Hadhari approach which emphasizes development, consistent with the tenets of Islam and on enhancing the quality of life. Through the mastery of knowledge, the development of the individual and the nation, the implementation of a dynamic economic, trading and financial system, an integrated and balanced development that creates a knowledgeable and pious people who hold to noble values and are honest, trustworthy, and prepared to take on global challenges must be clearly utilized.