List PTPTN defaulters in CCRIS

Last year, many newspapers’ headlines revolved regarding Second Education Minister’s statement that errant PTPTN defaulters will be listed under Central Credit Reference Information System (CCRIS). This particular statement drew unexpected backlash from the masses and even from vocal ministers like YB Khairy Jamaluddin.

 

Yesterday, Education Minister II Idris Jusoh said Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) loan defaulters from 1998 to 2010 recipients will be given three months to start repayment before being blacklisted in the Central Credit Reference Information System (CCRIS).Notwithstanding the fact that the idea of CCRIS listing does not bode well with the people, a bigger question arises. Is it a bad idea?

 

To the uninitiated, CCRIS is a Bank Negara-database system that stores financial records of Malaysians digitally for references by financial intermediaries in prospect of a new loan issuance. Each and every individual’s financial track that has taken a loan from any financial institution will be listed under CCRIS. And so far, it has become a “custom” for any finance provider to refer to the CCRIS system before sanctioning a new loan application. It has to be made clear that CCRIS is NOT a bankruptcy listing system. Only the Department of Insolvency can declare a person as a bankrupt.

So, will an individual with a bad financial track in CCRIS be given a loan in future? That depends on the financial providers’ discretion.

The insinuation of errant PTPTN loan takers to be listed under CCRIS is a good idea and should be welcomed. Such move will hopefully create awareness amongst the loan takers to repay their debt as per the contract. Commonly, these errant PTPTN defaulters will be warned by three (3) notices before any further actions are taken. Thus, defaulting in loan repayment should never be an option.

But, it has to be reminded that only CCRIS listing will not do much good. Why, it could even lead to more problems if appropriate reforms in PTPTN do not precede it. And here are my proposed reforms for a better PTPTN scheme.

11. Payment starts six (6) months after getting a job

Firstly, PTPTN which aims to be a helpful medium for higher education dreams of younger Malaysians should never be a “stumbling block” in crashing their future. For a better service, PTPTN should come up with a better repayment schedule. Currently, PTPTN loan takers are required to repay six months after graduation. Looking at the current pace of Malaysia’s higher education institutions churning out more graduates, more are likely to be unemployed for the first six months or even one year after graduation in some extreme cases. Hence, if current system resumes, more defaulters will emerge and more will be financially-hurt. Thus, in my opinion, it is best if the graduates are only required to repay their debt six months after landing in a job.

  2.Abolish the current 1% administrative cost under Ujrah scheme

Next, as PTPTN is a government-formed body for a special purpose. Thus, it is best that interest rates are done away with for the PTPTN loans. Although only 1% flat rate is imposed under a new plan, it can still be considered as an extra-burden for the loan-takers. It is understandable that PTPTN has management and operational costs but it is best for the government to absorb the costs to allow no-interest to be given for the loan takers. This is much better than providing free education and more future graduates will be financially stable in future, unperturbed by a huge debt.

It is my sincere opinion that the Government and PTPTN can look into this and hopefully, a better system in PTPTN is born for common good. Graduates are the national assets and let’s not destabilize by our own ineffective moves.

  3.Set a common threshold for loan conversion into scholarship

PTPTN has introduced a commendable plan prior to this, by allowing students achieving First Class degrees to convert their loans into scholarship. However, this has failed to be fully effective as in the current practice, the tertiary higher institutions have different threshold Cumulative Grade Point Average (CGPA) to indicate first class degree i.e UM – 3.75, UiTM – 3.50, it is discriminative in nature for the students in institutions with higher threshold.

Thus, taking that into concern, CGPA threshold for converting loan to scholarship should be standardised at 3.50 (for Arts stream subjects) and 3.30 (for Science stream subjects). If such move is to be introduced, a level-playing field can be better fostered.

  4. Mandatory payment only after a certain salary limit

Whilst it is commonly understood that one is bound to repay his or her loan as promised, the struggle of the current and upcoming graduates should be focused. With sky-rocketing cost of living coupled with slow increase in salary, the financial burden of a new graduate is of grave concern. It is noted that many, if not most graduates, can only expect starting salary of only around RM 2,000.

Thus it is proposed that PTPTN should allow the borrowers to repay only after their monthly salary hit RM 2,500. This is to ensure that the loan takers do not default and are in financially stable situation. The RM 2,500 threshold that I have proposed is created after taking into concern the examples I know. However, PTPTN is free to set other threshold ONLY after proper discussions with the stakeholders which MUST include the university students.

  5. Top-up PTPTN fund annually.

PTPTN’s highest-level administration often voice out that due to actions of defaulters, the fund amount is quickly shrinking and affecting future borrowers. This should have never happened. The unethical actions of defaulters (although some are financially troubled) should not be allowed at the expense of others.

Thus it is recommended that the Government should top-up the PTPTN fund every year to make sure all financially-vulnerable varsity students’ loan application be sanctioned. Critics may claim that such approach is counter-productive to the fiscal consolidation measures of the Government because it increases spending. However, all quarters should understand the importance of higher education and provide access to financially-struggling students through such approach. This is apparently better that providing universal free education which serves as blanket subsidy.

66. Scholarship recipients should not receive PTPTN loans.

PTPTN ought to make sure that any recipient of scholarship, particularly from JPA should not be entitled to PTPTN loans. Certain cases have been noted that those receiving JPA’s PIDN scholarship are also receiving PTPTN loans. The worst part is where the loans are invested in higher interest-yielding trust funds to earn money. This is how some students are becoming “financially-creative”.

This could be remote examples but should not be taken with ease. There could be more cases in Malaysia and these unscrupulous students are “stealing” the opportunity for education financing from those whom are more in need.

Conclusion

PTPTN needs reform and it’s crystal-clear. Pursue all these reforms and other appropriate measure before listing the defaulters in CCRIS. This will ensure the sustainability of PTPTN fund.