PUTRAJAYA: The government is considering making repayment of the Nasional Higher Education Fund Corporation (PTPTN) study loan a compulsory monthly deduction through the Income Contingent Loan (ICL) program.
Prime Minister Datuk Seri Anwar Ibrahim today said recovering study loans from those who have entered the workforce remains a challenge for government.
The monthly salary deduction would be made through the Inland Revenue Board, following a recommendation by the National Higher Education Policy Review Committee (NRC).
NRC which is also entrusted to reform the higher education sector in the country was formed in January to strengthen governance and reform the education sector facing new challenges.
"This Income Contingent Loan (ICL) implemented via automatic salary deductions made by Inland Revenue Board (LHDNM) is seen as the most practical and least-burdensome proposal for loan borrowers to settle their debts," he said in a speech read by deputy Prime Minister Datuk Seri Fadillah Yusof at the Higher Education Ministry's Open Day closing ceremony, here today.
Anwar said the outstanding debt owed to PTPTN as May stands at RM 66.9 billion.
"Loan recovery has become one of the government's biggest challenges in ensuring continuous education for students who may not be able to afford or suffering in financial difficulties, to pursue their higher education," he said.
He said the current low repayment rate among the graduates and those in workforce is insufficient for PTPTN to sustain.
"We are concerns about the long-term sustainability of PTPTN and the future of future students, should this persist.
"If this amount is paid, it can support nearly 2.5 million new student tertiary education loans," he said.
He said this ICL method when enforced will likely ensure the continuity of PTPTN loans for the new batch of students and not burden the old ones.
"In addition, ICL will provide incentives to individuals and employers making repayments as well will encourage more borrowers to carryout their civic responsibility for future students who want to continue studies but can't afford it," Anwar said.
Also present were the Minister of Higher Education (KPT) Datuk Seri Mohamed Khaled Nordin and his deputy Datuk Mohammad Yusof Apdal.
The incentive he referred to include the discount announced in the recent 2024 Budget for those who repay their PTPTN study loans.
Previously it was reported that the government will be giving a discount on PTPTN loan repayments from October 14 until March 31, 2024.
A discount of 10 percent will be given on the remaining debt for full settlement, 10 percent for payment of at least 50 percent of the remaining debt in one payment and 15 percent discount for those who enrolled for monthly deduction or scheduled direct debit.
Anwar said ICL will also encourage more borrowers
Meanwhile, Mohamed Khaled said NRC over the course of three months has reviewed 874 issues faced by the 115 education organisations over research, various acts, legal frameworks, policy papers, strategic plans as well as guidelines related to improving higher education.
He said of the total issues studied by the committee, NRC has made 58 recommendations for major improvements to the ministry.
"All these recommendations are not finalised yet" he said.
