A promise that can be written off
Datuk Seri Anwar Ibrahim’s latest plan – to abolish PTPTN study
loans and provide free higher education – may seem attractive, but it
just goes to show how desperate Pakatan Rakyat is politically.
BOTH
Barisan Nasional and Pakatan Rakyat are announcing populist measures to
influence voters and get their attention as the general election, that
is expected to be keenly contested, draws near.
While Barisan has
numerous popular projects from the 1Malaysia clinics to Bantuan Rakyat
1Malaysia, Pakatan leader Datuk Seri Anwar Ibrahim, not to be outdone,
has come up with his plan – to abolish PTPTN study loans and thereafter,
provide free higher education.
He is proposing to use
Petronas
funds to write off the RM43bil in PTPTN loans taken since 1999 and
provide free higher education for subsequent generations of students.
Varsity
cheer: Anwar’s proposal to write off outstanding PTPTN loans and
provide free higher education is attractive but will he deliver on his
promise should Pakatan Rakyat come to power?
At first
hearing, his scheme is attractive, especially to the 1.9 million
students who have received study loans under the PTPTN scheme up to
2011.
Who will not want their outstanding study loans written off
and for future generations of students to study free using Petronas
funds?
It’s simple - all the students and their parents need to
do is vote and ensure that Pakatan captures Putrajaya in the general
election and then wait for Anwar to deliver on his promise.
The
vast majority of PTPTN loan takers have paid up or are paying their
loans. About 144,000 borrowers have been blacklisted for not paying and
they will have reason to rejoice with Anwar’s promise to write off the
loans.
The cost of higher education has shot up since the
mid-1990s and it now costs more to study and even more for
the
Government to subsidise higher education.
For instance, a year’s
tuition for a medical course in a public university, before any subsidy,
comes to RM166,000. But students only have to pay RM9,000, which means
94.6% of the fees are subsidised.
Higher Education Minister Datuk
Seri
Mohamed Khaled Nordin, in clarifying the cost structure to
reporters last week, explained that a first-year engineering course
costs RM61,000 but students only pay RM6,800. He said 90% of the cost is
subsidised by the Government.
Students in public and private
institutions of higher learning need only pay between 5% and 10% of the
cost of degrees that they are pursuing and even then, they are already
subsidised in the form of PTPTN loans.
Students who take PTPTN
loans pay a minimum of the course fees and take care of their living
costs in the cities and major towns where they are located.
When students have completed their studies and are gainfullly employed, they start repaying their loans and many have done so.
Abolishing
PTPTN loans sounds good but it is impractical because higher education
is heavily subsidised, up to 90% or more, by the Government with
students paying only under 10% of the course fees.
And even for that amount, they take PTPTN loans.
But
because elections are near and Anwar feels pressured, he has come up
with a grand scheme to write off the entire RM43bil PTPTN loans given
out since 1996 and use Petronas funds to finance future generations of
students for free.
Petronas is the national oil corporation and
it deals with our own oil, which is beginning to deplete, and oil in
other countries, which it explores, refines and markets for a percentage
of the profits that it brings home.
Nearly half of Petronas’ payments to the Government — and the percentage is rising — is from dealing in oil in other countries.
Anwar should not use Petronas as a Santa Claus to promise parents free higher education for their children.
The
oil corporation is footing a huge part of the national budget and it
can’t be milked anymore to write off PTPTN loans and underwrite higher
education.
Taxpayers, who are also subsidising higher education,
should not be burdened with more taxes by a Pakatan policy of offering
free higher education for all if it captures Putra-jaya.
PTPTN
loans are very low-cost loans for students to pursue their dreams of
getting a diploma or a degree or to arm themselves with a skill to face a
challenging future at local colleges and universities.
It is
reckless for Pakatan to promise that it will write off the outstanding
loans and offer free higher education if elected to Putrajaya.
It is a big promise from a man whose penchant is to make ever bigger promises as the general election nears.
And
he will make them in a dramatic and striking manner, which just goes to
show his desperation that the political momentum is slipping away.
Analysis By BARADAN KUPPUSAMY
Learning to pay for a better future
Doing away with PTPTN loans will not only burden taxpayers but also deprive many of a higher education.
THERE
was much joy at the latest family gathering as my brother’s eldest son
joined the ranks of medical doctors in the family – he graduated a month
ago and is the sixth in the extended family to put the MBBS to the back
of his name.
In a few more months, two more of his cousins will also be graduating as doctors from the same private medical college.
The total cost of educating the three of them is more than RM1mil.
The
elder one managed by taking loans from the
National Higher Education
Fund Corporation or better known as PTPTN. Without such a loan, I doubt
whether my nephew could have pursued his ambition to be a doctor.
PTPTN has disbursed loans to 1.95 million students, totalling RM43.60bil, from 1997 to February this year.
Now
it seems some people want to can this and want the Government to
provide total free education from “cradle to grave” – as stated by
Solidariti Mahasiswa Malaysia (SMM) chairman Muhammad Safwan Anang.
SMM is a pro-opposition student movement.
His
call was supported by
Opposition Leader Datuk Seri Anwar Ibrahim, who
again pointed to Petronas’ oil revenues as a means to pay for the higher
education needs of all Malaysians.
This is obviously just a
populist move meant to please a certain quarter – mostly the more than
100,000 defaulters of whom about 70,000 have not even paid up a single
sen since completing their studies some 14 years ago.
Who would
not like to have their loans cancelled? The almost two million borrowers
are a very big electorate for any political party to woo.
For
the record, PTPTN loans recovery has not been very good. Over the past
14 years, a total of RM5.6bil was to have been collected in loan
repayments, but only RM2.7bil had been received.
The corporation
has tried all means to get back its money including the rather unpopular
blacklisting at all exit points that prevents defaulters from leaving
the country.
This is what is unpopular with PTPTN.
Previously,
the corporation was criticised for not making a serious attempt at
ensuring loan repayments, but when it makes an effort to do so it is
accused of being a bully.
Learning to pay for your own needs and
wants, including debts, is as important as a formal education. This is
called a lesson in responsibility. Cancelling the study loan is like an
uncompleted course.
Despite the contentious blacklisting move,
the PTPTN loan is the single largest enabler of education in this
country. Without this loan scheme more than half of the some two million
borrowers would not have been able to further their education.
I know of several students who only made it to a tertiary institution because they were able to get a loan.
An uncle of one of them said he was willing to provide support in terms of pocket money and even accommodation.
“Unless
he makes it into a public university, tertiary education will be beyond
us,” the uncle said. The nephew is already grateful because he knows
his future is assured either way.
He is not alone.
A good friend, who lives and works in Hong Kong, is very proud of his daughter’s independence because of the PTPTN scheme.
“I
do not have the money to send her overseas for a higher education and
she couldn’t get into a public institution. But she managed to get a
PTPTN loan, and with that she could study in a local private college.
“She
did everything herself, and was even able to save some money to buy
herself a car. She made sure she passed all her exams and is now
working. She is also paying back the loan on her own,” this friend said,
adding that he never expected her to be so independent.
When the
Government first liberalised the education system in the early 1990s,
the number of those aged below 24 who received tertiary education was
less than 15% but this has risen to 45% currently and should reach 50%
by 2020 – and all this is due directly to the PTPTN scheme.
PTPTN
can also be credited with the growth of the number of higher education
institutions in the country. As of October, there were 20 public
universities, 26 private universities, 23 private university colleges,
several branch campuses of foreign universities, 28 polytechnics, 74
community colleges and 434 private colleges.
Providing free
higher education, ironically, will result in many of these institutions
being beyond the reach of the middle class and the poor because they
will have to go to Government funded colleges.
For a simple
three-year business related degree from a local private university, the
tuition fee will be between RM30,000 and RM40,000. A local medical
degree will cost more than RM300,000.
Without a doubt many of
these private colleges are decent institutions of higher education, and a
viable alternative to the expensive foreign education that most
Malaysians dream of.
Just like everyone cannot be a doctor or a prime minister, not everyone can afford a foreign education.
These almost-500 private institutions provide a channel for our young to pursue their education dreams.
PTPTN makes this possible.
Why Not? By WONG SAI WAN
>
Executive editor Wong Sai Wan is glad he can afford to pay for his
children’s education but realises many need financial help to educate
theirs
PTPTN should stick to its guns
QUESTION TIME By P.GUNASEGARAM
The most efficient way to educate those who can’t
afford it is through loans as it ensures that future generations will
similarly benefit.
IT’S a bad part of human nature that the more you get the more you want, especially when you get something relatively easily.
And
since according to common wisdom elections are supposedly around the
corner, now’s the time to demand and hope that the Government will
accede simply to please in the hope of getting more votes.
But
there is a need to be more responsible than that. If goodies are handed
out every time they are demanded, we are going to have problems, real
problems.
We should not be going anywhere near forgiving other
people’s debts as an election manoeuvre but that’s exactly what is being
asked for.
There are many hundreds of thousands of people who have taken loans from the National Higher Education Fund (Perbadanan Tabung Pendidikan Tinggi Nasional or PTPTN) but now incredibly they want their loans to be waived – just like that. I wish my housing loan was waived too.
Not
only should their requests be flatly turned down, the Government should
review its entire system of scholarships on which it spends tens of
billions of ringgit yearly in favour of a system of loans.
The
PTPTN loans require repayment only after those who have taken them get
jobs or six months after graduation whichever comes first and is to be
paid through the Inland Revenue Department. They carry low rates.
We
are talking about really big amounts – as at end of February, 1.9
million students had loans totalling RM43.6bil from the PTPTN. That’s a
huge amount to be written off and the Government simply cannot afford to
do so.
Based on the figures, the average loan per borrower works
out to around RM22,000 and it should be possible for PTPTN to work out
some arrangement with the borrower if it is not possible to repay the
loan within the prescribed period due to unemployment or other reasons.
Eventually,
most graduates do get employed and when they get jobs, they will stand
to earn a lot more than non-graduates and they should be made to repay
society for the help they received in getting a leg up.
Many
others were unfortunate enough not to get a proper education because
they could not afford to pay the fees or take time off from work to
study. They often never earn graduate salaries in their entire
lifetimes.
The attitude of borrowers who have taken money from
PTPTN and now do not want to repay is selfish because they deprive other
similarly disadvantaged students from financial assistance in the
future.
The PTPTN was conceived as a fund that will be largely
self-financing from repayments and that’s the way it should be operated
so that the most number of people benefit from it.
Most of the
loans are taken by borrowers in public universities to cover the cost of
living as fees are already low in these universities. The timely
repayment of such loans ensures that future students will continue to
benefit from the programme.
The politicisation of this issue is
terribly unfortunate not only because it puts pressure on a scheme,
which if properly administered, will result in the emergence of a
sustainable operation largely funded by repayments but because it
inhibits consideration of loan schemes to replace scholarships.
The
scheme can be made more attractive by making repayments completely
interest-free and free of any maintenance fees as is the case in
countries such as Australia for their own citizens.
The
Government can then expand this scheme so that all qualified students
are eligible for loans and even extend the scheme to those who want to
study overseas.
Then it can reduce the amount of scholarships
allocated and restrict these largely to a select list of merit
scholarships and to fund those it wants to employ in future.
That
way the Government will be able to help more people get access to
higher studies without having to break its financial back by providing
outright scholarships and grants.
However, that would require
some courage because the rolling back of scholarships which were
relatively freely made available earlier would meet with a considerable
amount of opposition from all quarters.
You can sometimes give too much but try and take that away and you can get a lot of problems.
Governments
all over the world are moving towards interest-free loans to help needy
students. It’s the right way to go because only those serious about
their education would take such loans and they will tend to limit their
loans to what they need because it has to be repaid.
That’s a
good way to allocate scarce resources by making people who can’t afford
it take interest-free loans and defer payments until later. Instead,
those who have taken loans are demanding they be turned into
scholarships instead. That’s really too much.
Acceding to such
demands would be populist, what move would not be when you give
something valuable away for free, but it would be wrong simply because
it is going to deprive future generations from access to education.
Resources are finite after all and we must find the best way to allocate them. Sometimes, you have to be cruel to be kind.
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Independent consultant and writer P. Gunasegaram believes that both
lender and borrower have a joint responsibility to ensure that funds are properly used.
Living life by finding fulfilment without landing in debt
