Malaysian Sentiment Towards Education Loan


It is known that around 50% of Malaysian students today had taken Education Loans such as PTPTN, MARA and recently, JPA too in order to finance their studies.

This scenario highlights a concerning pattern in the realm of higher education, where students not only graduate with diplomas or degrees in their respective fields but also carry varying levels of debt. The prevalence of student debts appears to have become a commonplace aspect of our college experience.

The gravity of graduates facing indebtedness intensifies when a considerable number of young professionals encounter challenges in repaying not only their educational loans but also other debts accrued since entering the workforce, as in the case of PTPTN 51% of loan holders had defaulted.

My name is Fatin Najihah and I am a final year student who is doing her Final Year Project. And, as a soon-to-owner of RM400,000 education debt, I am very interested in :
- how education loans impacted debt holders in their employment decisions
- how does the payment impact the financial decisions and mental health of all debt holders
- what are education loan holders sentiment towards repayment

I believe it is important that we evaluate the financial, economical and mental health impact of these new trend of indebtedness on our future generation. Can you spare 7-10 mins for a questionnaire? It is available in both English and Bahasa Melayu. I am not sure how to verify link here, so to answer the survey just add https:// to this tripetto.app/run/SZ1ZCI1Z84 (Currently 70 respondents away from paper requirements, would appreciate if you can share to others in your family or friends)


Some information discovered during my prior research:
- In the OECD 2020 Finacial Literacy Assessment, Malaysian scores 59.7 in Financial Literacy Score that is assessed on three aspects, financial knowledge, financial behavior and financial attitude. On this, Malaysia scored lower than the average financial literacy score (60.5). Among the 3 segments, Malaysians only scores above average in financial behavior , second only after Indonesia at 68.1 and 69.7 respectively. With the exception of Malta, among the participating countries, Malaysian also scored the lowest in financial knowledge.
- Through a survey done in 2019 by PTPTN, their repayment situation was at 51% defaulters.
- 61.2% of our youth graduates (age less than 25) falls under skill-related underemployment. As in, they are overqualified for their role. This highlights the lack of high skilled jobs to accommodate our number of graduates. (2022 DOSM data)

This begs the question, is higher education worth the cost (financial, future and health) incurred from the debt ? Hence the objective of this research. If you had taken tertiary education before, this survey is applicable for you. Would appreciate if you can help fill it in and share with family members or friends please.

https://tripetto.app/run/SZ1ZCI1Z84

Those still hutang is parasite yang tak berterima kasih.

Ban their passport from travelling, and scrutinized their gaji.

Auto pay 10% of their gaji to loan until finish loan

No more kesian pada yang tak berterima kasih dan bersyukur kerajaan yang tolong mereka

Well for me was worth it.

Local/Privatised College.

Left RM2.5k left to paid.

As for you, how in the world RM400k debt... luckily still 1%.

Best is to start a plan to repay the debt..

Good to know that! I would love to hear your insights, so if you haven't would you mind answering my survey? I would greatly appreciate if you can share with others in your network too. ^^

400k comes from JPA JKPJ Scholarship. I study in France. Since JPA JKPJ was marketed as scholarship at that time and the shift to loan wasn't made aware to many (we are the second batch to receive it in loan form), most of us accept it unaware of the scale of payback since not many in our immediate surrounding have the capability to advice us regarding it (parents and family low education and lack of exposure towards contracts etc) I would say in general in my time, the offer come across a bit predatory as it targets vulnerable candidates like us for this offer as we were all ignorant SPM leavers and have mostly uneducated family backgrounds who were just sincerely happy that we got a 'scholarship' and didn't know any better. So yeah, regrets is abundant.

They are now more transparent in regards to that though. Saw them mentioning it on Myself website. So, future students that takes this loans should be able to do it much more clear headed than us.

In our case, no interest rate. Well even 1% on 400k is still 4000. So good that they dont put interest rates.

Though I agree enforcement of punishment is necessary and support every debtor paying back their loans and is against total debt relief, I disagree with the sentiment you hold.
As I don't know the issues and problems faced by them, I have no right to generalize all non payers as ungrateful. In order to come up with solutions and craft a suitable policy in this manner, all of the involved parties voices need to be heard.

I am not saying not wanting to payback is okay. But, if most of the defaulters are telling us they are earning less than RM2000 per month despite their high education, that they aren't able to afford it, and its affecting their life and career advancement, maybe we should try to understand what aspect are affected, to what extent and how we can try to achieve a win win in this situation. Is the the loan amount? Is it a lack of job? Is it a policy issue? Is it structural ? Is it lack of enforcement ?

So, the way we are handling PTPTN is not sustainable. The amount of debt PTPTN is taking is scary, it is now even bigger than 1MDB at 67 billion. We need people to start paying back. Just being mad and complaining at those who didn't payback wont solve this white elephant. And the fact that JPA is shifting to loan policies now despite being aware of the issues faced by PTPTN, is this an appropriate move?

50% are defaulting PTPTN so we need to understand why they aren't paying back. We are expecting degree education to boost social mobility, but the PTPTN experiment proves that this isn't true and despite the rising cost of education, the value of an education it is actually dropping. Even degree graduates are struggling with 2k salaries nowadays.

In fact, due to our zealousness to have more graduates, this means deteriorating academic standards in order to generate more graduates with 'good' results. This however led to the questioning on the quality of our graduates among employers, hence the question of whether a degree is worth the debt, since nowadays, a degree no longer translates into a good job and the 2k salary.

If we design our policy to punish them, this will only affect the short term and not sustainable at all in the long term.

In many situations, things aren't simply black and white. For example, dissatisfaction can breeds due to lack of transparency by loan provider. Furthermore, high monthly loans payment can be holding borrowers back in many future decisions (marriage, insurance, children, car, house etc). And some may decide to stay in a job they hate, or in a job that pays well for a fresh grad but have low growth/promotion opportunities for the sake of money. Some could also just settle for whatever job they get instead of what they studied for (skill underemployment). Furthermore, due to the debt discount programs that PTPTN been doing, some people can be discouraged to pay it regularly. Opting to just wait until a bigger discount or future discount instead. The lack of enforcement of punishment can also instill a sentiment of confidence that they can escape from their obligation.

We should start by understanding what's pushing away our graduates from paying. Based on studies, the appropriate max amount of education loan payment is 8% of fresh grad salary so that the monthly payment wont prevent loan holders from planning their future life. This however isn't practiced in Malaysia as our loan system mimic the American system more.

What would then be a solution? Debt relief is a no. And free higher education like Germany is a no too. There were conversations about implementing Income Contingent Loan Program last October, but nothing came out of that. This however is a pretty good suggestion as if the loan is considered a burden to some, we will take only how much they can afford, just like in Australia. At least, we have a continuity of repayment as long as graduates continue to strive in their career. This way, at least PTPTN can use the repayment money to help new students instead of taking up more loans themselves. (PTPTN take out high interest loans to give out low interest education loans). SO what you mention about the salary deduction is a good possibility. However, the amount 10% need to be given more consideration. Let's look at australia.

Repayment threshold	Repayment % rate
Below $51,550	Nil
$51,550 - $59,518	1.0%
$59,519 - $63,089	2.0%
$63,090 - $66,875	2.5%
$66,876 - $70,888	3.0%
$70,889 - $75,140	3.5%
$75,141 - $79,649	4.0%
$79,650 - $84,429	4.5%

This type of progressive income based repayment plan might be better for the long term.

Nevertheless, are the lenders and students the only party in this conversation. For me, I believe educational institution should also carry part of the burden too. It is their responsibility to generate high quality employable and skilled graduates. However, market reaction had proven that, our graduates don't have much worth. What with the lack of fresh graduates salary growth. As years go by, our youth purchasing power is simply diminishing.

Is company to be at fault. Perhaps their claim of lack of skills and experience is valid. Where and when then can these grads get the required skills? In the university. I believe, universities should be incentivized or given a deterrent according to their graduates performance. That a university should be rated according to their products(graduates). What are their starting salary, employability, average length of time taken for graduates to find jobs, etc. This move can make the universities take more accountability of their education quality and be more invested in a graduates success. What can be used as incentives or deterrent is probably the endowment fund the public universities receive.

In this way, its not just the graduates crying for higher starting salary. After all, with how much inflation over the years had been, yet the average wage stayed the low.

Year	Median Salary for graduates < 24 years old	Salary growth	Inflation rate	Inflation adjusted salary	Inflation adjusted growth
------	--------------------------------------------	----------------	----------------	---------------------------	--------------------------
2018	RM2,112	-	0.88%	-	-
2019	RM2,066	-2.18%	0.66%	RM2,130.59	-3.13%
2020	RM1,550	-24.98%	-1.14%	RM2,079.64	-34.17%
2021	RM1,590	2.58%	2.48%	RM1,532.33	3.63%
2022	RM1,624	2.14%	3.38%	RM1,629.43	-0.33%
2023	No data	-	1.50%	RM1,678.89	-
2024	No data	-	No data	No data	-

The value of 2018 salary in 2022 is RM2261.80. This means in between 2018 until 2022, salary had decreased by 28.2%. So the cries for higher starting salary was quite justified in that period of time. Their quality of life had decreased by more than 25%.

Though considering the new minimum wage in May 2023, this may affect the current graduates salary positively. To what extent cannot be determined as it differs between websites and DOSM havent reported anything since. So yeah, we need to pressure the company to raise wage. However, we also need to make education worth its value too. And considering the rates of underemployement, we need to increase the number of skilled job opportunities. We need to asses why is this happening and if its concentrated on particular field of studies? Are we producing too much graduates of a certain field? I dont think DOSM is tracking that data. Couldnt find it. Only one from 2012.

But yes, though some may take their education loans for granted, I disagree on labelling them as ungrateful without taking into consideration the economic, and structural issues behind Malaysia's education and job market.

This post has been edited by AtenJieha: Mar 17 2024, 06:45 PM

Ah, sorry for your predicament.

However, since you already started with some financial literacy. I believe you can do it. Won't be easy but doable.

Online has many ways to really snowball debt payment. Dave Ramsey is one of em.

I will do the survey when I reach back home.

Thanks ! I will check out that snowballing thing.