Introduction Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) is a statutorybody responsible for managing the financing of the education

of students inpublic higher education institutions and the private sectors in Malaysia. Itwas was established under the National Higher Education Fund Act 1997(Act 566) and is effective from 1st July 1997. PTPTN became operational on1st November 1997 at Bangunan Wisma Chase Perdana, Off JalanSemantan, Damansara Heights, Kual a Lumpur to replace JabatanPerkhidmatan Awam (JPA), which previously provided assistance foreducati on loans for students PTPTN functions are to manage disbursement for the purpose of highereducation, and to collect loan settlement, collect deposits, design and offersaving schemes for the purpose of saving for higher education and carryout any other functions given to the PTPTN under any written legislation. Itwas established to ensure efficient financing for students who are eligibleto pursue studies at institutions of higher learning (IPT) in line withgovernment aspirations that no student should be denied access to highereducation because of financial reasons. The loan scheme will enablestudents to fully or partially pay their fees and their subsistence for theduration of their study in the IPT. Thus, the scheme provides greateropportunities to students to continue their tertiary education Following are the criteria for students who eligible to apply for educationloans: Malaysian citizens; Not exceeding 45 years of age on date of application; Passed Malaysia Certificate of Education (SPM) with credits in any 3subjects; Passed SPM for Community College Certificate and PolytechnicDiploma graduates with CGPA 3.0 and above; IPTA/IPTS/Polytechnic students must register to pursue coursesapproved by the IPT Management Depar tment (IPTA/IPTS)/PolytechnicManagement Department and Community College of the Ministry of HigherEducation; IPTS students must obtain the Accreditation Certificate from theMalaysian Qualifications Agency (MQA). The course and AccreditationCertificate approval period must still be valid on the date of application;

All students must possess entry requirements determined by theMinistry of Higher Education to pursue the course. For students withqualifications tha t differ from that stipulated, verification that the saidqualification is equivalent to the required qualification must be obtainedfrom departments or agencies specified as above; The remaining period of study upon application must exceed oneyear; PTPTN loans require two (2) guarantors that must consist of biologicalfather and mother of student regardless of the parents age and income; From 18th May 2009 onwards, SSPN saving terms for PTPTN loansapplication will be discontinued; Have no other sponsor; and Loan overall total must not exceed RM65,000.00Students who are qualified to be given the loans are depending on thelevel of financial ability of their family and they must follow full timeprogram of first level degree or diploma (pre-degree) in any institution of higher education. Once the eligible students received the loads, thepayment of loans will be suspended if the students obtain a GPA of lessthan 2.0 or the students defer studies based on the contract that has beenagreed by each other. The borrower is encouraged to pay back the loan without waiting for theletter of claim. The period of loan repayment is based on the total loantaken as follows:i.RM10,000 and below 60 monthsii.RM10,001 to RM22,000 - 120 monthsiii.RM22,001 to RM50,000 180 monthsiv.RM50,001 and above - 240 monthsAdministrative costs of 4% annually will be charged on the date of loanrepayment up to 31st December 2003. From 1st January 2004, theadministrative cost is reduced to 3% annually on the remaining monthlyloan. Administrative costs will be calculated 6 months after completion of study or termination of loan as specified in the signed agreement. Noreduction is given in administrative cost. Deferment of repayment can beconsidered for borrowers who continue their studies or who are not yetworking by submitting an application. However, administrative cost will becharged during the period of deferment. Administrative costs will be waivedfor full repayment of loan within 6 months. The exemption of repaymentwill only be considered for borrowers who obtain first class honors for loansapproved prior to 1st July 2005 ONLY by submitting an application.Listed below is the formula for Loan Repayment Schedule with 3%administrative costs:

Students in public higher education institutions (IPTA), which took acontract worth RM19000 from PTPTN loans, need to pay back a total of RM23,083.89 after adding excess of 3% for payment within 10 years. Whilethe students of private higher education institutions (IPTS) to take a loan of RM 60,000 for three years subject to repayment of RM 87, 261.17.Education loan repayment can be made in monthly installments for aperiod of 10 to 20 years. It should start six months after graduation orwhen getting a job, whichever is earlier. Reimbursement shall be made bythe Inland Revenue Board appointed by the government as a collection

agent for the PTPTN. Repayment can be made through other means as longas it is approved by PTPTN. PTPTN accept payments made in one lump sumor in any amount as long as it is less than the amount agreed upon by theagreement. Contains the amount of loan repayment of principal andadministrative costs are charged at 3% per annum on the balance eachmonth.So far PTPTN has spent a total of RM 37 billion in 13 years ago. PTPTN hasa service charge of 4% and was trying to make amendments to the

actPTPTN which aims to tighten control of loan repayment. This action willdefinitely give more pressure on borrowers. The total borrowing is about1.7 million people. There are 191.262 people of borrowers unable to makeloan payments. They are stressed because they cannot afford to pay. Themain factor is because they do not have a permanent job and the cost of living increases each year, especially in the city.With the existence of this personal finance project, perhaps it will guidethe PTPTN borrowers on how to manage their future personal financialmanagement once they are entering to their job industry. This project willexplain and suggest on planning of how many years estimation to pay backthe loan and how much to pay in certain period according to certaincircumstances. The next chapter of this project report will describe theissues related to PTPTN borrowers in order for the PTPTN borrowers to takethe issues seriously to avoid bad consequences in future. Then, this projectreport will suggest the PTPTN borrowers in managing their personal financein order to pay back the loan in effective way. ISSUE RELATED TO PTPTN LOANS ARTICLE 1: GIVE BACK THE MONEY!: RM12 billion unpaid studyloans

KUALA LUMPUR: Student loan defaulters owe the National HigherEducation Fund Corporation (PTPTN), Public Service Department and Maramore than RM12 billion. Since PTPTN was established in 1997, it has givenout loans totalling more than RM11.5 billion. To date, it has only recoveredabout RM350 million. Defaulters owe the PSD RM1.6 billion for loansdisbursed between 1987 and 2004, and Mara RM198 million.A spokesman for PTPTN said the corporation had issued more than 60,000reminders and 2,500 notices of claim.He said from January next year, PTPTN would require parents to havesavings in the National Education Savings Scheme before their children wereeligible for loans. Under the new conditions, parents earning more thanRM2,000 a month must have RM3,000 in the savings scheme while thoseearning less than RM2,000 must have RM500."We have also made it compulsory for parents or guardians to stand asguarantors," the spokesman said."Hopefully these new conditions will help usovercome the problem of unpaid loans."Apart from the "Big Three", many students have also borrowed from othersources and failed to repay.The Education Ministry and MICs Maju Instituteof Educational Development (MiED) are owed RM50 million each, the Penanggovernment RM24.2 million, the Pahang government RM22 million and theSelangor government RM12 million. Perlis is probably owed the lowestamount RM41,035 due from 22 students. Negeri Sembilan and Kelantanare not making public their outstanding student loans, saying it would cause"unnecessary alarm". Other states said they did not have the exact figures.PSD, which has recovered RM385 million, is trying to get back RM1.6billion."We give borrowers between five and 30 years to repay the loanswhile those who excel in their studies are given a 75 per cent rebate," saidPSD corporate communications head Hasniah Rashid."Some of our defaulters include

private students who were given interest-free loans of up to RM200,000 under a costsharing concept to study

abroad."Under this scheme, those who pursue critical courses such asdentistry, medicine and pharmacy do not have to repay their loans if theyagree to be bonded to the government for 10 years.PSD had issued warning letters to 13,800 defaulters early last year."As aresult, half of them began servicing their loans while another 10 per centsettled the full amount."Of the remaining, some have agreed to pay usmonthly."The rest have been blacklisted or have had court action instituted againstthem."Last year, the department submitted the names of 8,288 loandefaulters to the AttorneyGenerals Chambers for legal action. The department also revoked the 75 per cent discount for hardcoredefaulters. Their spouses and children have been denied loans. Hasniah saidthe department was unable to trace those who had "absconded" whilepursuing further studies abroad."There were a few cases in the past but we have no records of the figurebefore 2004."To keep track of its scholars, the PSD has stationed officers inBritain, the United States, Japan, France, Germany and Australia, where themajority of its students are located.A Mara spokesman said: "We have about 150,000 defaulters and this hasbecome a chronic problem."We even published their names in newspapersand their children have been denied admission to Mara institutions of higherlearning."The sad part is that many of these defaulters are financially sound andthere is no reason why they cannot repay their loans." The spokesman said these people were irresponsible and selfish."We haveappealed to them to pay as little as RM100 per month. This will at least keepthe fund going."By not paying, they are robbing others of the opportunity tostudy."MIC president and MiED chairman Datuk Seri S. Samy Vellu said: "Thosewho are not paying are preventing thousands of Indian students who want tostudy from doing so."

He said if the more than 3,000 defaulters were to repay their loans, another11,000 students would benefit."What upsets me is that some of thesedefaulters have since become successful lawyers and doctors, earning up toRM10,000 a month."Words cannot describe their selfish attitude," he said. "When they come tous for loans, they come with such a sad face and beg us to help them. Now,they dont even bother about others." The Mara spokesman said many of these defaulters had taken loans tostudy abroad."After finishing their studies, they do not return. Not only havewe lost the money, but also the expertise they would have brought back tothe country."According to figures from the Higher Education Ministry, the number of Malaysian scholars who remain abroad has dropped from 117,297 in 2000 to56,609 in 2005.This was attributed to the efforts of the government to woothese students back by offering them incentives."It does not make sense,"said the spokesman.

"First these students took money from us to study, thenthey did not repay their loans, and now the government has to beg andoffer them incentives to come back."

He said if the more than 3,000 defaulters were to repay their loans, another11,000 students would benefit."What upsets me is that some of thesedefaulters have since become successful lawyers and doctors, earning up toRM10,000 a month."Words cannot describe their selfish attitude," he said. "When they come tous for loans, they come with such a sad face and beg us to help them. Now,they dont even bother about others." The Mara spokesman said many of these defaulters had taken loans tostudy abroad."After finishing their studies, they do not return. Not only havewe lost the money, but also the expertise they would have brought back tothe country."According to figures from the Higher Education Ministry, the number of Malaysian scholars who remain abroad has dropped from 117,297 in 2000 to56,609 in 2005.This was attributed to the efforts of the government to woothese students back by offering them incentives."It does not make sense,"said the spokesman. "First these students took money from us to study, thenthey did not repay their loans, and now the government has to beg andoffer them incentives to come back." New Sunday Timesby P. Selvarani and Patrick Sennyah, Sunday,08 April 2007 Reference:http://www.malaysianbar.org.my/legal/general_news/give_back_the_money_rm12_billion_ unpaid_study_loans.html Summary of ARTICLE 1:

This article is basically about the statistics of defaulters for the threebodies which is; PTPTN, PSD and also MARA.

The article showed that Malaysian students owed PTPTN about 11.1billion MYR.

PTPTN already giveaway RM11.5 billion amounted loans in 2007 for thestudents but they only managed to collect about RM350 million.

They have issued 60,000 reminders and 2,500 notices of claim.

This showed how critical this issue is towards PTPTN itself. The numberitself showed a very little percentage of loaners paid back PTPTN loan.

They also came up with a solution to avoid such issue in the future byfirming the guarantors status for the loan.

PTPTN would require parents to have savings in the National EducationSavings Scheme before their children were eligible for loans: o Parents earning more than RM2,000 a month must haveRM3,000 in the savings scheme o Earning less than RM2,000 must have RM500.

They have made it compulsory for the parents itself to be theguarantors.

ARTICLE 2: Blacklist the PTPTN loan defaulters The issue on the National Higher Education Fund Corporation (PTPTN) loandefaulters has been going on for a long time. It is not a new issue, but a staleone which should have been resolved a long time ago. Since the corporationwas set up 13 years ago to provide loan facility for students pursuing higherstudies, the issue on loan defaulters has never ceased to be highlighted andoften, whoever chaired the corporation would go amok for failing to detectand collect the repayment from the tens of thousands of borrowers. Yesterday, PTPTN went into a rage again. Its chairman, Datuk IsmailMohamed Said, stressed that the corporation would not be lenient anymorewith the loan defaulters. Hence, effective June next year, all PTPTN borrowerswould be required to make repayment through salary

deduction.Perhaps that would involve a lot of work, but the job should have beendone a long time ago to recover the arrears in unpaid loans from the morethan 46,000 borrowers who have never pay back their loans since theircompleted their studies and started work.Are they dead or alive, but simply ignored the need for them to make theloan repayments. Indeed, efforts to trace them may be difficult, but whentheres will, there a way. Hence, the need for the PTPTN management to bemore firm and not merely issue statements to scare them only.If all this while, everything they have done failed, it is hoped that the newapproach will overcome problems to recover the loans. Imagine, out of theRM23 billion from the loan fund which has been given out as loans, onlyRM1.8 billion has been recovered. It shows how serious the problem is. The action of the default borrowers has deprived other students theopportunity to enjoy similar benefit as could be seen from complaints by newstudents over the delay in the PTPTN loan being deposited into their bankaccounts. Currently, the students are not ashamed to ask, but aftergraduating and securing jobs, they forget their responsibility to repay the loan. For the Muslims, they forget that it is compulsory for them to pay theirdebts.Do not be selfish because there are reports which found that the defaultersare not those without money, but their income is spent to pay their car andhousing loans, credit cards and others. These are their priority that thePTPTN loan repayment of at least RM150 a month is not included in theirmonthly budget.It is kind of weird because they are able to pay the car loan, which may beRM500 a month or the credit card payment of RM350 a month, on schedule.Perhaps, this is due to the rigidness of the financial institutions in tracing theborrowers night and day, including calling them every day, that made thempay. Apart from that, it is also their fear of being blacklisted.So, it is time for PTPTN to blacklist the loan defaulters, besides deductiontheir monthly salary for the loan repayment. The move is seen moreeffective because if their names are blacklisted, they would have to pay backtheir loans. Otherwise, their names will be in the blacklist forever.Effective today too, PTPTN should forget about their lenient strategy bysending warning notices to the loan defaulters. Now it is time for it to bemore firm. That is the only way to recover the loans Utusan Online, 21/09/2010. Reference:http://ww2.utusan.com.my/utusan/special.asp?pr=theMessenger&y=2010&dt=0921&pub=t heMessenger&sec=Editorial&pg=ed_01.htm Summary of ARTICLE 2:

This article is mainly about the steps that PTPTN have taken to ensuredefaulters to pay their loans. Page 11

Starting in June 2011 they are deducting borrowers salary for PTPTNpayment.

It is stated that more than 460,000 borrowers have never pay backtheir loans.

From RM23 billion from the loan fund which has been given out asloans, only RM1.8 billion has been recovered.

The actions of the loans defaulters affecting those other new studentswho are loaners of PTPTN. This could be seen from complaints by them aboutthe delay of PTPTN loan being deposited to their bank accounts.

The loan defaulters are being selfish because they are able to payother loans such as for car and house but then they are not including PTPTNpayment at the end of the months.

Compared to up to RM500 other loan payments, they are neglectingPTPTN payment, which is the least they could pay is RM150. They are notallocating their money wisely and being negligence.

This is also due to the banks that giving away loans are more rigid andfirm in chasing their borrowers to pay back their loans.

They also fear that those banks will blacklisted their name, and this willmake it hard for them to borrow again in the future.

PTPTN should do the same for the sake of future students who want toborrow from PTPTN and further their study.

Thus, they need to be more firm in making borrowers to pay back theirloans instead of giving away reminders and statements.

They decided to blacklist defaulters until they pay back their loans orelse they will be blacklisted forever. ARTICLE 3: PTPTN loans no more excuses for non-payment In keeping with the Governments aim of modernising processes andservices, PTPTN has implemented measures to ensure that it can serve thepublics needs of receiving loan facilities and for repayment. With a largearsenal of payment methods at their disposal, borrowers from the NationalHigher Education Fund Corporation (PTPTN) no longer have any excuse tomiss their loan repayments after completing their studies. PTPTN in keepingwith the Governments aim of modernising its processes and services, hasimplemented various measures to ensure that it can serve the publics needsof receiving loan facilities to pay for their tertiary studies. A flip side of PTPTNs duties is to reduce the number of defaulters that spring up yearupon year. To date, 28,627 defaulters have been blacklisted for owing PTPTNa whopping RM454.5mil.At the same time, up until October this year, 1,446,939 students have beengiven PTPTN loans with a total amount of RM31bil.The statutory bodys chief executive officer Yunos Abd Ghani said various measures were in place toensure that loan repayments were as easy as possible for the students. These measures were also used in all stages from the time when aprospective student applies for the loan to the time they graduate and needto start paying their instalments, said Yunos in an interview.There are threedifferent modules in PTPTNs core business application for loan, loandisbursement and loan recovery, he said. He said since the intake of 2007,PTPTN has implemented the system of using online forms for application of loan facilities from PTPTN.You only have to buy a PIN (personalised identification number) from BankSimpanan Nasional (BSN). The PIN only costs RM5 per transaction and isvalid for six months. You can apply for the PIN at any time of the year, for 24hours a day, he said. Yunos added that the limited validity time of the PINwas put in place for security purposes in order to prevent the applicantsidentities from being hijacked. Upon submitting their forms, the applicantsdata will be synchronised with the National Registration Departmentsdatabase to determine and verify their nationalities. PTPTN loan facilities are only available to Malaysians up to the age of 45 who are pursuing tertiaryeducation particularly diploma, degree and post-graduate studies.Our objective of having a computerised application, vetting and approvalsystem is to be able to say whether the students application has beenapproved or not in 72 hours or three days.The students will then beinformed of whether their applications have been approved or rejected bybroadcasting this information through SMS, he said. At this point, thestudent will only have to sign in again to PTPTNs website to obtain theirapproved Letter of Offer.They will then take this Letter of Offer, collecting all accompanyingdocuments and submit their completed forms and relevant documents to theuniversities of their choice, he said. He added that every Letter of Offer isindividually bar-coded to each applicant to prevent duplication or fraud. Theuse of technology in PTPTNs processes continues throughout the time thatthe students are pursuing their studies, with the statutory body workingclosely with the BSN and the universities involved.The universities will update the students status and their results for eachsemester. PTPTN

will only disburse the loans for students who scored aboveGPA 2.0, Yunos said. He explained that this was to ensure that onlygraduates of employable quali ty get to enjoy the loan facility. If thestudents do not meet a certain standard, for instance, the minimum GPA 2.0,it would have an effect on their future employment prospects after theygraduate.Our intention to ensure that they graduate and become employable in the job market, he said. He also assured that despite scoring below theminimum GPA 2.0 for one semester, PTPTN would continue disbursing theloan if the student displayed improvement in the next semester.Graduatesare given a six-month grace period after completing their courses beforethey have to start honouring their installments. He pointed out that as a formof social obligation by the Government, PTPTN encouraged borrowers tosettle their loans as early as possible. He said this was because unlike commercial banks which profited more if the loan tenure was longer, theelement of government subsidy was extended the longer the borrower tookto pay off their loans.Generally, the first reminder sent to them when theygraduate informing them that they can make a full settlement within a sixmonth period without service charge.At the end of the 6 months, we send another notice informing them thattheir installment should start on a certain date and the amount involved, Yunos said. The chief of PTPTNs payment are online payment among others,over and above the traditional but slow over-thecounter type of paymentmethod.Online banking has remained the most popular method for borrowers torepay their PTPTN loans. Account holders can go online to their respectivebanks websites to remit their payments through MayBank, CIMB, BankIslam, RHB and Public Bank, Yunos said. Besides the ubiquitous onlinebanking methods, PTPTN also allows over-the-counter payment at KL Sentraland salary deduction via the Inland Revenue Board. To meet the needs of ageneration of IT-savvy tertiary students, PTPTN also gives the flexibility tocheck their account balances through by sending and receiving My SMS15888.It gives the borrower an accurate and fast way to check the balanceanywhere using the mobile phone.The network is very extensive. Butbecause of some peoples attitudes, we still have defaulters. Then we haveto follow the normal legal procedures, Yunos said in an interview. Fordefaulters, they would receive three notices if they do not pay their PTPTNloans for three consecutive months.If there is no action taken after the 3rd reminder, we will send a legalnotice of demand.The notice will be sent by our panel of lawyers. When wefile the summons, we are basically withdrawing all existing contract, whichmeans that the entire loan amount is due.It means they have breached the original contract. Simultaneously, we willput their names into the Immigration Departments blacklist database toforbid them from travelling.

If you can travel, what does it mean? It means you have money, he said. The STAR Online , By LESTER KONG , December 3, 2009. Reference:http://thestar.com.my/news/story.asp?file=/2009/12/3/nation/5166188&sec=nation

Summary of ARTICLE 3

This article is all about how the PTPTN is providing means for theborrowers in easing their process of doing payment to them.

A flip side of PTPTNs duties is to reduce the number of defaulters thatspring up year upon year. To date, 28,627 defaulters have been blacklistedfor owing PTPTN a whopping RM454.5mil.

There are three different modules in PTPTNs core business : o Application for loan o Loan disbursement o Loan recovery

Here, we are going to focus on the loan recovery module: o Online banking has remained the most popular method forborrowers to repay their PTPTN loans. Account holders can goonline to their respective banks websites to remit theirpayments through MayBank, CIMB, Bank Islam, RHB and PublicBank. o PTPTN also allows over-the-counter payment at KL Sentraland salary deduction via the Inland Revenue Board. o PTPTN also gives the flexibility to check their accountbalances through by sending and receiving My SMS 15888.

Generally, the first reminder sent to them when they graduateinforming them that they can make a full settlement within a six monthperiod without service charge. At the end of the 6 months, another notice

informing them that their instalment should start on a certain date and theamount involved.

For defaulters, they would receive three notices if they do not pay theirPTPTN loans for three consecutive months.

If there is no action taken after the 3rd reminder, we will send a legalnotice of demand. The notice will be sent by PTPTNs panel of lawyers.

When they file the summons, they are basically withdrawing allexisting contract, which means that the entire loan amount is due. It meansthey have breached the original contract.

Simultaneously, their names will be in the Immigration Departmentsblacklist database to forbid them from travelling.

PTPTN Repayment There are two types of PTPTN repayment method, either paying progressively orpaying averagely. The borrower can choose either one that suit with their budgetbecause each method is calculated differently. The two types of PTPTN repaymentmethod can be defined as below: 1)Paying progressively Method of repayment installments is according to the determination that has beendesigned. For example, the repayment installments will be charged 5 times theincrease and 30% increase in the installment loan payments. Means that if thepayment period is 10 years, then for the first 5 years, the monthly installmentamount will change with an increase of 30% per year but in the sixth andsubsequent installments throughout the remaining months will be fixed terms of repayment . 2)Paying averagely Installment method of repayment is according to calculations based on the averageamount of the loan and administrative costs incurred and the repayment period. The installment amount is fixed throughout the repayment period.In this report, we study four cases regarding of PTPTN repayment that

involve thesetwo types of PTPTN repayment method. The purpose is to help the fresh graduateespecially form private university and degree holders to choose the better plan forpayback their PTPTN study loan according to their budget. We made comparison of these two method by stated their differentiations and recommend suitable methodfor the PTPTN borrower to settle their loan. The cases will use loan RM30,000 asstandard loan that student will borrow. The cases will analyze which one is better tochoose either progressively payment or averagely payment method and is better topayback in short term or long term.