Set wage threshold for PTPTN loan repayment, MP suggests

DAP’s Zairil Khir Johari has proposed proposed that graduates only repay their PTPTN loans when their salaries hit about RM42,000 a year, allowing them the financial leeway to service their debt. ― Picture by Yusof Mat Isa
DAP’s Zairil Khir Johari has proposed proposed that graduates only repay their PTPTN loans when their salaries hit about RM42,000 a year, allowing them the financial leeway to service their debt. ― Picture by Yusof Mat Isa

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KUALA LUMPUR, May 16 ― The government should consider setting an affordability threshold for graduates to repay their student loans, DAP Bukit Bendera MP Zairil Khir Johari suggested today.

He proposed that graduates only repay their PTPTN loans when their salaries hit about RM42,000 a year, allowing them breathing space and the financial leeway to service their debt.

Zairil said the idea was more urgent now as official statistics indicate that many graduates have struggled to repay their loans, and blacklisting them would only worsen the situation.

“It is really no surprise that many graduates are simply unable to make their PTPTN loan repayments, especially after considering the other costs a young working professional has to deal with, such as house rental and vehicular loans, which have become a necessity due to the lack of public transport.

“In this context, punitive measures such as blacklisting defaulters on CCRIS and other legal action may actually worsen the situation… one way to address this dilemma is to introduce a minimum income threshold for repayment,” he told reporters outside the Dewan Rakyat here.

Putrajaya revealed recently that the 1.25 million borrowers who failed to repay their PTPTN loans have been listed in the Central Credit Reference Information System (CCRIS), which makes it difficult for graduates to obtain loans including personal loans, credit cards, housing and vehicular loans.

According to a parliamentary reply on the issue Zairil received last year, only 45.8 per cent of loans have been repaid as of 30 September 2015, amounting to RM6.71 billion out of RM14.65 billion.

At the same time, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar revealed last May that more than a quarter of all unemployed people in the country at the time were graduates.

Zairil said another way to help graduates with their loan problem is an income-contingent repayment scheme.

Currently, PTPTN uses mortgage-type loan structures, in which the interest rate, loan repayment period and monthly repayment rates are fixed.

“A better idea is to use an income-contingent repayment scheme, in which the rate of repayment would scale with the income of borrowers.

“In other words, the higher the salary of a graduate, the higher the quantum of repayment, and vice versa. Not only would such a scheme reduce the loan repayment burden of a graduate, it would also reduce the repayment period as borrowers would pay more as their careers progress,” he said.

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