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Selangor’s education fund owed RM8.23mil

 | October 8, 2013

The outstanding debt involves borrowers from as far back as 1987, says the Auditor-General's (AG) report.

PETALING JAYA: Selangor’s state education fund is wrought with outstanding loan repayments amounting to RM8.23 million, according to the 2012 Auditor-General’s (AG) report.

The report states that the outstanding amount involves borrowers from as far back as 1987 and one who started accumulating outstanding fees since 1990.

RM3.48 million of the total debt has been outstanding for more than six years. There was also an increase of outstanding loan repayments of 3.3% from 2012 to June 2013.

The report cautioned that failure to collect the outstanding payments will increase the debt amount and affect the fund cash flow in the long term.

The Selangor state government established the Selangor state scholarship fund through the Selangor state scholarship fund 1949 Enactment (Amendment 2001).

In the early stage of establishment, the fund was aimed to provide scholarships for Selangor citizens intending to pursue studies at higher institutions either locally or abroad.

However, with effect from 1987, the scholarships were converted to interest-free loans with the exception of students of Alam Shah secondary school, Putrajaya and medical undergraduates.

The interest-free loan can be converted to a sponsorship in the form of reduced loan repayments based on examination results of the borrower or commonly known as convertible education loan.

The AG report also pointed out that the programme was less than satisfactory because the marking scheme was not updated and the score formula was incorrect.

The correct formula is when the cummulative grade point average (CGPA) of a potential borrower is multiplied by 12.5. However, in some cases, it was found that the formula used was CGPA multiplied by 10, resulting in a lower score.

“If this continues, it is feared that those who qualify may be denied a chance to obtain a loan,” advised the report.

It further urged the fund’s board and secretariat to take proactive measures to collect outstanding debts by publishing the names of those who failed to settle their debts in the newspapers.

“This is to avoid the risk of not being able to recover the debt within the period stipulated in the Limitation Act 1953. Furthermore, the fund’s secretariat should decide on a policy for the provision of ‘doubtful debt’ and ‘bad debt write off ‘,” it said.


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