KUALA LUMPUR: The government’s study loan scheme under the National Higher Education Fund Corporation (PTPTN) is riddled with bad database management and a lending model that is financially bound to fail, says its chairman Wan Saiful Wan Jan.
Two months after taking over the fund, Wan Saiful told FMT that his staff are still grappling with shocking discoveries of mismanagement, as well as a whopping RM38 billion debt that the previous government seemed “not interested to collect” from borrowers.
“There wasn’t even an up-to-date database of borrowers, which means we can’t trace all our borrowers. This is the sheer incompetence of the Umno appointees,” the former think tank chief, who has been appointed as special officer to Education Minister Maszlee Malik, told FMT recently.
The issue of paying back study loans under PTPTN is among 10 promises that Pakatan Harapan (PH) said would be implemented in its first 100 days of power.
The coalition had promised to allow an extension period for repayment until a borrower’s salary reaches at least RM4,000 a month, as well as to lift the travel ban on thousands who have defaulted.
Wan Saiful said while lifting the travel ban is easy to implement, the process of identifying who is eligible for an extension of repayment is not.
“They didn’t care at all about maintaining a reliable database. This means I don’t know the incomes of the borrowers. When this data is missing, how can I decide which borrower can defer and who should continue paying? So I had to collect data first,” he said.
That exercise ended last month, after borrowers were given a deadline to update their latest income details.
But verifying these details was a herculean task, said Wan Saiful, with some government-linked agencies not forthcoming to assist the fund, possibly due to privacy laws.
He said this was compounded by the fact that the previous management failed to create partnerships with important agencies.
“When borrowers claim they earn a certain amount, I need to be able to verify that claim,” said Wan Saiful.
He said while the Inland Revenue Board had agreed to provide tax details, two other agencies have refused to help – the Employees Provident Fund (EPF) and the Accountant-General’s Department.
“I am still appealing to these two agencies because they can cause us to fail in delivering our promise by refusing to cooperate. Had the previous administration done something to break the silos, we wouldn’t have had to start from scratch,” he said.
‘Travel ban was unjust’
Asked if the lifting of the travel ban meant that the authorities were not being strict with defaulting borrowers, Wan Saiful, who once headed the liberal-minded Institute for Democracy and Economic Affairs (IDEAS), said the move had more to do with human rights.
“We must have a very strong reason to deny someone freedom of movement, which is a human right. We cannot treat a student who borrowed RM20,000 to study the same way we treat someone who swindled RM2.6 billion for personal gains. Hence, I lifted the travel ban,” he said.
However, he said, there was an absence of a business model in PTPTN. At the centre of his complaint are the borrowing rates of the fund at 3%-4.5% “but we lend at 1%”.
“This means we subsidise all loans – this is not sustainable at all,” he said, adding that it was not surprising because PTPTN had long been treated as a “political tool” for Umno.
Still, Wan Saiful said, the intention behind PTPTN was good.
“But over the years, Umno’s politicisation of education resulted in PTPTN being seen as a political tool rather than a vehicle to ensure educational equality. This resulted in a total neglect of the sustainability of PTPTN’s business model,” he added.
Wan Saiful and his team have their plates full for now, even as the pressures of proving themselves in the first 100 days of the new government subside over the next few weeks and months.
“I am committed to helping reduce the burden shouldered by our borrowers. Our team is working all out to figure out the best way to do it despite the weaknesses we inherited and the obstacles we face,” he said.