How PTPTN repayment scheme works

National Higher Education Fund Corporation chairman Wan Saiful Wan Jan.

KUALA LUMPUR: Some 225,000 National Higher Education Fund Corporation (PTPTN) borrowers will be exempted from repaying their student loans under the fund’s new repayment mechanism as they earn less than RM2,000 a month.

This was disclosed by PTPTN chairman Wan Saiful Wan Jan at a briefing on the new mechanism which was announced in Budget 2019.

Under the new mechanism, known as scheduled salary deductions (PGB), borrowers earning RM2,000 and above will have between 2% and 15% of their salaries deducted to repay their student loans.

The deductions according to borrowers’ salary scale are as follows:

1) Under RM2,000 = no deductions

2) RM2,000-RM2,499.99 (2%) = RM40-RM49.99

3) RM2,500-RM2,999.99 (3%) = RM75-RM89.99

4) RM3,000-RM3,999.99 (5%) = RM150-RM199.99

5) RM4,000-RM5,999.99 (8%) = RM320-RM479.99

6) RM6,000-RM7,999.99 (10%) = RM600-RM799.99

7) RM8,000 and above (15%) = RM1,200 and above

Wan Saiful said PTPTN would work with all relevant agencies to obtain information on the salaries and details of borrowers’ employers.

“It is the responsibility of the employers to deduct from their employees’ salary,” he added.

He said borrowers who were not formally employed were required to verify their income information on PTPTN’s website to enjoy the repayment facilities according to their incomes.

“The implementation of the PGB will benefit those in the lower income bracket and youths who have just entered the workforce.

“As an example, the repayment rate for someone who earns RM2,000 is just RM40. It is nearly half of the lowest repayment rate of the old mechanism, which was RM91.67.”

Wan Saiful said the new mechanism was fairer as it ensured that those who are not well-to-do are not burdened while restricting those who are rich from taking advantage of the system.

“Under the old mechanism, which relied on the amount borrowed and loan duration, there was a possibility that someone earning RM20,000 would only be required to pay RM91, while a borrower who earns RM4,000 might have to pay RM250 a month.”

He added that employers who helped their employees repay their loans would enjoy tax breaks for the amount paid, regardless of whether the payment was made in instalments or in a lump sum.

However, he said employers who helped their employees pay their loans were not allowed to set any conditions on their workers.

This includes bonding the employees, as the employers would already enjoy tax cuts.

On another initiative, Wan Saiful said degree students from the bottom 40 and middle 40 who graduated with first-class honours in 2019 would be exempted from repaying their loans subject to the following conditions;

1) They are full-time bachelor’s degree students;

2) They graduate with first-class honours; and

3) They complete their studies on time and are categorised as a member of a B40 or M40 family when they complete their studies.

As for the abolishment of loans for those above the age of 60, Wan Saiful said this applied to borrowers who earned between RM2,000 and RM4,000 a month and had consistently been repaying their loans over the past three years before reaching the age of 60.