The Malaysian people have been asked to help out the well-heeled head of PTPTN (National Higher Education Fund Corporation) with ideas to recoup the money owed by those who have defaulted on their loans.
It seems that while 55% of borrowers have behaved responsibly in repaying their loans, the rest of more than 400,000 borrowers have defaulted on their loans.
The figure amounts to RM39 billion, almost equivalent to the amount lost by 1Malaysia Development Berhad! With the further loss of another RM20 billion from GST cancellation, this loss of RM60 billion certainly cuts into our annual budget.
So, what is the problem that must be addressed if a more effective resolution is to be found? I would say that it is a combination of an inconsistent policy, an irresponsible attitude of entitlement and like many other aspects of public policy, a lack of political will.
1. A means tested sliding scale
A key flaw in populist thinking involving free tertiary education for all may seem “socialist” but in practice ends up as the working class subsidising the middle class because there is a higher proportion of middle class students in tertiary education than those from working class background.
In an egalitarian system, free tertiary education would be available only to those most in need, ie the B40 while the M40 would pay for tertiary education according to a means tested sliding scale.
Thus, those at the lower scale of the M40 would pay less than those at the higher scale of the M40. The T20 students would pay full fees.
2. Entitlement based on need, not “race”
A means tested access to free tertiary education or loan repayment waiver must be strictly based on economic need, not the criteria of “race”.
The populism practiced by the BN and now the PH government of pandering to “the Bumiputera Agenda” appears to have created a sense of entitlement that has resulted in 400,000 defaulters of the PTPTN loans.
It has an entitlement that is devoid of responsibility and that is why the country is facing this RM40 billion hole in our national coffers.
Another problem is once again, Pakatan Harapan’s flip flopping since GE14. The PH coalition, in its election manifesto, promised borrowers that they will only have to service their loans once their salaries hit RM4,000 a month.
They have since found that they cannot make good this promise. Thus, like the populist measure of cancelling traffic summonses, loan defaulters are similarly waiting for the next populist measure by the government and so they withhold payment of their loans.
3. Focus on responsibility
When I was Principal of New Era College that was set up by the Malaysian Chinese community, our loans repayment was almost 100 per cent.
I believe the loans repayment rate in all the 60 Independent secondary schools throughout Malaysia shows the same results. The reason this rate of loan repayment is possible is because all students who apply for these loans are reminded at the interview that the loans have been donated by those in the community who value education and that there are others waiting in line after them who should not be deprived of the opportunity to study.
In other words, those who have been given loans should discard any attitude of entitlement.
4. Political will backed by the law and enforcement
If the government has the political will to carry through good governance and reform, they can do this through the appropriate legislation and ensure that there is enforcement of the loan contracts to show that they mean business.
This applies not only to loan repayment but to a whole array of defaulters and flagrant flouters of the law – traffic offenders, illegal factories, importers of plastic waste, those who dump rubbish indiscriminately, illegal loggers, those who refuse to pay minimum wages, ad nauseum.
Thus, “New Malaysia” should inculcate a spirit of government assistance based on need and not “race”, eschew any attitude of entitlement, uphold moral and responsible conduct, implement a system of means testing for all services, and carry out government policy with a political will to deal with all defaulters and flouters of the law.
Kua Kia Soong is the adviser to Suaram.
The views expressed are those of the writer and do not necessarily reflect those of FMT.