By Yasmin Ramlan
SHAH ALAM, April 17 — In recent years, the issue of late National Higher Education Fund Corporation (PTPTN) repayments has garnered attention, especially as many young Malaysians struggle with managing their finances.
For fresh graduates, the combination of financial inexperience and the pressures of modern living can create a perfect chaos for financial mismanagement.
While loan repayment is a crucial responsibility, many young borrowers face difficulty staying on top of their obligations due to a lack of financial discipline, unrealistic expectations, and insufficient understanding of how their spending habits impact their debt repayment schedule.
Universiti Putra Malaysia senior lecturer Chong Kok Fei, an expert in marketing, management, consumer behaviour, and shariah financial planning, sheds light on some of the common mistakes young people make, which can lead to challenges in repaying PTPTN loans.
He said one issue is the lack of clear financial goals, which leaves borrowers without a roadmap to manage their debt.
“Many young people struggle with budgeting, which leads to overspending and falling behind on loan repayments. Establishing a financial plan and sticking to a monthly repayment schedule is essential to keeping debt under control and avoiding financial stress.
“Many young people don’t set specific financial targets, such as aiming to be debt-free in a certain number of years. Without a clear goal, it’s harder to prioritise loan repayments over unnecessary spending, leading to difficulties in managing debt effectively,” he told Media Selangor recently.
He explained that this lack of budgeting, combined with a failure to prioritise loan repayment, increases the financial burden as interest accumulates over time.
Additionally, many young borrowers underestimate the total amount they owe, which can lead to delayed repayments and greater financial strain.
“A lack of financial literacy prevents borrowers from making informed decisions about their repayments.
“Understanding interest, managing multiple financial commitments, and seeking help when needed — whether through loan restructuring or financial advice — can greatly improve financial outcomes and prevent defaults,” he said.
Punish those with means, support those struggling
On March 10, Deputy Higher Education Datuk Mustapha Sakmud said the government is considering reinstating a ban on overseas travel against blacklisted PTPTN loan defaulters.
He said 383,637 borrowers — or 13.55 per cent of the 4.1 million borrowers who were granted loans — had not made repayments as of December last year.
Mustapha said PTPTN was able to collect RM4 billion in loan repayments when the ban was in place before it was scrapped in 2018. However, repayments decreased after the ban was lifted.
He added that a total of 2.44 million borrowers, or 86.45 per cent of PTPTN loan recipients, have started repaying their loans.
Speaking to Media Selangor, Prof Datuk R. Rajah of the Universiti Malaya’s Asia-Europe Institute said the impact of punitive measures like a travel ban could be effective for financially stable defaulters, similar to rules against bankrupt individuals.
“Apart from those still unemployed or earning too low a salary, my take, though based on limited examples, is the lack of responsibility by those earning enough to repay,” he said.
Rajah suggested repayment structures be reassessed to ensure fairness to borrowers.
He added that if the high default rate is primarily caused by financial difficulties resulting from rising living costs, a broader strategy, including social safety nets, may be necessary to protect both borrowers and the wider public from such hardships.
“If defaulters are indeed facing cash flow or savings problems, then rising living costs can be a problem, though Malaysian inflation data only shows a rise in food inflation over the last few months.
“If payment flexibility does not currently exist, then that should be considered,” he said.
On March 17, Higher Education Minister Datuk Seri Zambry Abdul Kadir said the government is considering other methods to encourage more borrowers to repay their PTPTN loans in addition to reintroducing travel restrictions.
Prime Minister Datuk Seri Anwar Ibrahim had also directed the PTPTN management to propose improvements to the loan repayment system after Aidilfitri celebrations so as to not burden borrowers.
He said he has reviewed the issue of PTPTN’s low repayment rate and recognises the importance of ensuring the fund’s sustainability so future generations can continue to benefit.
Anwar, who is also Finance Minister, on April 11 said the government is considering reviewing PTPTN loan rates and repayment terms to better assist borrowers while addressing the issue of high debts, after it was revealed that the agency’s outstanding debt has reached nearly RM40 billion.
Counselling, not just penalties
Rajah said counselling may be needed for PTPTN defaulters if their saving habits are a contributing factor.
He said this would help the government assist them in managing their spending and savings more effectively in the future.
Meanwhile, Chong, who has worked for the Credit Counselling and Debt Management Agency, said while most young Malaysians understand their responsibility to repay the loans, the main issue lies in their ability to do so as they are influenced by factors such as income levels, high living costs, and other financial commitments.
He suggested that for those who can afford to pay more, making extra payments beyond the minimum can lower their interest rates, whereas for borrowers who truly cannot afford to repay, seeking advice from PTPTN or financial advisers for restructuring options is important.
“For individuals who hesitate to repay despite having the means, we must educate them on the long-term benefits of clearing their debt.
“Financial freedom and peace of mind are invaluable, and ensuring they understand the positive impact of debt repayment could motivate them to act sooner,” said Chong.
Six-step plan
To manage PTPTN loan repayments effectively while achieving other financial goals, Chong recommends borrowers follow a structured six-step financial plan.
Chong added that improving financial literacy is essential to lower the number of loan defaulters, with the main strategies being establishing financial planning clubs in schools and encouraging early habits like saving and budgeting.
He said interactive tools and financial apps can help people manage their money and track loan repayments, as do regular financial reviews and accessible resources, to further support responsible financial management and, ultimately, discourage loan defaulters.
Source: Selangor Journal
Last Update: 13/05/2025
