KUALA LUMPUR – A total of 77% of respondents agreed that underprivileged and overburdened National Higher Education Fund Corporation (PTPTN) borrowers should have part of their student loans cancelled, said a recent survey.
Some 301 respondents who are student loan borrowers were surveyed between August 3 and September 17 last year, where 80% of them agreed that borrowers should only begin to repay their student loans after attaining an affordable level of income.
Respondents agree that low wages not only impact their ability to repay their loans, but also contribute to their financial stress and lack of savings.
“Some 61% of the respondents earn less than RM4,000 a month and a substantial 25% have a monthly income of less than RM2,000,” the survey said.
This finding is especially worrying because those respondents earn less than Bank Negara Malaysia’s 2018 estimated monthly living wage for Kuala Lumpur, which is RM2,700 per single adult.”
Led by Ooi Kok Hin and Edwin Goh, the survey findings were revealed in The Centre’s Indebted Generation: Part 4 report published yesterday.
This report is the final instalment of a research series by the think tank to address the quandary of student debt in Malaysia.
In part four of the research series, The Centre has presented findings from its survey of student loan borrowers, which aims to understand borrowers’ views on student loans and the impact of student loans on their lives.
The survey also found that respondents with incomes lower than RM2,000 a month are especially likely to question the worth of their tertiary education.
It said 79% of those earning RM7,000 and above feel that their education is worth their loans, and only 38% feel the same among those earning less than RM2,000.
A sizable proportion of respondents, according to the survey, also said that student loan debts delayed their plans to start families or businesses.
Some 59% agreed that having student loans contribute to their financial stress, 57% delayed their home purchase, and 52% postponed their emergency and retirement savings.”
Other key takeaways from the survey are that respondents’ repayment habits are mainly driven by income, where those who default on their student loan repayments tend to earn less than those who pay consistently.
This suggests that low income rather than lack of financial discipline is the primary reason for loan defaults.
In addition, the survey revealed that 82% have signalled their support for the think tank’s argument that lower-income households should not have to incur debt to finance their higher education.
Therefore, most of the respondents indicate strong support for The Centre’s student loan reform proposals, which were outlined in the earlier parts of the research series, such as targeted loan cancellation and income-based repayment.
However, the study showed that respondents were unenthusiastic towards the idea to reduce loans for traditional degrees in favour of funding more technical and vocational education and training and micro-credential courses, indicating an uphill task ahead for the government in its effort to upgrade programmes in those areas as outlined in the 12th Malaysian Plan. – The Vibes, January 28, 2022
