Thursday, August 26, 2010

New system to ease PTPTN loan repayments

KUALA LUMPUR: New study loan borrowers will no longer have a means of defaulting on their payments upon graduation.

Higher Education Minister Datuk Seri Khaled Nordin said all first-year students who obtained study loans from the National Higher Education Fund Corporation (PTPTN) this year will be given a file number with the Inland Revenue Board (IRB) upon signing the agreement documents to allow for automatic deduction of their salaries.

In May, Khaled had said that the cabinet had agreed to allow the IRB to collect loan payments on behalf of PTPTN.

However, this payment recovery mechanism will not apply to the previous batches of borrowers as they did not sign similar agreement.

"Since this mechanism is imposed only to borrowers who are in their first-year of study this year, the salary deductions can only take place three to four years from now when the students have graduated and started working," said Khaled.

As for the rest of the borrowers who are currently in their second or third year of study, they had the option to pay back their loans by way of salary deductions through the IRB, he said.

Khaled said details on minimum salary deductions for these students, however, had yet to be finalised.

"We still have time to decide on this because the deductions will only begin after three years and by then, there may be changes in the income level of fresh graduates."

PTPTN has disbursed RM32.4 billion to 1.5 million study loan accounts since it was established in 1997.

As of March, payments were due on 775,942 loans, of which RM1.6 billion had been recovered from 563,897 borrowers.

For failing to pay back, a total 37,453 accounts had been blacklisted from 1997 to March.

*Taken from NST Online

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