Seminar on “Student Loans: A Case Study of Malaysia”

Mr Wan Saiful, the chairman of Malaysia’s National Higher Education Fund Corporation (PTPTN), gave a seminar to share his views on the challenges which PTPTN currently faces.


Wednesday, 18 September 2019 – Mr Wan Saiful, the chairman of Malaysia’s National Higher Education Fund Corporation (PTPTN), gave a seminar at ISEAS – Yusof Ishak Institute to share his views on the challenges which PTPTN currently faces.

PTPTN is a statutory board of the Malaysian government responsible for providing study loans to tertiary students, as well as managing education saving schemes. Government-funded loan schemes for tertiary education are not unique to Malaysia. Many other countries have similar schemes to satisfy the exponential demands for tertiary education, with the Higher Education Contributions Scheme in Australia being a prominent example. Governments must, however, reconcile differing objectives, such as achieving a high loan approval rate, and ensuring financial sustainability.

Mr Wan Saiful (right), chairman of Malaysia’s National Higher Education Fund Corporation, discussed PTPTN’s objectives and the challenge it faces. Dr Francis Hutchinson (left) moderated the session. (Credit: ISEAS – Yusof Ishak Institute)

Mr Wan Saiful prefaced his seminar by providing an overview about the goals of PTPTN, which are to provide tertiary students with affordable, flexible, and easily accessible loans. Contrary to allegations on social media, the ethnic breakdown of PTPTN’s borrowers closely matches Malaysia’s racial composition. Students from poorer families stand to receive a larger loan quantum, with more than half of the disbursed loans channelled towards students from the lower income group (B40). Most of the remainder goes towards students from middle income families (M40). PTPTN therefore assists students from low and middle income households to obtain the necessary funding for tertiary education. Even though approximately two-thirds of PTPTN’s borrowers are enrolled in public universities, 51% of the PTPTN loan amount is disbursed for students in Private Higher Education Institutions (PHEI). 

Mr Wan Saiful explained that PTPTN’s mounting debt stemmed partially from the conflicting goals which the agency has to simultaneously fulfil. Since 2003, with the termination of governmental grants, PTPTN is expected to be financially self-sufficient. PTPTN borrowed annually from private financial institutions at market rate interests to raise the necessary capital for student loans. However, PTPTN is also mandated to offer affordable study loans, and therefore charges her borrowers an interest which is significantly below the market rate. In addition, the repayment rate of PTPTN borrowers is less than 50% which further aggravates the debt problem.  Mr Wan Saiful suggested potential solutions to increase the repayment rate amongst PTPTN borrowers.

During the question and answer session, one participant commented that PTPTN’s debt problem cannot be separated from wider issues facing the higher education sector, such as the quality of higher education per se, as well as the employability of its graduates. Mr Wan Saiful agreed and opined that the Pakatan Harapan government needs to create value-added jobs with higher remuneration for Malaysians. Another participant inquired about the rise of identity politics since last year’s General Election as seen in the recent alliance between PAS and UMNO. Mr Wan Saiful argued that Malaysia politics is shifting away from economic concerns towards identity battles. Mr Wan Saiful also responded to a range of questions including his motivation to take up the position of PTPTN’s Chairman, the exponential increase of PHEI in the recent decade, amongst others.

The seminar drew more than 30 participants comprising of government officials, academics, and members of the public.

Over 30 people attended the session. (Credit: ISEAS – Yusof Ishak Institute)