This article first appeared in The Edge Financial Daily on October 25, 2018

KUALA LUMPUR: A holistic study on a new repayment policy for the National Higher Education Fund Corp (PTPTN) study loans was completed on Sept 26, said Deputy Education Minister Teo Nie Ching.

Teo said her ministry is currently awaiting feedback from several government agencies, following which the report would be tabled to the cabinet.

An announcement on the new direction for PTPTN would be made after a final decision is reached, she said when replying to Khairy Jamaluddin (Barisan Nasional-Rembau) in the Dewan Rakyat.

Teo said 429,945 PTPTN borrowers were removed from the immigration department’s blacklist between May 24 and June 8.

She acknowledged that from June to September, there was a lower collection of RM817.56 million, compared with almost RM1.33 billion in the same period last year.

However, Teo stressed that the removal of the blacklist was not the sole reason as to why there was a drop of more than RM500 million in loan repayments as policies put in place by the previous Barisan Nasional government also played a role in the decrease.

Teo referred to a decision by former prime minister Datuk Seri Najib Razak last year to extend the grace period — from six months to 12 months — for fresh graduates to repay their PTPTN loans. As a result, she said, loan repayments dropped from RM351 million in January 2017 to RM297 million in January 2018, and from RM384 million in March 2017 to RM293 million in the same month this year.

On Sept 20, Prime Minister Tun Dr Mahathir Mohamad lambasted errant borrowers of PTPTN loans for their untrustworthiness, which he said had resulted in billions of ringgit in unpaid loans.

PTPTN and Lembaga Pembiayaan Perumahan Sektor Awam are among the largest issuers of debt guaranteed by the federal government, which stood at RM238.1 billion as at end-2017.