PTPTN : Should Education be turned into a business?

In the recent PTPTN debate between UMNO Youth Chief, YB Khairi Jamaluddin and PKR Strategic Director Rafizi Ramli, an interesting point that was brought up by Rafizi was how PTPTN has turned education into a business. For those who have not watched the debate, you can watch it below.

I know the debate was about whether the government should settle the outstanding PTPTN loans and make education to the tertiary level free, but I think bigger questions should be ask and those questions will determine how the education policy should be in the future.

First of all, lets put aside the question of the PTPTN debt and whether the government should pay it or not, or whether the government does actually have the money to support free education. A lot of numbers have been thrown around but as a common person, there is no easy way we can confirm the validity of the numbers. What we should focus on is what we should do about it and how to make sure it does not spiral into a full blown crisis. This is all a big question of policy. If you have a policy that wants to make education free, eventually they will find a way to make it free. If the policy is to maintain status quo, then there is no way to make significant changes to the system.

Status Quo

So, what is the status quo? According to Rafizi, from 1997 to 2010, the PTPTN debt collection in those 13 years is only 10%, meaning from all of the loans given out within those years, only 10% has be recollected and as he argued, if this trend continued, it will lead to serous economical implications.

In the US, the same thing is happening, only in a larger scale. The US has among the highest cost of education and for one to afford it, the natural thing is to take a loan. The problem is, there is no guarantee that one will get a job after graduating, especially in the current economic climate. So in a way it’s kind of like the sub-prime mortgage crisis in the US that hit the US around 2008 where the banks lend money to people that clearly can’t pay for the loan. For a more detailed explanation, watch the video below.

However the “PTPTN loan crisis” is not as bad as the sub-prime mortgage crisis, but it’s basically the same concept. The skyrocketing cost of living in Malaysia means less money in the pockets of recent graduates which in turn means not money to pay for the PTPTN loan.

Of course, there is a chance that they just don’t want to pay for the loan too. If that is the case, that means the debt collection has a problem.

“Education has turned into a business”

What Rafizi means by this is simple actually. Did you notice that recently university and colleges have sprouted up “like mushrooms after the rain”, as Malays would say it. I mean, you can see advertisements everywhere from TV to newspapers to the internet. PTPTN is one of the biggest contributor that helps make this happen and has become a important point for the pro-PTPTN supporters argument questioning what will then happen to these institution of higher learning if PTPTN is abolished.   With the ability to take study loans, the average teen can now pursue their tertiary education. The catch is, there is no guarantee that they will get a job that pays will enough that can support their lives and at the same time allows them to pay for PTPTN. When the debt accumulates, one day the bubble will burst and either the government will have to bail out PTPTN or let it go bust in which will effect the economy just like how the sub-prime crisis did.

Free Education

Now what Rafizi and Pakatan Rakyat is suggesting is like “OK, we know where this is heading, we need to clear this debt and start with a totally different plan and policy before we go bankrupt”. According to their proposed policy, students are future investments for the country, so it’s only fair that the government make education free to lessen the burden of these students. Public universities will be free and private university students will get a subsidy in their tuition fees.


The problem with that is where do we get the money, YB Khairy commented. In reply, Rafizi said that to know the cost of the current system we need only look at the budget allocation for student fee subsidies of our 21 public university in Malaysia. This calculates to RM16,000 per student, which is 90% of their total tuition fees. So to top up the other 10% of the fees only RM562 Million is needed. But as a comparison, the government spent RM2.6 Billion to give RM500 to Malaysians through the BR1M progam (Skim Bantuan Rakyat 1 Malaysia). So, it is only 1/5 th of the cost of BR1M to abolish tuition fees for public universities. That will give parents with university student kids an extra RM1000++ per month in their pockets or better still students need not take PTPTN loans anymore. The PR suggested the handing out of RM5000 a year to university students as an life cost allowances, multiply that with the 465,000 current public university students, it only amounts to RM2.23 billion which if added to the earlier amount of RM562 Million for tuition fees is only RM2.792 billion, which is only slightly higher than what the government spent on BR1M. So, the question of where to get the money is somewhat irrelevant. If you have money for BR1M (and they are talking about a second BR1M campaign), then surely you have money for education.

Moral Hazard

Another point that was brought up by YB Khairy and a few ministers recently is the moral hazard of giving free education to students. They believe that paying is a way to put ones commitment into the education he or she is undertaking. Free education for them is equal to no commitment to their study, the argue. Valid point, but if one doesn’t have commitment in study, they wouldn’t have been selected into it , would they? You can always add a clause that if a student gets expelled or wants to stop their study in university they have to repay the tuition fees since they started their studies. This also means the selection process must be tighter so that we will not select students with bad attitudes.

The Bottomline

As Rafizi has said, “Nak seribu daya, tak hendak seribu dalih” meaning “where there is a will, there is a way”. If you want to make education free, there is always a way. I’m starting to think that the government is disagreeing with the idea just for the sake of disagreeing. This is a common trait of Malaysian politics. You can’t agree with your “enemy” even though the idea is good. I’m sure a proper discussion between both sides can be very productive instead of merely debating it. I do question the PTPTN debt clearing on moral grounds (a debt has to be paid), but I totally support free education as long as a better selection process is implemented to weed out the ones with attitude problems.

What do you think? Should PTPTN debt be abolished and tertiary education made free? Opened to comments

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