PTPTN’s Conundrum – Continue or Whither Away?

As at 31 December 2015, PTPTN approved more than RM55 billion in loans to approximately 2.5 million students.  Amount disbursed stands at RM45.2 billion while amount repaid is RM7.3 billion.

The enrolment on a yearly basis, private tertiary institutions will increase to 1.6 million students by 2025.  And the cumulative loans is projected to rise to RM141.5 billion by 2025.  On current loan recovery trend, PTPTN is not likely to sustain its business.

Possible ways to defuse PTPTN “bomb” is to adopt some of Penang Institute’s recommendations:

·        reduce waivers for 1^st class honours;

·        remove discounts;

·        automatic deduction at source (with a monthly salary of above RM3,500).

For new applicants, return student loan applications to the private sector, either through banks or a new SPV for the purpose.  Could also consider P2P or such similar arrangement?

PTPTN’s existing loans need to be restructured into a “good” bank and a “bad” bank principle.  The “bad” bank is sold to the private sector to recover.  So what is PTPTN’s future?  Existing PTPTN is transformed and all new loans are driven through a new private sector entity not connected to any college.