Higher education comes at a cost which may be prohibitive for students with limited financial resources.
Some are fortunate to obtain scholarships, while others have found benefactors to pay for their tuition and living expenditure.
But for those who are really out of luck, they must find other ways to pursue their tertiary education dream, and among the best methods is to apply for education loans.
Muhammad Danial Nor Azman, 23, who is studying for a Bachelor of English Language and Literature at International Islamic University Malaysia, has applied for a loan from the National Higher Education Fund Corporation, a government entity otherwise known as PTPTN.
“I was initially hoping to get a scholarship but my first semester results fell short of requirements. So, I decided to apply for a PTPTN loan because of its exemption policy,” he said.
Open to all Malaysians pursuing higher studies at public (IPTA) and private (IPTS) higher-learning institutions in the country, PTPTN loans are meant to help students pursue their diploma or degree in programmes that have been accredited by the Malaysian Qualifications Agency (MQA).
The PTPTN loan will allow students to fully or partly pay their tuition fees, as well as cover the cost of living throughout their studies.
While financing charges or “Ujrah” is set at a very low one per cent only, loan repayments can be exempted for borrowers from the B40 and M40 income group who obtain a first-class honours degree. And this is what Danial is aiming for as he rated himself as “slightly above average”.
“I believe I have a fair chance of getting the exemption if I put in the effort,” said the final-year student. PTPTN provides loans in three categories according to the borrower’s household income — a maximum level if the student or student guardian is listed as a recipient of Bantuan Sara Hidup (BSH); 75 per cent of the maximum level if family income does not exceed RM8,000; and, 50 per cent of the maximum level if family income is more than RM8,000.
Once approved, the loans will be partially disbursed every semester and borrowers need to maintain a minimum Cumulative Grade Point Average of 2.0 to avoid suspension.
Monthly repayments start a year after the borrower completes his studies. The repayment period depends on how much is borrowed.
On the other hand, Amira Asyidah Aminy Mohd Badar, 26, had opted to take up a Mara education loan when she was pursuing a degree in business information technology with accounting at Kolej Universiti PolyTech Mara Kuala Lumpur a few years back.
The loan, under Mara’s Tertiary Education Loan Programme (TESP), is for local diploma or first-degree studies in the field and institution designated by Mara.
“What made me decide to take up the loan was that borrowers can also get a repayment discount if they fulfilled certain criteria throughout their studies,” she said.
It was relatively easy for Amira when she submitted her application online, and the loan of RM85,000 was approved for the three-year study that included registration fee, study fee, hostel fee, monthly allowance, laptop purchase and stationery.
“When I graduated in July 2016, I was advised to apply for a loan discount based on my results, which significantly reduced the amount. And I have been servicing the loan for four years now,” said the financial administrative assistant.
To be eligible for the study loan, applicants must be a Bumiputera, and it will be considered only for applicants with a minimum of one year study remaining and their socio-economic status.
A bank loan is another avenue to finance studies. One bank offering such loans is Affin Islamic Bank through its Affin Education Financing-i.
The loan is for students pursuing their foundation/certificate, pre-university (eg. A Level), diploma, degree, post-graduate (Masters and PhD) and professional courses on a full- or part-time basis at 65 panel universities and colleges nationwide.
According to Affin Islamic chief executive officer Nazlee Khalifah, the syariah-compliant scheme enables students to receive up to RM400,000 financing with a maximum tenure of 15 years at a financing base rate of four per cent.
“It covers up to 90 per cent of the total course fees, and payment to universities will be made on semester-by-semester basis. Parents, spouse or siblings aged 21 and above are required to jointly apply with the student as joint applicants,” he said.
Nazlee said students/parents were required to pay the profit charged (progressive profit) during the study period. Any default is subject to compensation charges.
“The full monthly instalment will only start upon completion of the study period. However, for any dropout or termination, the full monthly instalments will commence with immediate effect upon notification by the universities,” he said.
Other alternative funding can be sourced from savings in the Employees’ Provident Fund (EPF) and zakat scheme for Muslims.
Parents who are EPF contributors can consider withdrawing savings from Account 2 to help finance their children’s education at approved institutions locally and abroad.
Eligible courses include diplomas, advance diplomas, degrees, postgraduate degrees and professional qualifications.
The Federal Territory Islamic Religious Council (MAIWP) and religious authorities of other states offer higher education zakat schemes for low-income families or those with special needs, where the aid is used to supplement their funding from other organisations.
Before starting a course, students have to do a lot of research to find the needed resources and ensure they graduate. And once a loan is approved, they have to ensure that they can afford to make repayments.
As Danial puts it, when asked whether he will recommend other students to take up a PTPTN loan: “I guess it depends. Are they willing to pay back their loans? Do they understand the consequences of not paying back?
“It’s different when you are exempted from paying back. You worked hard and earned that privilege.
“When you agree to take up a loan, it is your obligation to pay back. My advice to students is simple: even if you are smart enough to turn the loan into a scholarship, you need to be willing to pay back whatever the outcome is.”
For more information on PPTN loans, visit https://www.ptptn.gov.my/permohonan-pinjaman-side while for Mara education loans, visit https://www.mara.gov.my/en/index/education/education-financing/.
More details on Affin Education Financing-i can be found at https://www.affinislamic.com.my/Consumer-Banking/Consumer-Financing-i/AF... .
To learn about the EPF Education Scheme, visit https://www.kwsp.gov.my/en/member/withdrawals/partial/education.