[VIDEO] Student loans: Use first, pay never?
PUBLISHED 3 AUGUST 2018
Are you struggling with your student loan, or are you dodging it entirely? Do you really think it's safe to dodge your debt in the long run? In our second episode of RUMIT, we get down to the nitty-gritty of student loans with Hajjah Rohani bt Datuk Mohd Shahir from Hijrah Wealth Management Sdn Bhd.
FULL TRANSCRIPT
Hello?
Hi, I’m Jazmin. I’m 22 and well, adulting – it’s been tough. Think you can help me adult?
[INTRO MUSIC]
“EPISODE #2: STUDENT LOANS”
JAZMIN SIEH | Host
This is it. I’m done. No more 8AM classes. No more balding from junk food. And no more curfew. I’m doing it, I’m graduating! I’m free from you guys, I’m free from that teacher, I’m free!
[RECORD SCRATCH]
“STUDENT DEBT”
HJH ROHANI BT DATUK MOHD SHAHIR | Founder, Hijrah Wealth Management
You don’t want to be bankrupt, for sure, because of study loans. [laughs]
[MUSIC]
HJH ROHANI
Out of about 790,000 names blacklisted in the immigration department, 56% of them are PTPTN borrowers. You would think that out of the 800,000 Malaysians blacklisted, the bigger portion might be people who are not paying their income tax or whatever.
JAZMIN
Apa yang rumit sangat about student loans?
HJH ROHANI
Always in any debt issue, the money issue is not the problem but the repayment is the complicated thing and it complicates when you don’t pay. Since 1997, 1.9 million borrowers had graduated. People who have defaulted [are] up to about 448,000. Means that they did not even pay a single cent.
“DEFAULTER”
“A person who fails to fulfil a duty, obligation, or undertaking.”
“synonyms: non-payer, debt dodger; tax dodger; bilker; delinquent;”
HJH ROHANI
As an ex-banker, giving loans to students is very high risk because the student doesn’t have any income to pay. Kids do not know about money management. Basically professionals need not necessarily know. Because sometimes the avenues available to you are totally different. I myself am a trained accountant but I bummed out on my money management too!
When you take a student loan, you don’t have any security. So it’s actually regarded as a clean loan – a loan that is only to your name. You are the person that is actually responsible to pay back. But what if you don’t pay? Your name’s already in CCRIS; Central Credit Reference Information System. It’s a database maintained by Bank Negara Malaysia, so all banks have access to that database. So the minute you walk into any bank, if they key in your IC number, they will see you are defaulting.
Once you are a defaulter, no banks will give you loans. Immediately, you will be turned down for reasons only known to you. So apparently in all those hundreds of thousands of defaulters, two have been bankrupted by PTPTN. Quite scary too, because you don’t want to be bankrupt before you even reach the age of 40 or 35.
[MUSIC]
NEWSREADER
17% of 479,067 borrowers were blacklisted from travelling abroad.
“HAVE YOU SETTLED YOUR LOANS?”
HJH ROHANI
Once you want to buy a house, your dream house, and suddenly you are being declined. That would be a very sad thing to undergo. That would probably also give an impact on their kids’ potential to borrow. So that would probably hit them. When it hits their kids right, you are actually pushing it down to your second generation. So you better be a responsible first generation for your future generation to enjoy what you have enjoyed.
The problem with some of our borrowers is that once they finish their studies, they don’t go back to PTPTN. Whether you get a job or not, you need to advise them.
If in the early twenties, if you start with a low income, tell them that maybe you can afford say, RM100 or RM200 a month. As your income goes higher, increase your repayment. Another thing also, PTPTN has managed to get EPF to allow these borrowers to take out their money from EPF to settle the loan. It’s a pity because the borrowers are quite young, and if you allow them to take out from their life savings or retirement planning, that will be the negative impact on their savings capability, you know, to have a good retirement.
So the willingness of PTPTN to restructure the payment terms until you are aged 60 – which we don’t encourage them to do so – but at least you can stretch your term of payment and that will bring your instalment amount lower. So that will definitely help in your cash flow management.
Don’t let the debt drown you because this is the beginning of your life. For the young to take a student loan, it’s not a very good thing to start of, but if you need it, be a responsible borrower.
The trick is that, whoever is your creditor, don’t run away from them. Because the minute you start running away, they will catch up. One day it will balloon up and it will burst in your face, you know? So better settle this problem fast.
[END]
CREDITS
