KUALA LUMPUR, Dec 5 — Federal student loan takers earning above RM2,000 a month no longer have to pay the National Higher Education Fund Corporation (PTPTN) as the agency will deduct the funds directly from their salaries.
The tiered wage garnishment scheme starting in January begins at 2 per cent for those earning between RM2,001 and RM2,499, extending to 15 per cent for those with monthly salaries of RM8,000 or more.
PTPTN chairman Wan Saiful Wan Jan told a press conference earlier that a directive will be issued to employers to garnish wages where needed, with the system to emulate the Inland Revenue Board’s (IRB) monthly tax deduction (PCB) system.
“PTPTN will work with relevant agencies, among them the IRB, Employees’ Provident Fund (EPF), Retirement Fund Inc (KWAP) and the Immigration Department to obtain salary information as well as details of borrowers’ employers.
“Based on the information, PTPTN will issue a directive for employers to deduct salaries according to the percentage set.
“Employers will be responsible for deducting the salaries of their staff (borrowers) for the purpose of PTPTN loan repayment,” Wan Saiful was reported to have said when announcing the new repayment mechanism at Menara PTPTN, today.
He said employers who assist their staff to repay their study loan through the newly introduced PGB scheme will be entitled to tax relief for the amount paid.
The tax relief will benefit both full repayment or monthly repayments with the condition that employers would not impose any terms against the staff after the repayment is made.
“Perhaps employers can offer PTPTN loan settlement as an incentive for exemplary staff members or incentive in recruiting new employees.
“This incentive can serve as motivation to employees and at the same build employers’ reputation,” he said.
According to the repayment scheme, the lowest amount to be paid is RM40 for those earning a RM2,000 monthly salary, and exceeds RM1,200 for those earning a pay of RM8,000 and above.
Wan Saiful said the repayment method would be fair as those earning a lower salary would not feel too burdened whereas those earning higher incomes would not be able to take advantage of the situation.
He added that degree students in B40 and M40 households who complete their studies with first class honours in 2019 will be entitled for loan repayment exemption, with certain conditions, including being full-time students and to complete their studies within the stipulated time frame.
Senior citizens earning a monthly salary of between RM2,000 to RM4,000 and have repaid their loans consistently for three years before hitting 60 will have their loan balance waived.
As for the abolishment of the one to three per cent administration fees, Wan Saiful said the government is still reviewing the matter.
At present, 1.4 million out of 2.9 million PTPTN borrowers have not fulfilled their loan repayments.
The percentage structure for the repayment method according to monthly income is as follows:
i. Below RM2,000 — 0 per cent
ii. RM2,001 to RM2,499 — 2 per cent (RM40-49.99)
iii. RM2,500 to RM2,999 — 3 per cent (RM75-89.99)
iv. RM3,000 to RM3,999 — 5 per cent (RM150-199.99)
v. RM4,000 to RM5,999 — 8 per cent (RM320-479.99)
vi. RM6,000 to RM7,999 — 10 per cent (RM600-799.99)
vii. RM8,000 and above — 15 per cent (RM1,200 and above)