Why You Should Repay Your PTPTN Loan ASAP
Your PTPTN loan is probably your first foray into debt. There are only two legitimate ways to get out of it: the first is to repay your debt, plus a 1% per annum interest, and the second is to graduate with first class honours from your degree programme.
Unfortunately, you’ve just missed the 31 March 2015 deadline for a 20% discount on a lump sum payment of your PTPTN loan as allocated in Budget 2015, but here are five reasons why you should pay up nonetheless:
Renew your passport
This one goes somewhat hand-in-hand with the prohibition from travelling abroad, since you can’t legally travel overseas without a passport. It may not seem like a big deal, especially if you have no immediate plans to go overseas, but once you’ve a steady income stream, your mindset may change.
Continue travelling abroad
PTPTN has started blacklisting those who do not repay their loans. One of the repercussions is that you’ll no longer be able to travel overseas whether by rail, air, land, or sea until you’ve paid up an agreed amount seven days before you go abroad.
You can check your status on PTPTN’s website here or via SMS to 33199 in the following format:
Pay less in interests
The interest charged on your loan balance is calculated using the reducing balance method, which means that the 1% is charged on the amount that you have yet to repay. 1% is a nice, low rate, lower than personal loans, but the amount will snowball if you don’t take steps to reduce your remaining balance. The longer you leave your loan gathering dust, the more you’ll have to pay in interests.
Protect your credit rating
If you’ve been blacklisted, PTPTN is also mulling entering your name into the Central Credit Reference Information System (CCRIS), which is a computerised data centre that compiles credit information from various financial institutions to create your credit background.
Your non-repayment of your PTPTN loan will result in a damaged credit rating that will negatively affect your ability to secure loans, mortgages, credit cards, and in extreme (but legal) cases, new jobs.
Give others a chance to study
PTPTN exists as a financial aid for needy students to further their studies. By refusing to repay your loan, you’re depriving another young citizen who was just like you, a teenager with aspirations to have a profession instead of just a job, of a chance to realise their dream. PTPTN has already slashed their loan amount by 5% for public institutions and 15% for private institutions, and instated stricter eligibility for full loans.
Basically, only students whose parents quality for BR1M can apply for full loans. Those whose parents earn less than RM8,000 can get 75% of the maximum loan amount, while those whose parents earn more than RM8,000 can only get half the maximum amount. However, PTPTN chairman Datuk Shamsul Anuar hinted that the limit may be eased if more errant borrowers repay their loans. This is your chance to play your part as a good Malaysian!
In most cases, PTPTN is a loan, not a gift. You’ll be considered blacklisted if you fail to make payments after several reminders have been sent to you, culminating in a Notice of Demand (NOD) that blacklists you.
PTPTN’s measures to collect payment won’t affect you if you’ve been repaying at least the minimum amount, so that’s all the more reason to start polishing off your debt!