ONE of the worst choices that you can make is to ignore repaying your student loans.
The “burying your head in the sand” option — refusing to acknowledge the obligation to pay after taking a loan in the hope that it will go away — is unlikely to work. When you say no to repayment, you incur the wrath of the authorities, which can make your life difficult.
The issue of student loan defaulters resurfaced recently when a New Straits Times report revealed that National Higher Education Fund Corporation (PTPTN) loan borrowers made the bulk of some 707,304 individuals the Immigration Department has barred from leaving the country.
These student loan defaulters number more than 260,000 — a fourfold increase in a year. They are on the PTPTN blacklist for refusing to pay their debts.
There are many graduates who meet their loan repayments but many more do not.
The situation has pushed the corporation to compile the now infamous blacklist of defaulters. Some 6,000 people make the regularly-updated register of borrowers who fail to honour their obligation daily.
Some 264,000 names have been recorded this year and the list keeps growing.
As of September, 1.9 million borrowers owed PTPTN RM18.3 billion. Out of this figure, 739,000 have yet to pay a single sen.
The Immigration Department has the names of these individuals and one action taken to recover the loans is to stop them from travelling overseas.
Some have been frightened enough to get in touch with the corporation to discuss repayment plans, which is good news indeed.
So far, 31 per cent of 264,000 borrowers have contacted the corporation and it is hoping that more will do so.
Still, the corporation must initiate other measures, including tough ones, to collect student loan repayments.
Since more and more new students proceed to higher education every year and many require financial help, it is vital that the repayment process is robust.
It should also be fair to borrowers, and work well to ensure the corporation’s sustainability as an outfit which offers funds to deserving students.
What else can the corporation do?
Other countries facing a similar problem are considering stronger action to trace borrowers, including those overseas, if it is clear that they are trying to avoid repayment.
This includes the use of sanctions against errant borrowers and, if necessary, prosecution.
This is something for the corporation to think about in collaboration with the relevant agencies.
It must improve its ability to track down borrowers and pursue and retrieve outstanding student loan debts.
Borrowers, on their part, must explore all available solutions to get themselves out of default. A provision in the 2017 Budget allows discounts on repayments, which they should take advantage of.
If you are struggling to make ends meet and cannot pay the rent, does this mean you forget about your student loan?
The answer is no, because there are steps you can take to minimise the pain of beginning to repay your loans.
And, it begins here.