KUALA LUMPUR: National Higher Education Fund Corporation (PTPTN) borrowers earning more than RM2,000 a month will no longer be able to esacpe repayment once the scheduled salary deduction (PGB) is implemented this January.
The scheme will emulate the Inland Revenue Board's (IRB) monthly tax deduction (PCB) system in which PTPTN will be in direct contact with employers who will then be responsible for mandatory salary deductions.
PTPTN chairman Wan Saiful Wan Jan said they will issue a directive to employers to carry out the deductions according to the percentage set in the PGB scheme.
"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," he said at a press conference to announce the new repayment mechanism at Menara PTPTN, here, today.
In the 2019 Budget, Finance Minister Lim Guan Eng initially announced that the government will be implementing a scheduled salary deduction scheme of between two to 15 percent for borrowers earning more than RM1,000 a month.
However, the threshold was later amended to RM2,000 as announced by Deputy Education Minister Teo Nie Ching in Parliament.
Presently, 1.4 million of the 2.9 million PTPTN borrowers have not made repayments.
Wan Saiful said employers who help their staff to repay their PTPTN loans via PGB will be entitled to tax relief for the amount paid.
He added that the tax relief benefit covers full repayment or monthly repayments.
"This is on the condition that employers must not impose any conditions against the staff member after 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 added.
Earlier, Wan Saiful said 225,000 borrowers earning below RM2,000 will be exempted from repayment under the PGB scheme.
"Those earning below RM2,000 a month do not have to make PTPTN repayment until their salary exceeds RM2,000. For those earning between RM2,000 and RM4,000, their repayment amount (monthly) is low," Wan Saiful said.
The lowest repayment amount is two percent which works out to a monthly deduction of RM40 for those earning RM2,000 a month.
"This method is seen as fair as it ensures that those not earning as much will not feel burdened while the rich will not be able to take advantage (of the situation)," he said.
Meanwhile, Wan Saiful said degree students from B40 and M40 households who obtain first class honours and complete their studies in 2019 will qualify for loan repayment exemption.
"However, the condition is that they must be full-time students, complete their studies within the given time frame and are from B40 and M40 households when they complete their studies," he said.
He added that the government has also agreed to waive the loan balance for borrowers who are senior citizens earning between RM2,000 to RM4,000 a month and have been consistent in paying back their loans for three years before they hit 60.
Apart from that, Wan Saiful said the corporation is still in the midst of reviewing calls for the abolishment of the one to three per cent administration fees.
Facts on PGB
Percentage of deduction according to monthly income
* Below RM2,000 - 0 per cent
* RM2,001 to RM2,499 - 2 per cent (RM40-49.99)
* RM2,500 to RM2,999 - 3 per cent (RM75-89.99)
* RM3,000 to RM3,999 - 5 per cent (RM150-199.99)
* RM4,000 to RM5,999 - 8 per cent (RM320-479.99)
* RM6,000 to RM7,999 - 10 per cent (RM600-799.99)
* RM8,000 and above - 15 per cent (RM1,200 and above)