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The New PTPTN Scheduled Salary Deduction Scheme

Posted on December 06, 2018


The New PTPTN Repayment Scheme
The government announced that the National Higher Education Fund (PTPTN) will implement the Scheduled Salary Deductions (PGB) beginning January 2019 to force-collect repayment of education loan owed by 2.9 million borrowers.  As of August 2018, the 2.9 million borrowers owe the fund RM40 billion.

In the 2019 Budget, the government incentivise companies with tax breaks if they assist their staff to settle their loans by the year ending 2019. The tax relief offer (for the amount paid) is now extended to employers who help their staff to repay their PTPTN loans via PGB.

The Scheduled Salary Deduction Scheme
The forced-salary-deduction scheme collects as little as RM40 for those earning RM2,000 and at least RM1,200 for higher income earners.

Monthly Deduction Percentage and Amount

PTPTN Schedule.png
The New PTPTN Scheduled Salary Deduction Scheme

Posted on December 06, 2018


The Unfulfilled GE14 Promise to Postpone Repayment
In the Pakatan Harapan’s election manifesto, it promised to postpone the student loan repayment for graduates earning RM4,000 and below and also to remove the blacklisting policy on loan defaulters.  

After the PH Government won the election in May, as promised, the travel ban on 429,945 loan defaulters was lifted.  As for the promised repayment postponement, the government stated that it was unable to fulfil the promise due to the country’s high debt level.  Instead, the government is implementing a staggered instalment repayment according to monthly income scheme for borrowers who are earning RM2,000 and above and deferred repayment for about 225,000 graduates earning RM2,000 or less a month.


How Much do Graduates Owe to PTPTN?
According to Dr Mahathir Mohamad, the amount of student loans owed to PTPTN is almost equivalent to the total debts suffered by the scandal-riddled 1Malaysia Development Bhd (1MDB).

Based on the MoF’s reported statistics, in 2016 the government is liable for RM40bil in guarantees for PTPTN student loans, the single largest statutory guarantee provided by the Malaysian Government. In the past eight years, with new loans outgrowing repayment, the government’s liability grew at an average of 18% or approximately RM3.7bil per annum.


Currently, there are 2.9 million borrowers who owe approximately 40 billion to PTPTN and half of them, 1.4 million have not made payment. 


However, should the PTPTN borrowers default on the loans, these guarantees turn into real debts for the country and the government is obligated to pay the borrowed amount.

PTPTN Loan Guarantee.png


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The New PTPTN Scheduled Salary Deduction Scheme

Posted on December 06, 2018


How does the Scheduled Salary Deductions (PGB) Work?


Step 1
PTPTN will work with the following government agencies to obtain salary information as well as details of borrowers' employers:-

  • Employers Provident Fund (EPF)

  • Inland Revenue Board of Malaysia (LHDN)

  • Retirement Fund Inc (KWAP)

  • Accountant-General’s Department

  • Armed Forces Payroll Directorate 

  • Public Service Department (JPA)

Step 2
PTPTN will then issue a directive for employers to deduct salaries according to the percentage set. However, Human Resources Minister M Kula Segaran has commented that currently there is no law to allow employers to directly deduct their employees’ salary for the purpose of making National Higher Education Fund Corporation (PTPTN) loan repayments. Amendment to the existing PTPTN Act may be required for employers to deduct their employees’ salary for the new PTPTN repayment scheme.

Step 3
Employers will be responsible for deducting the salaries of their staff (borrowers) for the purpose of PTPTN loan repayment.


Repayment Exemptions
Full-time degree students from B40 and M40 households who obtain first class honours and complete their studies in 2019 and within the given time frame, will qualify for loan repayment exemption.

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. 

PTPTN Loan-to-Scholarship
As of October 2018, a total of 53,113 students with first-class honours were exempted from repaying their loans, with 37,355 students from public universities and 15,758 students from private universities.