Prime Minister Datuk Seri Anwar Ibrahim said repaying National Higher Education Fund Corporation (PTPTN) loans through the Income Contingent Loan (ICL) option is a practical move that would not burden borrowers.
ICL, among several methods proposed by the National Review Committee on the National Higher Education Policy, will involve monthly salary deductions through the Inland Revenue Board.
Currently, PTPTN’s loan repayment rate is meagre, and the government is concerned about its long-term sustainability.
“As of May this year, the outstanding loan amount was RM66.9 billion. This amount, if repaid, can fund approximately 2.5 million new students,” he said.
Deputy Prime Minister Datuk Seri Fadillah Yusof read out his speech text, while Higher Education Minister Datuk Seri Mohamed Khaled Nordin was also present.
Anwar said the NRC recommended the introduction of a new financing mechanism where public universities would be bound to the government through a Service Level Agreement (SLA) to produce high-quality students and research.
Instead of the block grant model, the proposal suggests the government ‘pay’ public higher education institutions (IPTAs) for educational services based on the performance-based financing formula.
“This formula should be based on graduate employability, graduate salaries, and education quality. Institutions that can demonstrate strong performance will receive higher costs per student,” he said.
Anwar, who is also the Finance Minister, said the NRC also recommended the implementation of a three-year budget planning cycle similar to Hong Kong.
It would be regulated by the University Grants Committee (UGC), which will consider proposals submitted by institutions, outline programmes, and set student enrolment targets based on the country’s needs, with funding provided based on the targeted student enrollments.
The NRC has also looked into expanding university endowment funds by removing the annual spending requirement of 50 percent imposed on endowments and waqf funds.
This would enable endowment and waqf funds to be expanded further and subsequently reinvested to enhance access and the standard of higher education.
Anwar said world-renowned universities like Harvard University and the Massachusetts Institute of Technology (MIT) have large endowment funds allowing them to reinvest in the education system, including improving teaching materials and equipment, expanding research, and providing scholarships.
Overall, the recommendations put forth by the NRC, which KPT established to reform the country’s higher education, were very promising and could be further discussed with the Finance Ministry.
