Education Loans in Malaysia: Alternatives to PTPTN
Higher education is an important but significant investment for your future. However, it can be quite a financial burden for many students and their families. In Malaysia, one of the prevalent ways to finance higher education is through an education loan.
The National Higher Education Fund Corporation (PTPTN) is the primary government body that provides education loans. However, there are other alternative education loan options available to Malaysian students. This article explores some of the available alternative student loan options available to Malaysians in 2024. Let’s get started.
Why consider an education loan?
An education loan (sometimes called a student loan) is a specialised type of financial assistance expressly designed to help aspiring students cover the costs associated with post-secondary education. Here are several reasons why students should consider an education loan.
It gives you access to higher education
An education loan can provide access to quality higher education that might otherwise be financially out of reach. Whether you are pursuing a degree locally or venturing overseas for studies, an education loan can cover tuition fees, accommodation, and other related expenses.
Increase chances of employment in the future
Investing in education is investing in your future employability. Graduates with a degree typically have a higher earning potential and more career opportunities compared to those with only a high school certification. Thus, an education loan enhances one’s employability by enabling them to focus on their degree studies without worrying excessively about financial burdens.
Alleviates financial burden
For many students and families, covering the costs of education outright may not be feasible. Education loans alleviate this financial burden by spreading the cost over an extended period. Instead of facing a significant upfront expense, borrowers can repay the loan gradually, often after completing their studies and securing employment.
Help you build a credit score
Besides being a strategic investment in one's academic and professional development, student loans can positively impact one’s credit score.
Additionally, responsibly managing a student loan by making timely payments may lead to an improved credit score and better creditworthiness over time.
Consequently, a good credit history opens doors to future financial opportunities, such as obtaining housing loans or starting a business.
How do student loans work in Malaysia?
Education loans in Malaysia operate similarly to other types of loans. Upon approval, borrowers receive funds to cover their educational expenses, including tuition fees, living costs, and other educational-related expenditures.
Repayment usually commences after the completion of one's studies— although some loans may offer grace periods or flexible repayment terms.
Types of education loans in Malaysia
Different education loan facilities exist that open doors to educational opportunities for Malaysians. Let’s explore some, shall we?
PTPTN
While PTPTN remains a prevalent option for education financing, several alternatives exist, each with its own terms and conditions. Let's explore some of the prominent education loan providers in Malaysia:
Bank education loans
Banks in Malaysia offer education loans tailored to the needs of students pursuing various levels of education, both locally and internationally. Some of the notable bank education loans include:
Affin education financing-i
Affin Bank offers an education loan with a financing amount of up to RM400,000 and RM600,000 for medical, engineering and pilot/aviation courses. The financing tenure is a minimum of 5 years to a maximum of 20 years, or up to the age of 65.
Maybank education loan
Maybank offers an education loan that provides up to RM400,000 worth of financing. The repayment period only starts six months after graduation and is stretchable for up to 30 years— giving students time to find work before they need to start paying.
Bank Rakyat education financing-i
Bank Rakyat offers education financing solutions based on the Islamic principle of Tawarruq. Eligible students can obtain financing for pre-university, undergraduate, and postgraduate studies at approved institutions. The accessible loan amount can reach up to a whopping RM1,000,000— repayable within 20 years.
OCBC education loan
OCBC offers a loan to individuals who are keen on studying Malaysian Qualifications Agency (MQA)-recognised programmes— whether internationally or locally. The loan amount is usually capped at RM250,000 and can be settled anytime within seven years without penalty.
CIMB education loan
CIMB offers education loans for Malaysian citizens pursuing tertiary education at both local and overseas institutions. It is imperative to note that the Malaysian government must recognise the course. The loan covers a minimum amount of RM10,000 and a maximum of RM100,000 for 10 years.
RHB education loan
RHB's education loan caters to students pursuing higher education at recognised institutions. With competitive interest rates and flexibly convenient repayment terms, RHB aims to ease the financial burden associated with education.
MARA education loan
The Majlis Amanah Rakyat (MARA) provides education loans and scholarships to Bumiputera students pursuing studies at various academic levels. These loans aim to support students from economically disadvantaged backgrounds in accessing higher education opportunities.
Foundation education loan
Several foundations in Malaysia offer study loans to well-deserving students based on academic merit and financial need. Some of the prominent foundation education loans include:
AMMA Foundation study loan
The AMMA Foundation provides study loans to Malaysian students pursuing tertiary education in selected fields of study. The loan covers tuition fees and other essential expenses.
Each candidate is given a loan not exceeding RM4,500 per semester for a maximum of six semesters for degree courses and a loan not exceeding RM3,500 per semester for a maximum of six semesters for diploma courses.
ECM Libra Foundation study loan
The ECM Libra Foundation offers study loans to Malaysian students from disadvantaged backgrounds with outstanding academic achievements. The loan aims to support students in pursuing higher education at reputable institutions that are recognised by the MQA and are enrolled in approved courses. The loan, which is interest-free and bond-free - unless otherwise stated - principally covers tuition fees.
Kuok Foundation loan
The Kuok Foundation provides study loans to students who are applying for, or currently pursuing an MQA-approved first-degree programme full-time and on-campus at selected universities.
SOCSO education loan
The Social Security Organisation (SOCSO) offers education loans to children of contributors, enabling them to pursue higher education locally or overseas. The loan covers tuition fees, accommodation, and other educational expenses.
JPA Skim Pinjaman Yuran Pengajian Luar Negara
The Jabatan Perkhidmatan Awam (JPA) provides education loans to eligible Malaysian students pursuing studies in specific fields of study overseas. The loan aims to groom future talent in critical sectors of the economy.
KOJADI education loan
Koperasi Jayadiri Malaysia Berhad (KOJADI) is a cooperative society expressly established to avail educational loans to needy students who want to pursue higher education. However, loan applicants must be members of the society.
Maju Institute of Education Development (MIED) education loan
Since its founding in 1984, the Maju Institute of Education Development (MIED) has grown into the premier provider of study loans. Its loans are privy to members of the Indian community in Malaysia who are seeking financial aid for their pursuit of higher education.
SPP1M
The Skim Pembiayaan Pendidikan 1 Malaysia (SPP1M) provides education financing to Malaysian students pursuing undergraduate and postgraduate studies locally or overseas. The scheme tends to offer appreciably competitive interest rates and flexible repayment options.
Note: All loans mentioned above are subject to the bank, organisation or provider’s policies and terms & conditions.
How to get an education loan in Malaysia
To apply for an education loan in Malaysia, follow these general steps:
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Check eligibility: Ensure you meet the established eligibility criteria set by the loan provider. For instance, citizenship status, academic performance, and other requirements.
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Gather documents: Prepare the necessary documents required for the loan application, such as identification documents, academic transcripts, and offer letters from educational institutions.
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Submit application: Complete the loan application form and submit it, along with the required documents, to the respective loan provider. Be sure to adhere to the application deadlines and guidelines provided.
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Accept loan offer: If your application is successful, carefully review the loan offer, including the terms and conditions, interest rates, and repayment schedule. Subsequently, if comfortable with the terms, accept the offer.
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Manage repayments: After completing your studies, start incrementally repaying the loan - in line with the agreed-upon terms and schedule. Furthermore, be sure to always initiate timely payments to avert any penalties or adverse effects on your credit score.
What is the interest rate for an education loan in Malaysia?
Interest rates for education loans in Malaysia vary depending on the loan provider, loan amount, and repayment period. For example, PTPTN charges a fixed rate of 1% per annum, while bank loans can have interest rates ranging from 4% to 6.8% per annum.
It's imperative to carefully review and iteratively compare the interest rates offered by the loan providers to choose the most favourable option for your circumstances.
Conclusion
Education loans serve as valuable tools in facilitating access to higher education for students in Malaysia. While PTPTN remains a prominent option, numerous alternatives exist, offering diverse financing solutions tailored to the needs of students.
Remember that an education loan is a significant commitment that can unpredictably impact your finances for many years, so always make sure to read and understand the terms and conditions before signing up. It's also a good idea to consult with a financial advisor or education consultant to make the most informed decision.
With the right education loan or financial aid, you can make that investment more affordable and achievable. So, start planning early, explore your options, and take the first step towards your dream education today.
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This article aims to give an overview of Malaysia’s education system for public understanding. However, it does not cover all aspects of the University of Nottingham Malaysia (UNM), so readers are encouraged to seek more information if necessary.
Posted on 21st June 2024