Honouring my obligations, settling PTPN

After 5years servicing my 1^st ever loan – My education loan, PTPTN I managed to settle my debt with the aid from my mum. Finally, it comes to the end.

Thanks to the government initiative for waiver of 20% for those who are willing to settle their loan one-off under Budget 2015, my mum has offered me zero-interest installments  to settle the my outstanding balance and enjoy the 20% discount.

Although the policy has raised a big debate, but undeniable it is welcome amongst the graduates who has the capabilities to settle their debts and being rewarded for their willingness to honor their obligations. Well, it seems like not everyone else were as lucky as me, having a mum who are willing (or should said having the capacity) to help their children and reduce the youngsters’ burden. Some might even questioning those who are able to paid one off why at 1^st place was granted the loan? I can’t answer for others, but in my case my mum was retired from her job and received pension from government.

 Well, the world wasn’t always fair, so just take it and move on. (I always feel unfair too why I am still a banker who earns little, but face it ok? Work harder rather than mumbling there.)

So, what has the 20% discount mean to me? Here are some illustrations:

	Debit	Credit	Amount
I borrowed for my 3years degree course in IPTA.	RM19,500-00		RM19,500-00
Being charged 3% interest as I do not change to 1% flat ujrah (Repayable over 120months instalment in gradual term)	RM  3,821-38		RM23,321-38
Total amount inclusive interest			RM23,321-38

                               

			RM19,500-00
Actual interest charged to-date	RM2,126-52		RM21,626-52
Actual amount paid to-date		RM7,814-80	RM13,811-72
20% Discount		RM2,726.34	RM11,049-38
Insurance coverage	-RM113-36		RM10,936-22

	Interest	Payment	Principal
			RM19,500-00
FY2010	RM  48-75		RM19,548-75
FY2011	RM579-63	RM1,044-80	RM19,083-58
FY2012	RM558-37	RM1,400-00	RM18,241-95
FY2013	RM521-57	RM2,400-00	RM16,363-52
FY2014	RM418-20	RM2,970-00	RM13,811-72
Total	RM2,126-52	RM7,814-80

As you have seen from the table above, I should have paid RM23K over the 10years period and I have paid  until to-date for 5years, with total settlement of RM18,751-02 (Paid RM7,814-80+ Final settlement of RM10,936-22). Thus, a cost savings of RM4,750-36 in calculation. However, I have made more payment than the schedule payment, thus, I believe the actual payment will be less than RM23K should I continue the payment until the last payment. That, was only a theoretical illustration.

In fact, for the amount I have borrowed RM19,500-00 plus interest charged up-to date RM2,126-52, total RM21,626-52. I have paid RM18,751-02 to settled,

Cost Saving         = RM21,626.52 – RM18,751.02

                                = RM2,875.50 (13.3%)

For the real saving I received from the 20% discount was solely 13.3%. Despite that, excluded the interest, the PTPTN has only lose RM748-98 of principal. If accounted for discounted cashflow, I believe the government has merely undertaken minimal losses only.

Of course, during FY2014 I entitled for another 10% additional discount (RM220) for monthly installments I have paid on-time. Thus, I actually does enjoy higher cost savings.

It’s fine for me being rewarded for being a good paymaster (because I am, haha!!).

Everything does has a cost, what we have borrowed we should honor and settled it. We have enjoyed the benefits; it’s time to pay back for the sake of next generation.

Just pay accordingly to your ability instead of letting the interest roll and roll.  As you have seen from the illustration, the interest charges might as high as RM500+ a year.

For those who arguing they should not charge interest for the education loan, change your mindset and put it as administration charges, it would be less uncomfortable for you.

Or, pay on time monthly, and enjoy the 10% discount, it’s almost reducing your interest in half.

Don’t ever think that someone who are able to pay installments for Car loans, Housing Loans or even using a credit card and enjoying ZPP to buy electronics gadgets or facial packages are unable to service their obligations. They can but they are just unwilling. Of course there will be argument whereby the car is meant for them to travel for working purpose. There are always excuses to cover their back. So, no point arguing for this.

Of course, there are some friends who are waiting rewards/dreaming presents from sky drop ie cancellation/waiver for PTPTN repayment. Free education at the cost of billions from taxpayer wasn’t a wise decision. Are you willing to pay a higher tax when you are one of the taxpayer (Definitely not for me, I m currently paying PCB RM30 per month and feeling imbalance already!!)?

You will definitely feel the sweetness from your hardship if you work hard enough during your university time and graduate as first class degree holder. Then, you will get waiver…

If you are not, pay the cost and you will appreciate it more. 

Every comment here is just my personal view. No heart feelings...