KUALA LUMPUR: The National Higher Education Fund (PTPTN) plans to convert its conventional education loan scheme for all current 1.45 million student borrowers to the new syariah-compliant education financing programme by December next year.
Pursuant to the conversion, the 4% interest rate for loan repayment under conventional banking scheme will be replaced with a 1% administrative charge under the new scheme based on the Islamic principle of Ujrah.
Out of the total loan recipients, 192,059 have since December 2008 been automatically offered to repay their loans under the new Islamic scheme.
"By end of 2010, it will certainly be done (the full conversion),” the statutory body's chief executive officer Yunos Abdul Ghani said after a signing ceremony between PTPTN and AmIslamic Bank here on Dec 16 for the bank to finance RM1.5 billion and act as a facility agent for 10 years to the statutory body.
This is the second commercial financing arrangement that PTPTN has secured. The first involved a RM1.5 billion government-guaranteed commercial financing arrangement from CIMB Islamic Bank Bhd in July 2009.
PTPTN received its funding from the government from 1997 to 2002 of RM5 billion. In 2003, government spending was stopped and PTPTN had to look for alternatives, receiving RM500 million and RM12.5 billion from Kumpulan Wang Amanah Pencen (KWAP) and Employees Provident Fund (EPF) respectively, in the following five years.
The total funding that PTPTN has received over the years is a whopping RM21 billion to help finance higher institutional students in the country.
"At the moment, we have 391,790 students under our loan scheme. For 2010, we have a total of 166,116 newly approved loan applications with loans amounting to RM1.5 billion to be disbursed by April 2010," said PTPTN chairman Datuk Dr Mohamad Shahrum Osman.
"However, an additional RM2.5 billion is still needed to support loan applicants until the end of next year," he added.
The total 1.45 million loan applications approved since PTPTN's inception in 1997 up to November 2009 is said to require financial allocation of RM31.17 billion for the students to complete their studies.