It is a sorry state for our youth when they begin their educational journey already burdened with debt – an aggressive education liability imposed by what was meant to be the nation’s education fund.
Despite its name, Perbadanan Tabung Pendidikan Tinggi (PTPTN) today resembles a bank more than a fund.
Established in 1997 under the National Higher Education Act, PTPTN carried a noble mandate: to bridge the gap between rich and poor by managing education savings and providing fair access to higher learning. Yet over time, PTPTN appears to have lost its way.
It has evolved into an entity that prioritises loans over savings, repayment over empowerment – forgetting the very purpose for which it was created.
For instance, with 65.6 per cent of fresh graduates in 2021 earning below RM2,000, according to a Khazanah Research Institute report published in 2024, a standard monthly repayment consumes nearly 10 per cent of their gross income. This represents a significant burden amid rising living costs.
PTPTN’s foundation was meant to balance saving for education with borrowing for opportunity. Over time, however, that balance has shifted dangerously towards lending – what should have been the last resort.
Malaysia must stop treating PTPTN solely as a lender and begin rebuilding it as a genuine national education fund. The only viable path forward is to institutionalise early education savings through mandatory contributions.
The solution lies in recognising the distinct roles of PTPTN and the Employees Provident Fund (EPF). We must address the education financing crisis not by fully subsidising tertiary education, but by introducing a simple, self-sustaining financial discipline.
Moving forward, a mandatory contribution to a National Education Savings Scheme (SSPN) account should be automatically created upon birth registration at the National Registration Department.
This initiative is neither a punishment nor a tax. It is a strategic investment in both parents’ retirement security and a child’s educational future. To ensure fairness and universal coverage, the mechanism should apply to both public and private sector workers through equivalent channels.
Under this model, every Malaysian child would be automatically assigned an SSPN savings account linked to their MyKid number. This removes bureaucratic barriers and ensures no child is excluded from birth.
A two per cent funding strategy can be implemented through a “forced savings” mechanism adapted to parents’ employment status.
For private sector workers, a total of two per cent from monthly EPF contributions – split evenly between employee and employer – is redirected into the child’s SSPN account. This is a reallocation, not an additional cost. The remaining 21 per cent of mandatory EPF contributions continues to fund retirement savings.
For civil servants, while EPF contributions remain under review, the mechanism would involve a direct mandatory salary deduction. A fixed two per cent of gross salary would be channelled into the child’s SSPN account.
Once deposited, these funds would benefit from compound growth through PTPTN’s investment arm, mirroring EPF dividend performance. Crucially, the account would be ring-fenced – portable throughout the child’s life but restricted strictly to education-related withdrawals.
This safeguard prevents misuse and ensures funds are available when the child reaches tertiary education age, protecting both EPF savings and government pensions from being diverted for education costs.
Why this will work
This strategy shifts the financial burden from a depleting retirement pool to a dedicated education savings engine. The current reliance on EPF withdrawals for education is a self-defeating cycle.
By mandating small, consistent contributions to SSPN, EPF is preserved for its intended purpose. Based on the 2022 mean household income of RM8,479, setting aside just two per cent – about RM170 per month – allows families to accumulate approximately RM29,480 over 18 years. This is sufficient to fund a full medical degree at Universiti Malaya via the UPU channel.
The outcome is clear: parents’ retirement savings are protected, while children enter the workforce without the crushing burden of PTPTN debt.
Government savings: Stopping the fiscal bleed
Under the current model, the government shoulders most PTPTN loans using public funds. Education loans are inherently unprofitable for the state. Low interest rates and weak repayment performance mean the government absorbs high capital costs with minimal returns.
A mandatory contribution framework would allow PTPTN to become self-sustaining, using accumulated savings to fund loans for those who genuinely need them. This would relieve the government of a substantial annual liability and free up public funds for other national priorities.
The courage to be logical
Education is an investment worth making – but not indefinitely at taxpayers’ expense. It is a shared responsibility, and the system must reflect that balance.
This proposal is simple and financially sound. It restores PTPTN to its rightful role as the nation’s education fund while strengthening EPF as Malaysia’s retirement pillar.
Parents would no longer need to drain their retirement savings to educate their children. Students would transition from decades-long debt to manageable three- to five-year repayment periods. The government, meanwhile, could redirect resources to other pressing needs.
Mandatory contributions would compel PTPTN to operate as a disciplined fund manager, relying on structured savings and investment rather than aggressive lending. EPF would remain protected as a retirement-only vehicle, as originally intended.
Malaysia’s long-term stability depends on a self-sustaining financial architecture. The moment for reform is now – and the solution is already within reach.
Irham Zulkernain is a writer based in Kelantan and a student of Applied English Language Studies at Universiti Poly-Tech Malaysia.
The views expressed here are the personal opinion of the writer and do not necessarily represent that of Twentytwo13.
