KUALA LUMPUR – The National Higher Education Fund Corporation’s (PTPTN) Syariah-compliant Ujrah loan repayment scheme, which was introduced seven years ago, has received lukewarm response from borrowers.
Only 23 percent or 257,582 out of the 1.1 million borrowers, who were under the conventional loan repayment scheme prior to the introduction of the Ujrah scheme in 2008, have switched to the Islamic financing scheme, according to
PTPTN Chief Officer for Marketing and Strategic Communications Mastura Mohd Khalid.
As of May 31 this year PTPTN, which was established in 1997, has disbursed study loans worth RM52.2 billion to a total of 2.3 million people.
The Ujrah scheme was introduced in 2008 to encourage borrowers to settle their outstanding loans faster at a lower fee.
While the conventional scheme charges an administrative fee ranging from three per cent to five per cent per annum on the reducing balance, the Ujrah scheme charges a flat fixed rate of one per cent per annum.
Since it is obvious that borrowers can make a saving on fee payments by opting for the Ujrah scheme, why aren’t they beating a path to PTPTN to have their loans converted?
Said Mastura: “I’m not sure why not many borrowers are switching to the Ujrah scheme. I don’t know if it is because not many are aware of it or they just don’t want to change their loan agreement.
“If you look carefully, many of them are hard-core defaulters who have not even made a single repayment to PTPTN. They couldn’t care less what happened to their loan accounts,” she said.
She said the rather low conventional-to-Ujrah conversion rate could also be due to the perception that it entailed a cumbersome process.
She also pointed out that the Ujrah scheme allowed borrowers to make an estimated 50 percent saving on the administrative fee.
“Under the Ujrah scheme, a flat fixed rate of one percent is charged on the borrower’s outstanding balance. For example, if the principal loan amount is RM15,000 and the borrower has already repaid RM3,000, then the one percent rate is imposed on the balance sum of RM12,000 and not on the principal amount.
“We hope that borrowers will no longer have any misconceptions about the calculations under the Ujrah scheme,” she told Bernama during an interview recently.