In Malaysia, a common way for us to be able to afford this cost of education is through PTPTN loans. PTPTN stands for Perbadanan Tabung Pendidikan Tinggi Nasional (National Higher Education Fund Corporation). It is a government agency that provides study loans to Malaysian students for their tertiary education.

How does PTPTN loan work?
Contrary to popular belief, PTPTN is one of Malaysia’s most accessible study loans due to its exceptionally low-interest rate. The loans have a flat-rate interest of 1% (or ujrah, a Shariah-compliant service fee), which makes it relatively easy for you to pay off in small amounts after you graduate.
Lets say you’re borrowing RM70,000 over a repayment period of 15 years for an business course at a private university. The interest that you would need to pay will work out to RM10,500 or RM58.33 per month (RM70,000 x 1% x 15 years). Your total monthly repayment, on the other hand, would be RM447.22 per month (RM70,000 + RM10,500 / 15 years). Based on this example, the interest rate of RM58.33 that you need to pay monthly is extremely low compared to that of loans offered by banks.

What Happen If You Don’t Pay Off Your PTPTN Loan
After your graduation, you have a 12-month grace period after which you would need to immediately start repaying your PTPTN loan. But what happens if you choose not to? PTPTN will first issue up to 3 reminders followed by a demand letter for you to repay your loan. All unpaid loans will automatically be listed under the Central Credit Reference Information System (CCRIS) 12 months after the borrower graduates. You should make regular repayments towards your PTPTN loan to keep your credit report on CCRIS healthy. Should You Consider Paying Off Your PTPTN Loan Early As with any loan, the earlier you pay it off, the more you can save on interest. For one thing, interest is charged only after the 12-month grace period. This means that if you repay your entire loan within the 12-month grace period, you would not have to pay any interest at all. And if you start making partial repayments within the 12-month grace period, you would be charged with interest only for the payments you make after that
time period.

Consider how much interest you can save by repaying your loan several years earlier than the scheduled period. Using the same example as above, you would need to pay an interest of RM10,500 for repaying a PTPTN loan of RM70,000 over a period of 15 years. Yet, if you take 7 years to repay the same loan, you would be charged with an interest of RM4,900 and that’s RM5,100 in savings.