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PTPTN Repayment Tied to Income, Automated Salary Deductions via LHDN – PM

PTPTN Repayment Tied to Income, Automated Salary Deductions via LHDN – PM

The ICL method, introduced by the NRC, has aimed to address the challenge of recovering study loans from those who have entered the workforce.

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In Malaysia, the National Higher Education Fund Corporation (PTPTN) has long served as a vital source of educational financing.

PTPTN provides specific loans to students, covering their tuition fees and living expenses throughout their academic journey, with repayments due post-graduation.

However, as of May 2023, Prime Minister Datuk Seri Anwar Ibrahim revealed a substantial outstanding PTPTN loan amount of RM66.9 billion.

This poses a significant challenge, especially for future students seeking financial support.

“Loan recovery has become one of the government’s biggest challenges in ensuring continuous education for students who may not be able to afford or suffering in financial difficulties, to pursue their higher education,” he remarked.

The persistently low repayment rate among graduates and the employed is insufficient for PTPTN’s sustainability.

Proposed Method for PTPTN Repayment Through Income Contingent Loan (ICL)

As a response, there’s a proposal to implement the Income Contingent Loan (ICL) repayment approach, with automatic salary deductions through the Inland Revenue Board (LHDN).

This strategic move addresses the pressing concern of low loan repayment rates, ensuring ongoing access to education for prospective higher education students.

“We are concerned about the long-term sustainability of PTPTN and the future of future students, should this persist. If this amount is paid, it can support nearly 2.5 million new student tertiary education loans,” highlighted Prime Minister Datuk Seri Anwar Ibrahim in a speech conveyed by Deputy Prime Minister Datuk Seri Fadillah Yusof.

ICL Salary Deductions: A Burden-Free Solution for Borrowers

Confidence in the ICL-based salary deduction system is high, anticipated not to overburden borrowers.

“This Income Contingent Loan (ICL) implemented via automatic salary deductions made by Inland Revenue Board (LHDNM) is seen as the most practical and least-burdensome proposal for loan borrowers to settle their debts,” Anwar stated.

“In addition, ICL will provide incentives to individuals and employers making repayments as well will encourage more borrowers to carry out their civic responsibility for future students who want to continue studies but can’t afford it,” he added.


This ICL method was initially introduced by the National Higher Education Policy Review Committee (NRC) in response to the challenge of the low loan repayment rate, which had reached RM66.9 billion by May 2023.

Additionally, the government announced discounts in the 2024 Budget from October 14 to March 31, 2024, as an incentive for borrowers to make PTPTN loan repayments.

These discounts vary based on the repayment rate:

  • 10% discount on the outstanding balance for full loan settlement.
  • 10% discount for repayments of at least 50% of the outstanding loan in a single payment.
  • 15% discount for payments made through scheduled salary deductions or direct debits.

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