Education is a crucial long-term investment in your life. It is undeniable that not all students can bear the costs of education on their own or be supported by their families for the significant expenses involved. Therefore, taking an education loan is a reasonable alternative that should be considered.
Do I Need to Take an Education Loan to Continue my Studies?
One of the main factors that leads someone to make the decision to take an education loan is the cost of continuing their studies. The cost of pursuing education depends on the type of university you choose, whether it’s a public university (IPTA) or a private university (IPTS). As you may already know, the tuition fees at private universities are much higher and can reach tens to hundreds of thousands of ringgit compared to the fees at public universities.
If parents haven’t taken early steps such as setting aside savings for their child’s education through SSPN (National Education Savings Scheme) or education insurance, then taking an education loan is a reasonable step if you want to continue your studies. This means that you may need to repay the loan after completing your studies. Here are some reasons why you should consider applying for an education loan:
Access to Education
Education loans can provide opportunities for students to pursue education that was previously unaffordable for their families.
By obtaining higher education, as a student, you will enhance your chances of securing better employment with a rewarding salary.
Education loans can serve as a financial aid source to help students pay for their education expenses and alleviate the financial burden on their families. For example, programs like PTPTN (National Higher Education Fund Corporation) offer exemptions for first-class degree holders, which means they may not have to repay their education loans.
Building Credit Score
Repaying your education loan can also help you build your credit score. A good credit score increases the likelihood of your loan applications, such as home loans, credit cards, and others, being approved. Therefore, it is important to ensure responsible use of your student loan and consistently make your monthly payments.
Types of Education Loans You Can Apply
Education loans in Malaysia can be obtained through several financial institutions such as banks, cooperatives, and government institutions. You can choose to apply for one from one of the following types:
1. PTPTN Education Loan
This loan is offered by the Malaysian government to students who wish to pursue higher education at tertiary institutions. By taking out a PTPTN loan, the education costs, including tuition fees, accommodation expenses, and living costs, will be covered by this loan. Additionally, students who receive PTPTN loans have a flexible repayment period, depending on the loan amount and post-graduation income.
The repayment rate of PTPTN loans is based on the student’s ability to repay, with lower repayment rates for those with lower incomes. PTPTN loans also offer lower interest rates compared to loans from other financial institutions. Failure to make repayments according to the schedule may result in strict actions taken by PTPTN.
To apply for a PTPTN loan, you need to follow these steps:
- Visit the PTPTN website at https://www.ptptn.gov.my/ and click on the “Permohonan Pembiayaan” (Loan Application) link at the top of the page.
- Choose the type of financing you want to apply for (for example, Higher Education Financing or SSPN-i Plus).
- Fill out the application form with your personal information, including family, education, and financial details.
- Prepare supporting documents such as a copy of your identification card, copies of your parents’ salary slips or bank statements, offer letter from the tertiary institution, and other relevant documents.
- Complete the application form and upload the supporting documents on the PTPTN website.
- Once your application is processed, PTPTN will provide a decision on whether your loan is approved or not.
2. Bank Education Loan
You can obtain loans from financial institutions such as local and international banks for students who wish to pursue higher education at tertiary institutions. Banks offer several advantages, including faster application and processing, a wide range of loan options, and quick disbursement.
Some banks that offer these loans include Bank Rakyat’s Education Financing Scheme (Pembiayaan Pelajaran Boleh Ubah or PBBU Bank Rakyat), Bank Islam’s education loan, and Maybank’s education loan.
How to Apply Education Loan
Here are the steps to apply for an education loan from a bank:
- Find a bank that offers education loans.
- Check the eligibility criteria required to apply for the loan. Make sure to understand the terms and interest rates applied before submitting your application.
- Complete the application form provided by the bank.
- Attach all the necessary documents, such as the offer letter from the educational institution, income verification, and other relevant personal documents.
After the application is approved, the bank will disburse the loan to the student. It is important for students to ensure that they repay the loan promptly according to the designated schedule. It should be noted that each bank may have its own procedures. Therefore, it is advisable to contact the bank directly before submitting the application.
3. Private Education Loan
Private education loans are a type of loan provided by private financial institutions such as finance companies, cooperatives, or banks to finance the education expenses of students studying at private educational institutions. Private education loans typically offer higher loan amounts compared to PTPTN or bank loans, but they also come with higher interest rates.
Before applying for a private education loan, it is important to carefully consider and ensure that you can repay the loan. Therefore, understand the terms and conditions imposed by the financial institution before making a decision to apply for a private education loan.
Steps to Apply For a Private Education Loan
Here are the steps to apply for a private education loan:
- Find a financial institution that offers private education loans.
- Complete the application form for the education loan and provide all the required personal and educational information.
- Prepare the necessary documents such as a copy of your identification card, offer letter from the educational institution, and other personal documents required by the financial institution.
- Wait for the application approval: Once the loan application is completed and the documents are submitted, the financial institution will assess the applicant’s eligibility and make a decision on whether the application is approved or rejected.
4. Foundation Education Loan
This loan is offered by foundations or charitable organizations to finance the education expenses of students. These foundations or charitable organizations typically offer loans with lower interest rates or even interest-free, depending on the policies and requirements of the foundation.
In addition to loans, these foundations or charitable organizations often provide other forms of financial assistance such as scholarships or contributions to help students manage their education costs. Some of the foundations that offer education loans include Yayasan Selangor’s Pinjaman Boleh Ubah, Yayasan Tenaga Nasional’s Pinjaman Boleh Ubah (YTN), and others.
Steps to Apply For a Foundation Education Loan
Here are the steps to apply for an education loan from a foundation:
- Research foundations that offer education loans.
- Check the eligibility requirements for the loan. Make sure to understand the loan policies and terms imposed by the foundation.
- Complete the education loan application form, providing all the required personal and educational information.
- Prepare the necessary documents, such as a copy of your identification card, the offer letter from the educational institution, and any other personal documents required by the foundation.
- Once the loan application is completed and the documents are submitted, the foundation will assess your eligibility and make a decision on whether to approve or reject your application.
5. MARA Education Loan
The eligibility and requirements to apply for MARA Education Loan depend on the type of loan being applied for, and there are several steps to be taken to apply for the loan. Therefore, it is important to have a clear understanding of the terms and conditions imposed by MARA before deciding to apply for an education loan from MARA.
Steps to Apply For MARA Loan
Here are the steps to apply for an education loan from MARA:
- Ensure that you meet the eligibility criteria, such as achieving the minimum required grade point average (GPA) and fulfilling other specified criteria.
- Choose the type of loan that is suitable for your educational needs.
- Complete the MARA loan application form and attach the required documents, including a copy of your identification card, offer letter from the educational institution, and any other personal documents requested by MARA.
- Submit the MARA loan application and required documents to MARA through the online application portal or at the nearest MARA office. Make sure to submit the application before the deadline.
- After submitting the application, MARA will assess your eligibility and make a decision on whether your application is approved or rejected. You will be notified of the decision through a letter or message.
6. JPA PIDN Education Loan
JPA PIDN (Program Ijazah Dalam Negara) Education Loan is a loan program provided by the Public Service Department (JPA) for students who wish to pursue undergraduate programs at public universities (IPTA) or polytechnics in Malaysia. This program is offered to high-achieving students who have the potential and require financial assistance to cover their study costs.
Eligible students can apply for the JPA PIDN Education Loan through the online application system provided by JPA. The application period usually opens annually, depending on the needs and budget allocated by the government.
Steps to Apply For JPA PIDN Education Loan
To apply for the JPA PIDN Education Loan, you need to follow these steps:
- Visit the official JPA website at https://www.jpa.gov.my/ and look for the education loan application button.
- Register an online account and complete all the required information in the application form. Ensure that the provided information is accurate and complete.
- Upload the required documents, such as the latest academic transcript, copy of identification card, offer letter of admission, and others.
- Include the family income confirmation letter and proof of parents’ or guardians’ income.
- Make sure to read and understand the terms and conditions imposed by JPA before submitting the application.
- Submit the online application and wait for approval from JPA.
After obtaining approval, you will need to sign a loan agreement with JPA and undergo an entrance session as a requirement to receive the loan. Students are required to repay the loan amount after completing their studies within the timeframe specified by JPA.
What Else Do You Need to Know About Education Loans?
Before applying for an education loan, you also need to consider its drawbacks. Firstly, you will start accumulating debt even before you have started working. In other words, you begin your life with debt. This can increase your financial commitments in the future when you want to take out other loans, such as for a car or a house, or when you need to obtain health insurance plans and so on.
Additionally, there are other disadvantages to consider, such as the interest charged on the loan. The repayment amount required may increase due to the accumulated interest that needs to be paid. Furthermore, some types of education loans may require collateral or a guarantor.
This can pose difficulties for students who do not have sufficient collateral. Therefore, it is important to consider the overall costs and responsibilities before making a decision to apply for an education loan. Hopefully, this article helps you gain a better understanding of education loans in Malaysia and enables you to make informed decisions when obtaining such loans.
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