KUALA LUMPUR, Dec 6 — The National Higher Education Fund Corporation’s (PTPTN) plan for firms to deduct employee salaries for student loan repayments violates the “spirit” of the Personal Data Protection Act (PDPA) 2010, a MIC leader asserted today,
MIC Youth National Council member Arvind Krishnan also called the tiered wage deduction scheme “horrendous” for not giving consideration to the ability of the borrowers to repay at the intended rates.
“The real nightmare lies with the manner in which the PGB will be implemented,” he said using the initials of the Malay phrase “Pemotongan Gaji Berkala” or scheduled salary cuts.
“A simple understanding or empathy can be achieved if one were to just imagine if banks, in their debt recovery attempts, are able to provide employers with credit information of their workers.”
He said that while the government is exempted under provisions in the PDPA, the proposed move went beyond the intended limits of these exemptions.
He also accused PTPTN chairman Wan Saiful Wan Jan of a “sore lack of understanding and empathy” for the realities faced by employees by pushing ahead with the proposal without consultations.
Arvind also questioned the reality of Wan Saiful’s suggestion that employers offering to offset PTPTN repayments could use this as an incentive for recruitment, saying this would ultimately be detrimental to new hires.
“It is a bad but common practice by employers to give more perks to employees in lieu of a higher salary, as it would result in employers having to pay less for the Employees Provident Fund (EPF).
“With this implementation, it gives further incentive for employers to do so,” he said.
Using the example of a basic RM2,500 salary, he said a worker stood to gain more financially if his pay did not include repayments to the PTPTN as this would eat into his contributions to the mandatory retirement savings.
He also said most ordinary Malaysians were already struggling with wage stagnation.
“The last thing they need is for the government to give employers even more incentive to stretch this ‘exploitation’ even further,” he added.
Arvind then pointed that under Barisan Nasional previously, PTPTN borrowers were given the flexibility to opt for wage garnishment and did not make it mandatory.
Salary information reporting to the PTPTN was also not strictly enforced, he added.
“If this solution sounds pleasant and familiar, it is because this was exactly what BN implemented in the past via the old scheme of ‘Jadual Bayaran Balik’.
“Despite all the pressure [put on] BN when the coalition was governing, for borrowers to repay their loan, BN never crossed the line to actually enforce the repayment because of a simple belief that this would have a crippling effect on the education of the younger generation,” he said.
Wan Saiful announced yesterday that PTPTN will garnish the wages of borrowers earning above RM2,000 monthly at tiered rates ranging from 2 per cent to 15 per cent.
The announcement also follows the Pakatan Harapan coalitions decision to break its previous pledge for federal student loan takers to defer repayment until they begin earning over RM4,000 a month.
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