I had come across friends, whom refuse to accept the PTPTN loan or some whom actually borrow from their parents to settle off all the PTPTN loan as soon as after their graduation.
Some doesn't even pay which I had read in newspaper about some local self made millionaires in Malaysia whom hasn't pay off their PTPTN. Please do not do that.
Anyway a few simple issue that I wish to share with you are below:-
1) Why you should accept the PTPTN offer
PTPTN is consider the cheapest source of financing that you can get. Refer the table below. There is none financing products that offers you a loan at 4%. More over getting a PTPTN loan is only once (or max twice) in your life time. Not the same case with credit card which you can apply every now and then. The processing procedure is very easy, which will be solved in the university during the orientation week ( depending on university procedures ).
2)Why you should not use your parents' money to settle off the loanYour parents' money are meant for retirement, thus one should be responsible for his/her loan. Settling off the loan in lump sum doesn't provide you the liquidity option. Imagine if you need the money for emergency case (eg medical expenses), you can't withdraw that amount of money back from PTPTN.
Imagine if you can borrow at 4% and invest at a guaranteed return of 5% (eg Merdeka Bond), you would have been able to make a riskless investment return of RM200. Lets do some mathematics, the net return is 1% (5%-4%) while investing RM20,000 (PTPTN loan amount) at the net return of 1% gives you RM200 return per annum.
As long as the expected return is higher than the borrowing cost, you will definately make profit along the years servicing your education loan. If the expected return is 8% (eg ASW 2020), you would have been able to make a riskless investment return of RM800. Lets do some mathematic again; investing RM20,000 (PTPTN loan amount) at the net return of 4% (8%-4%) gives you RM800 return per annum.
