Sulh Approach in Reforming the Education Loans’ Repayment for the National Higher Education Fund Corporation (PTPTN)

Abstract

PTPTN is an established government organization that provides education loan among Malaysian students. Nowadays, the number of unpaid debts by the graduate students granted by PTPTN is increased. PTPTN has taken a step further in order to minimize the inactive payers by collaborating with immigration body and CCRIS. While, Al-Quran has stated the role of creditor in facilitates debtors by giving a delay or just waived the debts even though the debtors are responsible for settling the debt. This paper brings Sulh approach as an alternative to reconcile between PTPTN as the creditor and the higher learning’s students as the debtors in accordance to re-evaluate their knowledge of debt repayment priority. By using the approach of Sulh as the medium of arbitration between two conflicting parties, this paper explores a solution to provide a win – win situation that able to harmonize the parties’ interest. Therefore, the first objective of this paper is to suggest new elements of sulh between PTPTN and graduate students. The second objective is to propose the framework of Sulh from the elements suggested that verifies the better off to all parties involved. This paper found that, Sulh approach can create an assessment in determining a discounted loan repayment. The PTPTN’s comprehensive assessment on the students’ profiles such as academic results, university activities participation and families background is discovered. The assessment created by Sulh approach shows the potential benefits gained by the PTPTN’s collections and savings as compared to its current practice, and for students, it motivates them for setting the target on discounted loan settlement that matches their own ability and reality as it entertains them holistically through the introduction of elements of Sulh. Introduction Al-Sulh is a word derived from Arabic which means conciliation. Al-Raghib al-Asfahani states that one of the objectives of al-sulh is to eliminate hatred among humans and to find peace (Mun im, 1999). While earlier Muslim Scholars’ discussions regarding the implementation of Sulh in debt settlement International Journal of Academic Research in Business and Social Sciences Vol. 9 , No. 4, April, 2019, E-ISSN: 2222-6990 © 2019 HRMARS 235 were not clearly stated, some Quranic verses and Hadiths could be a back-up to the debate as to how creditors should be tolerant of the debt owed to the borrower. Allah says: And if the debtor is in a hard time (has no money), then grant him time till it is easy for him to repay, but if you remit it by way of charity, that is better for you if you did but know. (al-Baqarah: 280). In hadith that relation the story about Abu Qatadah, he said that he once had heard about Prophet says: Whoever lends the loan to the borrower or eliminates it then he is in the shadow of` Arsy on the Day of Judgment. (Narrated by Muslim) Based on the Quranic verses and Hadith above, it is concluded that the need for consideration of both parties in settling the debt. Although it is the responsibility of the borrower to repay the debt, their circumstances must also be examined so that the lender is not too urgent in making claims while they are in difficult situation. However, there are also many other borrowers who can pay the loan but cannot pay it as a whole. This is because the income they earn does not entitle them to raise money to repay their debts within the prescribed time. Hence, some of the actions and considerations considered appropriate should be highlighted as giving an additional repayment period, giving specific intentions, such as granting a conditional discount and so on. Methodology This paper uses analytic induction. Analytic induction is a working knowledge that departs from a single proposition or specific and drawn conclusions to be considered true and generalization. (Clive Seal, 2007). However, the induction will never have been complete. This is because it is based on facts and data that is found only, and then draw a general conclusion that applies to all data and facts, including data and facts that have not been found. It is also based on the truth that is never to be definitive conclusion, and certainly, because it always just opens the possibility that there are new facts and data that will abort the earlier conclusions. In using this method through the formation of new assessment of loan repayment, the current situation is observed and analyzed, where the dependency on the only variable -academic performanceis not significantly related to the debt collection and to the motivation of repayment by reduction and discount offer. Therefore, the variable of assessment is being expanded to make it more flexible and more opportunity to students in debt repayment as well as the debt collection to PTPTN. Results In term of the loan’s repayment, current PTPTN assessment was found to be less flexible in intensifying the borrowers. Recently, PTPTN only gives exemptions to first-degree holders, at the Cumulative Grade Point Average (CGPA) scores 3.5-3.7 and above, depending on the definition of first-degree qualification by their respective universities. In addition to these scores, the borrower has no other choice but to pay back the 100% loan received along with other costs such as ujrah and so forth. Through the Sulh approach, PTPTN and the borrower can make a win-win situation, whereby PTPTN can diversify loan repayment rates other than exclusions for first-class degrees or 100% nondegree first class. A certain rate of the exceptions are assessed and suggested by this framework. The score of the iCGPA, the level of student extracurricular activities in the campus and the background International Journal of Academic Research in Business and Social Sciences Vol. 9 , No. 4, April, 2019, E-ISSN: 2222-6990 © 2019 HRMARS 236 of the students either from a difficult family or not and so on are considered as the elements used in this Sulh reconcilement model. Elements of Sulh This paper suggests several elements of Sulh which can be the medium of reconcilement between PTPTN and higher education students. These elements are conceptualized in this paper by using the method of content analysis. The elements are academic results and performance (iCGPA), university curricular activities participation and family background. The selection of iCGPA and curricular activities as the elements of Sulh approach model is grounded by human resource standard and quality in Malaysia. According to literature reviewed, these two elements are regarded as the key performance among higher education students’ as both of it can reflect their achievement in their universities. While, family background is a major element which considered the indicator of debt payment postponement. a. Academic Performance There are many studies, which highlights the significance of academic performance. Students who are exposed to higher levels of motivation and study skills can achieve better result in academic performance. However, the effect of academic performance together with the participation of curricular activities towards the debt repayment behaviour or ratios are still needing to be tested. In Sulh approach, the element of academic performance is reliable to become the mediator between the conflicts between PTPTN and education loan payers. The current exception of debt repayment is only offered to the first-class degree students regardless their family background and performance in curricular activities. Therefore, in Sulh approach, it is suggested to the government to offer a discount of up to 50% from outstanding balance of PTPTN loan for second-class upper degree holder but with the condition the payer have any experience in leadership management such as student representative councils, societies and college administration. On the other hand, an excellent degree holder or first-class student without any participation in societies and organization should not be given the 100% exceptional. This assessment offers the benefits to all levels of higher education students. Sulh approach also promotes the concept of wasatiyyah in debt settlement conflicts between the parties. This assessment is supported by the Hadith of our Prophet Muhammad SAW as he said to Ka’ab ibn Malik: “Please reduce (a certain amount) from the debt that you have given to debtor. “ b. University Activities Participation In higher education, the students are required to perform in both academic and soft skills enhancement such as communication skills, public relations, leadership and life-long learning. Participation of students in curricular is reliable to become the elements of Sulh approach. This is because Islam promotes the loan repayment reduction to anybody regardless the certain level of people. Many of the students cannot achieve the academic excellent because of their involvement in leadership and management activities. The government should not deny their achievement, as it is become one of the human resource requirements in any industrial or organizational companies and International Journal of Academic Research in Business and Social Sciences Vol. 9 , No. 4, April, 2019, E-ISSN: 2222-6990 © 2019 HRMARS 237 business. Therefore, this paper suggests the element of students’ participation in university activities to be included in the loan repayment reduction. c. Family background Family background is the most important element of Sulh approach. The household income, siblings’ education background and other financial data should become the concern of PTPTN organization. Islam considers a loan as a social support to poor and needy society. Therefore, the PTPTN as a creditor should considers a certain condition regarding family background history in reducing the poor repayment among students with poor families.