Should You Pay Off Your PTPTN Debt With Your EPF Money?

One of the ways you can use your EPF is to pay off your student debt or PTPTN. But is this a good idea to do? Let's find out!

More Malaysians are using their Employees Provident Fund (EPF) to pay off their National Higher Education Fund Corporation (PTPTN) debt, but many more are debating the wisdom of using what is meant to be kept as our retirement fund to pay off our student debt.

If you’re still on the fence on whether you should or shouldn’t use your EPF to pay off your PTPTN debt, here are 4 scenarios of when you should - without a doubt - be prioritising the repayment of your student loan over your retirement fund:

1. When You Need A Credit Card or a Loan

If you’re applying for any type of financial facilities in the form of a loan or a credit card, you’ll want to have the best credit score that you can possibly have to increase your application’s approval rate - and ultimately, be qualified for the lowest interest rate available.

Typically, a financial institution will look into your credit report from credit reporting agencies such as Central Credit Reference Information System (CCRIS) and Credit Tip-Off Service (CTOS) before approving your loan or credit card application. Your PTPTN debt will be reflected in your credit report as a credit facility (an amount owed to a financial institution), and the higher your credit facilities are, the more negatively it will affect your credit score.

A good credit score is mainly defined by your payment history and amounts owed, therefore the less you owe, the better your chances are of having your loan or credit card application approved. The smart thing to do here would be to consider withdrawing your EPF and pay off at least a portion of your student loan in order to improve your credit score before applying for any credit card or loan facilities.

2. When You’re Barred From Leaving the Country

PTPTN may not be as annoying as other financial debt collectors when it comes to getting you to pay your debt to them, but they do have their own - and very effective - way of forcing you to pay without having to hound you incessantly with calls and emails letters; by barring you from leaving the country, renewing your passport, or even obtaining a new passport.

In this situation, it’s better to use your EPF to pay off a portion of your student loan to give your finances more breathing room - and make the planned international trip without hurting your budget. Do take note that PTPTN will require at least 7 working days to remove your name from the travel blacklist.

Read also: 6 Part-Time Ways To Make Money

3. When You Need to Use Your EPF Cash For Non-EPF Purposes

Suppose you’re going through a financial pickle or planning for something that requires a great deal of money. You can’t just withdraw your EPF money to pay for these savings goals or emergency expenses.

What you can do however, is free up the monthly cash you’ve been using to pay your PTPTN loans by using your EPF money to cover the payment for a set period of time. How much time that is depends on how much cash you need.

For instance, say you’re aiming to pay off your credit card debt in 2 years, and your monthly PTPTN repayment amount is RM200. Therefore, the amount of money that you should withdraw from your EPF account is:

RM200 X 24 months = RM4,800

After making the calculation, make the payment (of the total calculated sum) to PTPTN via your EPF account, and make sure to let PTPTN know of your intention. It’s imperative for them to know the sum of money you’re paying them via your EPF account is, in fact, to offset your future monthly repayment for the predetermined period of time. After all, you wouldn’t want to be involved in any sort of misunderstanding that could mar your credit history.

4. When You Want to Cut Down On Your Repayment Amount

As an initiative to encourage lenders to repay their student loan, PTPTN has announced discount incentives in the 2017 Budget that are valid until December 2017. The discount incentives are as follows:

  • 15% off the total outstanding debt for full settlement.
  • 10% off payment of at least 50% of the outstanding debt made in a single payment.
  • 10% off the total outstanding amount for payment through salary deduction or direct debit in accordance to the repayment schedule.

If you’re looking to make more savings in the long run, these are the repayment options that you should look into. Say, for example, your total student loan is RM45,000 (before interests), and you’re entitled to 10% off your total outstanding debt, you’ll be able to save RM4,500 of your hard earned money. So if withdrawing a portion of your EPF allows you to get these discounts, you should definitely consider doing so.

Have you thought about paying off your PTPTN debt with your EPF? Or are you one of the many who has made partial or full settlement on your student loan? Share your thoughts and experiences with us in the comment section below!


Agree or disagree with this post? Questions? You also have your word!

  • Fiza

    How can we find out our credit score?

    • Amanala

      An even quicker way, especially if physically going to Bank Negara isn't convenient for you, is to purchase a CTOS credit score report for RM25. It takes mere minutes and the entire transaction can be done online.

      • RinggitPlus

        Hi Fiza,

        There are a few ways you can find out, but the quickest would be to walk into Bank Negara and use the CCRIS kiosk at the ground floor.
        Hope this helps!

      • Aria

        Can we pay off PTPTN with EPF? I was under the assumption that the money could not be used for other purposes besides withdrawal for house purchases, or when you are retired?

        • Daphne

          yes, you can. you first need to drop by PTPTN office to get a letter from them. bring along the letter, your graduation certificate (original and a copy of it) & IC to EPF office for the withdrawal. Wait for the approval.
          The discount of 10/15% will not immediately reflect. For my case of fully repayment, the whole outstanding amount will be deducted from my EPF account 2 first. Within 2 months, the 15% will be refund to my EPF account 2. not a friendly arrangement, but at least i got the 15% discount and reduce my loan.

          • KL

            Hi Daphne. I called up and spoke to a PTPTN rep the other day and told her that what I have in my account 2 is [actual amount owed - 15%]. She then said I can go ahead and use that amount (inclusive of a 15% discount) instead of the [actual amount owed] to make a full settlement. She even went further to provide me the exact amount that I need to pay after the 15% discount. I think I'm gonna visit the center at KL Sentral tomorrow to find out more.

          • RinggitPlus

            Yes we can, Aria. It's a relatively recent rule, so it's possible you may have overlooked it. Here is our reference, via the official website of PTPTN:

          • KHAW PING LIN

            using epf account 1 or account 2 money to pay ptptn ?

            • RinggitPlus

              Account 2

            • mdnazmi

              Can you enlighten more about point number 3. What do you mean by epf cash for non epf purpose? Cheers.

              • RinggitPlus

                What we mean is, EPF money can only be used for certain purposes.
                But if you want that cash freed up for things like weddings, big purchases, or other reasons,
                you can channel that EPF money to your PTPTN repayments,
                then use the money that you originally intend to repay your PTPTN with for your new purpose (weddings, etc) instead.

              • Nizam

                It is a good idea and the best solution. I happen to come across 3 scenario above (except barred from leaving country). Now in progress to pay off 50% so that i can polish my CTOS score and in the same time get 10% discount. Monthly payment also still continue.. glad that this year i can finish my PTPTN loan.. we just need to utilize all type of fund we do have to cover back our spending.. and it works...

                • majority

                  does the ptptn loan incurred any interest? if not better don't as epf gives good interest return

                  • Justin

                    Hi, I just used my epf to settled all my ptptn loan which left 22k, after discount 15% which i need to pay around 18k+. I have calculated, pay monthly to ptptn is still better than the 15% discount lump sum payment as epf give higher interest rate in long term. But, I choose the 15% discount because I need to lower my commitment, so that my application for property loan will pass easier..

                    • hedy

                      Pls advise is using the funds from EPF account 1 or 2 or both?

                      • RinggitPlus

                        Hi hedy,

                        Just account 2

                      • Yin

                        Hi, can PTPTN monthly repayment pay by our EPF account?

                        • Veron

                          Hi, good morning to you. I am quite aware paying off my PTPTN debts through EPF withdrawl , but the issue here is I lost my Diploma and have contacted the college but no response too. please advise what am I suppose to do since I am unable to apply any loan or buy a house at the moment . My PTPTN shows in Bank Negara records. Please help.

                          • RinggitPlus

                            Hi Veron,

                            You need to get your papers from that college, by any means. If they still don't oblige, you have to make a report to the Ministry of Education and see how they can help you sort this out.
                            Hope this helps!

                          • Ixis Hew

                            Please advise whether I entitle to withdraw EPF to pay ptptn loan as I didn't complete my study .

                          • HABSAH MAASAP

                            Can parents use their EPF to pay PTPN loan of their children?

                            • RinggitPlus

                              Hi Habsah,

                              Unfortunately, you can't do this anymore as far as our research tells us.
                              If you want more clarification on this, you can contact your nearest KWSP branch.
                              We hope this helps!

                            • Dex

                              I went down to PTPTN Branch at KL Sentral today, requested for full payment note at the counter for my 46k loan. I paid cash 39k from my savings account after the 15% discount. Didn't use EPF and other credit line.

                              CPF is your only life saving and the last emergency fund. Think twice before you decide to withdraw them.