Raising children is never easy. As parents, we have watched our children grow, supported them through school, guided them through exams, and celebrated every milestone along the way. Now that our child has graduated and started working, it feels rewarding to see their hard work paying off, even if new challenges continue to appear.

Many of us know that the salary our children earn is often just enough to cover rent, bills, and daily expenses. PTPTN loan repayments take up much of what remains at the end of the month. It is natural for us to wonder if we should step in to help, perhaps by paying off part of the loan so they can start saving for bigger goals such as buying a home. This is a question many Malaysian parents face as education debt continues to affect graduates long after they leave university. The real challenge is finding the right balance between helping our children move forward and protecting our own financial future.

How Big Is The Education Debt Problem In Malaysia

PTPTN loans currently total around RM43.68 billion as of the end of 2023. The Auditor General calls for stricter measures as unpaid balances reach their highest level in a decade.

As of December 2024, more than 1.2 million borrowers still owe money, with total arrears amounting to RM10.85 billion. Even more concerning, 383,637 borrowers have not started making any repayments.

Most Malaysian graduates owe between RM20,000 and RM50,000, depending on their field of study and institution. PTPTN loans carry a flat 1% annual interest, which remains much lower than personal loans from banks that typically charge between 4% and 15%.

Fresh graduates earn an average salary of RM3,086 per month, though about 65% earn below RM3,000. For many, that leaves little room to build savings or repay loans comfortably, which leads PTPTN to take a closer look at repayment behaviour.

PTPTN’s New Focus On Fairness And Accountability

PTPTN is tightening its approach to student loan repayments to ensure fairness and long-term sustainability. Borrowers who genuinely struggle to make payments continue to receive support, but those with the financial means to repay may face stricter action. Internal checks show that about one-third of defaulters appear capable of repayment, with some maintaining stable incomes or working abroad without making any instalments.

According to Higher Education Minister Datuk Seri Dr Zambry Abdul Kadir, the aim is not to punish borrowers facing hardship but to encourage communication and repayment flexibility. PTPTN continues to improve compliance through clearer repayment options while also protecting the fund’s ability to support future students in need.

For parents, these developments highlight how education debt and repayment discipline are now under closer national scrutiny. They also remind us that while repayment is ultimately our children’s responsibility, the financial and emotional effects can ripple across the whole family when repayments become difficult.

When Helping Makes Sense

In some situations, helping your child pay off their education debt makes financial sense, but only if your own finances are secure. Before making any decision, take an honest look at your financial position. Ideally, you are debt-free, have sufficient retirement savings, and maintain an emergency fund that can cover at least six months of living expenses. If your financial foundation is still shaky, helping your child may create more problems for both of you in the long run.

It is also worth comparing the numbers before taking action. PTPTN’s 1% interest rate remains extremely low compared to other types of borrowing. If your savings or investments earn higher returns, such as EPF dividends averaging around 5% to 6% annually, it often makes more sense to keep your money growing rather than using it to pay off a low-cost loan.

That said, there are cases where stepping in is justified. Defaulting on PTPTN repayments damages your child’s Central Credit Reference Information System (CCRIS) record, which affects their ability to qualify for future financial products such as car loans, housing loans, or credit cards. If their credit standing is already suffering, assisting them in settling or restructuring their loan helps restore financial stability.

If you decide to help, consider treating the support as a loan rather than a gift. Setting clear repayment terms helps maintain accountability and encourages your child to stay responsible while still receiving your support.

When Helping Hurts Your Retirement

While helping your child feels rewarding, it is important not to jeopardise your own financial security.

Withdrawing savings or diverting retirement funds to clear their debt means losing the power of compound growth. For example, withdrawing RM50,000 from an account earning 6% annually reduces your future balance by around RM39,500 over 10 years. That loss has a real impact on your retirement lifestyle.

According to EPF’s Retirement Income Adequacy Framework, Malaysians need RM390,000 in savings by 2028 for basic retirement needs. Parents who use their retirement savings to help children risk falling short of this target.

There is also the question of long-term behaviour. When parents take over their children’s financial responsibilities, it can unintentionally weaken their financial discipline. Children who are always rescued from debt may not learn how to manage expenses or prioritise repayments. In some cases, parents delay retirement or reduce their quality of life to help, only to depend on their children financially later on.

Other Ways To Help Without Giving Money

Support does not have to mean paying the debt directly. There are many ways to help your children manage their education loans while still promoting independence.

Work together to create a repayment plan. Review their monthly budget, identify areas to cut back, and set realistic goals. This teaches practical money management skills and keeps them focused on progress.

Consider matching contributions. For instance, for every RM100 your child pays toward PTPTN, you contribute RM50. This encourages consistency while sharing the responsibility fairly.

Provide financial guidance instead of cash. Help them negotiate a salary increase, explore higher-paying opportunities, or start a side hustle. These steps improve income and financial resilience over time.

If repayments are genuinely difficult, help them explore PTPTN restructuring options. This can extend the repayment period, reduce monthly instalments, or allow temporary deferment during unemployment.

Keep an eye on repayment incentives as well. For example, Budget 2024 offers a 10% discount for full settlement, a useful opportunity for those able to make lump-sum payments.

Check These Things Before Deciding

Before offering any financial help, go through a quick self-check.

Review your existing debts. If you are still repaying a housing loan, car loan, or personal financing, focus on clearing those first. Make sure your emergency fund covers at least six to twelve months of living costs, and avoid using it to pay off someone else’s debt.

Evaluate your child’s effort and attitude. Are they employed full-time? Have they tried to increase their income or reduce unnecessary spending? Do they make regular PTPTN payments, even small ones?

Consider their spending habits too. A child who frequently spends on non-essential items while claiming they cannot repay loans may need guidance on financial discipline rather than direct financial help.

Lastly, compare the cost of the loan against your returns. A RM30,000 PTPTN loan at 1% over 10 years costs only about RM1,500 in total interest. Paying that amount gradually is often far more sensible than depleting your own savings for a quick settlement.

Why Graduates Struggle With Payments

In early 2025, about 35.7% of Malaysian graduates are employed in jobs below their qualification level. While the overall employability rate remains high, many still earn less than expected, which makes loan repayment difficult.

The issue is not always the size of the debt but the gap between income and expenses. High living costs in urban areas, especially rent and transport, leave limited room for repayments.

However, graduate salaries typically rise over time, often 10% to 15% higher after two to three years, and up to 40% higher by the fifth or sixth year. Given this natural income growth, temporary support often makes more sense than paying off the entire loan at once.

Other Options To Consider

If you decide that financial help is necessary, explore alternative approaches before using long-term savings.

Personal loans from banks usually carry interest rates between 4% and 7%, which may still be more cost-effective than losing compounding returns from EPF or other investments. Compare the total cost before deciding.

Alternatively, consider investing in your child’s earning potential. Funding a short professional course or skills certification might increase their income and make loan repayments easier in the long run.

Finding The Right Balance

Raising children is one of the most meaningful journeys in life, and it does not stop once they graduate. We all want to see our children succeed, but financial help should never come at the cost of our own stability. Taking time to plan and communicate openly ensures that both generations stay secure.

The goal is not just to help our children become debt-free, but to raise financially confident adults who can manage their own obligations with independence. Sometimes, the best help we can give is not money, but guidance, helping them build financial habits that last a lifetime.

If we plan to assist our children financially, we can explore safer ways to grow our funds, such as comparing savings accounts and fixed deposit rates, or checking out personal loan options if borrowing makes more sense than using our retirement savings.

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