On youth drowning in debt

Malaysians are in for tough times, especially the younger generation. In this day and age, the average Malaysian youth even before stepping into their first job are set for either an education loan or worse, an education and car loan.

According to the National Higher Education Fund Corporation (PTPTN), a student loan would have not an interest rate, but a “fixed administrative cost rate” of 3% per annum on reducing balance for diploma and degree courses or a 5% per annum on reducing balance for doing their postgraduate, doctorate or professional certificate courses.

Both, of course, over a period of five to 20 years depending on the financing amount.

For those living away from campus without a bus route, there is the need for a car. Going for a solid Perodua MyVi is going to set you back an additional RM41,500 at best. And then, of course, there is the monthly renting for those who are not chosen to stay on campus.

In the case of UiTM Shah Alam, their listed properties for rental range from RM650 to RM2,800 per house. If you can cope with living in a flat with six others, you will be paying roughly more than RM100 a month.

With all this in mind, congratulations upon your graduation and now comes the hard part.

Your average starting salary is now RM2,200 to RM2,400 if you luckily get into a government-linked corporation or the finance and banking sector in Kuala Lumpur. Otherwise, you may be stuck earning the median Malaysian salary of RM1,500.

Hopefully at this period, you can still find a place to rent with four friend. If you are a resident of the Klang Valley, you may choose to stay with your parents in the family home for the time being and choose to drive just as far as the nearest LRT, Monorail or Komuter station and put up with the large rush hour crowd and sometimes downright late trains.

Otherwise, you could choose or require, depending on your job, the need to drive and face the massive traffic jams. Petrol is cheaper, though, so you do have something going for you.

Working for five years, with an increment of 6% per annum, congratulations. If you are in the median, you have now breached the RM2,000 a month wage.

And then comes marriage. A quick survey on the Shah Alam Residents Facebook page would put the average cost of a wedding at RM15,000 to RM20,000, while many would prefer spending the on the bare necessities which could go as low as RM2,000 if they could.

But marriage is getting expensive, especially when it comes to the dowry. I recall an article by Nomy Nowzir in The Malaysian Insider noting the high amounts based on educational merits.

In addition to this, the religious authorities are now increasing the costs as well, from RM85 for a marriage cert and course to RM120.

As such, how much debt are we burdening the youth nowadays, and are we even paying them enough to cope with such burdens?

Is it even a wonder that we have a growing population of young bankrupts?

And worse yet, we have not educated the youth to cope with debt or even what is or what is not acceptable in terms of credit. I recall someone at the Malaysian Global Innovation and Creativity Centre (Magic) telling a bunch of food truck entrepreneurs what they will be looking at when it comes to loans in business.

As she clearly put it, a business loan of RM500,000 would mean servicing it with RM8,000 a month. As the words were said, you could hear a pin drop and feel the enthusiasm just up and left the room; along with myself who needed a cigarette.

These are the realities when we seldom tell the youth, our greatest sin of omission. We tell them to study hard and get a good job, but it also includes a burden of debt on themselves which no one is telling them or teaching them how to handle as well as depressing phone calls home to parents every other day for a soft loan because it is just too expensive to live.

We tell them to get a car because public transport is not dependable, but forget to tell them that a default on the loan for a MyVi could lead to a blacklist.

We tell them them there is a need to buy a house as soon as possible, but forget to tell them how much they can actually afford and what a sacrifice it means on their social lives for the time being.

And the worst thing of all is, I’ve no idea how to stop this or what solutions are viable. But know this, I’m still thinking. – February 12, 2015.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of The Malaysian Insider.