‘Impacts observed include cognitive overload, absenteeism and high turnover’
PETALING JAYA: Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman said financial stress linked to National Higher Education Fund Corporation loan repayments is reducing workplace productivity by up to 15%.
He told theSun MEF’s engagements with employers revealed that the debt has become a part of the financial burden faced by fresh graduates and early-career employees whose salaries have not kept up with rising living costs.
“Impacts observed include reduced focus and cognitive overload, in which financially stressed employees spend work hours worrying about bills and repayments.
“There is lower engagement and motivation, higher absenteeism because employees may take part-time jobs or gig work, and increased requests for salary advances or early wage access, which is a sign of financial strain.
“Overall, financial stress, of which the debt is a part, could reduce productivity by an estimated 10% to 15% based on internal employer observations and HR feedback shared with MEF.”
He added that loan obligations also influence career decisions and turnover patterns among younger workers.
“Employees may job-hop in search of higher salaries to ease repayment pressure. Fresh graduates with higher education loan debts may avoid formal sector jobs that enforce direct deductions, leading to higher turnover or preference for gig or contract roles.
“Some resign to pursue freelance or gig platforms offering faster cash flow, even if long-term career progression is compromised.
“The debt is a structural factor contributing indirectly to retention challenges among younger employees, especially in sectors in which wages remain compressed.”
On salary deductions, Syed Hussain said employers support voluntary arrangements but emphasised that participation must be strictly initiated by the workers.
“Employers are generally supportive of voluntary mechanisms, provided that the process remains voluntary and employee-initiated, the administrative burden is minimal and there is no implied obligation or liability on employers.
“However, MEF emphasises that employers should not be turned into debt collectors for government agencies.
“Any deduction scheme must be opt-in, based on written employee consent and simple to administer, similar to the Employees’ Provident Fund, Socso or zakat deductions, and non-punitive, meaning no penalties for employers due to delays, system errors or employee status changes.”
He also said employers remain cautious due to practical risks.
“Some employees with very tight cash flow may sign up but later request reversal, creating administrative loops.
“Employers worry about being blamed for arrears if employees resign, are terminated or go on unpaid leave. Smaller companies with basic payroll systems may find frequent changes difficult to track.”
Syed Hussain said employers could still play a supportive role in improving financial resilience without being made liable for repayments.
“Employers should not be expected to shoulder financial obligations related to student loans, but they could run financial management programmes, educate younger employees on the importance of structured repayments and work with the corporation to conduct on-site briefings or digital clinics during employee onboarding.
“Employers must not be positioned as debt collectors, guarantors or the party responsible for repayment compliance. The root of higher education loan repayment difficulties is income stagnation, especially within B40 and lower-M40 segments.”
theSun on Dec 4 reported that expert and survey findings showed repayment failures stem from different causes. Low-income borrowers lack sustainable income, middle-income groups are squeezed by childcare, loans and rising living costs, while high-income defaulters delay payment out of attitude or choice, not affordability.
The report was a follow-up to Higher Education Deputy Minister Datuk Mustapha Sakmud’s parliamentary statement on Dec 3, in which he revealed mounting student debts of RM257.56 million among higher-income households and RM10.23 billion among aid recipients (as of Oct 31).
