PETALING JAYA: Malaysian graduates are facing a financial squeeze, struggling with stagnant starting wages and job mismatches that leave many in debt soon after entering the workforce.
According to Khazanah Research Institute (KRI)‘s study titled “Higher Education Loan Repayment: Between Borrowers’ Moral Responsibility and Labour Market Realities” revealed a troubling landscape for young graduates whose salaries have barely budged in over a decade.
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In 2021, nearly 60 percent of fresh graduates started their first jobs earning less than RM2,000 monthly—a figure almost unchanged from the 61 percent recorded in 2010.
With skilled job growth stagnant since 2002, job opportunities are not meeting the rise in higher education levels, and 25 percent of graduates continue to earn low wages, typically in roles below their qualifications.
The study highlights that nearly half graduates hold jobs that don’t align with their academic backgrounds, with many reporting a decline in status.
“This signals a major challenge that needs to be addressed, as it affects graduates’ ability to cover their living costs in the future,” it said.
KRI attributes much of the issue to a labour market mismatch, where just 25 percent of roles are high-skilled, while the rest are semi- or low-skilled positions.
This mismatch is a key factor driving graduates into debt, with many turning to the National Higher Education Fund Corporation (PTPTN) for financial assistance.
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“Currently, around 80% of graduates from local universities come from B40 (low-income) families, and 40% of these students rely on PTPTN loans.
“More than half of PTPTN borrowers are also from B40 households, highlighting the crucial role PTPTN plays in providing access to higher education for students from low-income backgrounds,” the study read.
“The real challenge for these B40 graduates emerges after graduation, when they must repay their education loans while facing limited job opportunities and low incomes.”
The report highlights that 97 percent of PTPTN defaulters come from the B40 group, despite relaxed repayment terms of RM50 per month.
The study suggests solutions to address the crisis, including income-based repayment plans, enhanced job market policies and promoting long-term savings to alleviate debt burdens and improve graduates’ financial resilience.
KRI concludes that PTPTN must analyse the profiles of the 430,000 defaulters to understand their struggles better.
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“In conclusion, the effectiveness of PTPTN’s repayment strategy requires a more holistic and inclusive approach, going beyond just enforcing penalties.
“Measures such as loan restructuring, income-based repayment options, and additional facilities like EPF withdrawals and salary deductions need to be expanded.
“Efforts to raise awareness and simplify the repayment process are crucial to fostering borrower responsibility, ensuring the sustainability of the fund, and reducing the financial burden on graduates in the long term,” it added.
