LAST_UPDATEMon, 20 Nov 2017 2am

A Guide to the PTPTN Education Loan - Ujrah

In this article, explains everything you need to know about Ujrah:

1% “Ujrah” Interest Flat Rate vs 3% Adminstrative Cost on Reducing Balance PTPTN have introduced Ujrah, a loan conversion scheme meant to encourage ex-students to clear off their debts faster and with less interest. Basically, by applying to the Ujrah loan conversion scheme, you can replace the existing fixed administrative cost rate of 3% or 5% per annum on reducing balance to 1% flat rate per annum. This sounds good, but should you take it?

(1) Flat Fixed Rate vs Fixed Rate on Reducing Balance

First, make sure you know the difference between the two rates. Fixed rate per annum on reducing balance is a rate similar to that of your mortgage product, where interest is charged on the current balance which reduces over time as you pay down the loan. Fixed flat rate per annum is similar to that of a typical Malaysian personal loan product, where the rate is charged over the whole balance over the tenure.

As a rule of thumb, for loans above 12 months in tenure, you have to multiply a fixed flat rate by about 1.8-1.9x to equate it to a fixed rate on reducing balance. So for most people, the effective rate with the 1% p.a. fixed flat rate will be between 1.88%-1.99% p.a. on reducing balance depending on tenure (this compares favourably to the 3% p.a. fixed rate on reducing balance).

(2) Amount of Loan Balance Reference Date

But here’s a catch: The 1% flat rate interest will be calculated from your debt balance from 1 June 2008.

So for example, if your debt balance in 2012 is RM 10,000 but your debt balance in 2008 is RM 30,000, the 1% interest will be calculated from RM 30,000! As a general rule, only consider changing to Ujrah if your current outstanding balance is more than 63-65% the value of your outstanding balance as at June 2008 (This figure is done using a working backwards calculation of 1.88-1.94%/3%).

Ujrah conversion is eligible to all existing borrowers who have a PTPTN outstanding loan balance at 1 June 2008 with the exception of:

1. Borrowers subjected to law enforcement action.

2. Borrowers who have breached previous loan agreements - (cancelled loans, failed in studies, quit studies and obtained another sponsor)

I Have Enough Savings To Fund My Education – Should I Still Apply For the PTPTN ELS Loan?

The choice is entirely up to you, but we at say yes! Let’s assume that you have RM 30,000 worth of savings. Well, let’s do a quick calculation of your options:

Assume the degree and living expenses costs RM30,000 over 3 years. If you have RM30,000 on June 2012, you can either choose to:

A: Use the RM30,000 saving for education expenses, RM10,000 for each year, with any remaining balances put into a 12-month FD (at 4% p.a.).

B: Apply for a PTPTN ELS Loan amount of RM30,000 which will disburse RM10,000 each year, and put the RM30,000 savings in a 3-year fixed deposit at 4% p.a, and in June 2015 repay the PTPTN Loan of RM30,000.

  A B
Year 0 (2012) RM 20,000.00 RM 30,000.00
Year 1 RM 10,800.00 RM 31,200.00
Year 2 RM 1232.00 RM 32,448.00
Year 3 (2015) RM 1281.28 RM 3745.92
Addition Saving   RM 2464.64

As you see, with the course and expenses totalling RM30,000 you can earn almost RM2,500 more over the 3 - year period by opting for a PTPTN loan over self funding.


*Balkish Rosly is an Investigative Rosly of, an online consumer advice portal which aims to help Malaysians save money through smart (and most of the time painless) savings in their daily banking, technology, and lifestyle spending habits. This is an excerpt of the original article, for the full article click here.