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A BASIC degree is now considered a minimum qualification that one must attain. But financial assistance can make or break a student's ambition to obtain a degree. 

While many parents consider higher education an invaluable investment it is by no means cheap, especially if the course is not heavily subsidised as in the case of public universities. 

The price of a diploma, degree or even a PhD ranges but those at the higher end can cost as much as a car, home or even more. 

For students from a low-income family especially, financing the steep cost of tertiary education can be a major dilemma, something which Mei Ching can attest to. 

"I really wanted to further my studies at university and my results were good enough for me to apply for a place. However, times were hard and with three more children to see through school, my parents just could not afford to pay for my education. 

"I had to give up my ambition of studying in a university and work instead,'' Mei Ching recalls ruefully. 

Her sister, the youngest sibling, was more fortunate. By the time she finished school, the family's finances had improved and she was able to further her studies at Universiti Malaya. 

Abraham Pereira's parents took an alternative approach to finance their son's medical studies in India. When their savings turned out to be insufficient, they applied for a bank loan. 

Mr Pereira recollects: "We needed about RM100,000 for Abraham's medical degree but we could not get an education loan because banks here did not offer any at that time. 

"We had to put up our house as collateral before the bank was willing to let us have the money.'' 

Bumiputra Commerce Bank's senior vice-president of retail marketing, Bhupat Rai explains the reluctance: "When an education loan is given, the assumption is that a student will start paying back the loan once he graduates. 

"Also, in most instances, the parents or guardians act as guarantors for the students and they are normally in their late 40s or early 50s when the loan was taken. 

"In some cases, the borrowers would also be required to put up their properties as security for the loan. 
 

IMU's Prof Dr Ong Kok Hai

"Unfortunately, a high percentage of these students fail to pay back their loans when they graduate. (For some banks, it was later discovered, the delinquency rate can be as high as 25%.) 

"When the student fails to pay, the bank will then have to take legal action either against him and or his guarantor who, by this time, would either have retired or is about to retire. 

"In addition, the bank will have no choice but to take away the properties that have been set up as collateral. 

"This is a situation which banks normally avoid because either way both parties lose. That is why many banks do not want to offer education loans.'' 

But today, the disinclination among banks to offer loans has given way to attractive packages to parents and students. 

In addition to this, students have had another source of loans since 1997 -- the National Higher Education Fund (NHEF) set up by the government to help them finance their education at local institutions of higher learning. 

In October last year, the government announced the Children's Education Withdrawal Scheme for EPF contributors, and yet another door was opened. 

Says International Medical University's dean of student affairs, Prof Dr Ong Kok Hai: "For the first time in Malaysian history, there is actually help from various credible sources for Malaysians to achieve their educational goals. 

"Not only is this a tremendous step forward to producing a generation of educated young people but it is also a big relief for those who are hard pressed to find the money for their higher education.'' 

Prof Dr Ong is especially grateful for these avenues for loans because he empathises with medical students who have a much heavier financial burden. 

Medicine remains one of the most expensive degree programmes in Malaysia, costing approximately RM250,000 per student. 

As for the loans, Prof Dr Ong believes there is still much room for improvement: "One of the weaknesses of these education loans from the banks is the repayment period. It is just too short. 

"A bank education loan normally requires a student to pay back his loan over a period of seven years after he has graduated and found a job. 

"Let's assume that the student has borrowed RM100,000. Throw in the interest together with the loan, it means that the student would need to pay back about RM20,000 a year once he starts working. 

"This is a very heavy burden for a fresh graduate.'' 

Still, despite the shortcomings, Malaysian students -- and their families -- can breathe easier knowing there are various sources they can turn to for financial help. 

National Higher Education Fund 

The National Higher Education Fund Corporation offers loans to students in public and private educational institutions. 

The Corporation (which administers and controls the Fund) is a statutory body established under the Perbadanan Tabung Pendidikan Tinggi National Act which came into effect on July 1, 1997. 

The loans are open to students doing diploma or degree (or the equivalent) programmes at public universities, private universities and, most recently, private colleges. 

The fund, which started off with an initial allocation of RM100mil, now has RM2.5bil worth of loans for tertiary education. The good news is that the Corporation does not require any collateral or guarantors for its loans. 

Recipients of the NHEFC loans will be charged an additional 4% annual "administrative charge'' when repaying the loan. However, if students start making repayments six months after they graduate, the 4% charge will be waived. 

The Act appoints the Inland Revenue Board as the collection agent for the repayments through monthly paycuts. 

For those who want to pay back the loan in a lump sum or within a shorter period of time, the Corporation will draw up a new repayment schedule. 

Selection depends not only on the student's financial status but also the number of applications and the allocation. 

Nevertheless, the Corporation claims that almost 100% of students who apply for the loan and are eligible for them have their applications approved. 

The corporation claims that there is almost 100% approval as those who do not get it the first time, get in on appeal. For those who did not qualify (in the past), it was either because of technical hitches or because they were not eligible. 

Another unique feature of the fund is that automatic approval is granted to children of civil servants, uniformed bodies as well as pensioners. 

Although only first-year students can apply for the loan which is valid for the duration of their course, the Board does consider applications from second years students on a case-by-case basis. 

Employees Provident Fund (EPF) 

Even though the announcement of the Children's Education Withdrawal Scheme for EPF contributors was made by the Government last October, the plan only came into effect five months ago. 

Essentially, the scheme allows members 

who have an account with EPF to withdraw their savings from Account II (for housing, education and computer) for the purpose of supporting their children's tertiary education in local and foreign institutions. 

This scheme also allows EPF members to withdraw up to a maximum of RM5,000 for the purchase of a personal computer (PC) for the use of one child. 

Members who are eligible under the new scheme are those who have:  

           -  NOT made a full/complete withdrawal from their account;  
           -  SAVINGS in Account II; and  
           -  A CHILD/stepchild/adopted child who will pursue or are pursuing their undergraduate or
               postgraduate courses at any higher education institution in the country or overseas. 

In the case where both the parents have an account in EPF, both can apply for withdrawal from Account II, on condition that the applications are done simultaneously. 

The scheme allows a member to apply for withdrawal once each academic year for each child. 

The amount which EPF allows the member to withdraw depends largely on the applicant's accounts. 

An EPF member is allowed to withdraw all his contribution in Account II, or enough to cover his child's tuition fees plus related expenses and/or the purchase of a PC, whichever is lower. 

For example: Aman has a savings of RM19,400 in his Account II. His son has been offered a place to pursue an accounting degree in a local university. 

The tuition fees for the first year of the programme is RM3,800. Aman has also bought a computer worth RM5,000 for his son. 

The total amount of savings which Aman can withdraw from Account II is RM8,800 (RM3,800 + RM5,000). 

One thing members should note is that EPF does not disburse the money direct to the applicant. 

Instead, EPF will forward the money to:  

          -  THE educational institution if the child is studying in a local university or college;  
          -  THE applicant if the child is studying overseas or if an early payment has been made within six months
              prior to the application;  
          -  THE financial/loan agency from which the applicant has borrowed for the purpose of the child's
             education, provided the loan was made under the applicant's name, or his and the child's name. 
 
Members who wish to withdraw from their Accounts II for their children's tertiary studies in a local educational institutions have to: 

First, check the balance of their account at any EPF branches. 

Second, present the letter of offer from the educational institution, or notice of registration for the consecutive years of study, together with the identification card; 

Last, get a letter of statement from EPF which includes the amount that can be withdrawn under the scheme. This letter must then be presented to the educational institution when the child registers for the course/programme. 

The processing period for a withdrawal is a maximum of  21 days. 

For further information, members are advised to contact the nearest EPF branch office or Bahagian Perhubungan Awam,  KWSP  at  Tel: 03-294 6566.