[Music] hi everyone welcome back you're still with us here on the C morning show it is quarter 7 in the a.m. and it's time for our first discussion of the morning now in response to the viral case of online loans for paying tuition fees at e Bay the Ministry of Finance is currently considering a student loan program through the LPE endowment fund that's right Paul Finance Minister 3 milon Indra announced that the government through the education fund management agency or LD lpdp is currently exploring student loan plan due to the increased financing needs for Education indeed now this discourse arises in response to the phenomenon of students resorting to online loans based on fintech lending at the Bandung Institute of Technology in order to pay for their tuition fees however the government is proceeding cautiously considering the negative repercussions of similar plans implemented in the United States yeah I got a lot you want to talk a little bit about this very interesting all right so let's uh get into our first discussion of the morning as joining us in the studio today is celios director of public policy media uh Wahu ascar good morning M thank you for being with us here media I love the name by the way media I tripped me up there for a second media okay okay M let's talk a little bit about this uh new phenomenon it's uh not new to Indonesia but that's because Indonesia currently uh could you explain to our viewers perhaps is there a a student loan program currently in place by the government a formal Student Loan program I don't think so no okay but there was initiative years ago correct around 1980s okay had that program called K mahasiswa India I see yeah but it was fail okay at that time so after that they don't we don't really have initiative on about this student MH so I wanted I wanted to kind of share with you because well we both you know brought up one in Canada one in the United States uh but both of my siblings have two different uh student loan one my sister she has the student loan by the government so the the the funding itself goes straight to pay off the school until four years but my brother uh Christopher he went to UC Long Beach he got a scholarship so basically from a private sector who pays off every month not uh so it's a equivalent to a money that he needs so it's either for his education or whatever that he needs to do to strive within that month throughout four years so there's this you know kind of like different kind of scheme and plans that's right in United States and there's some from the schools directly themselves as well right yes yes what is yours in Canada um it's same thing so there's a student loan program from from the government but there's also student loan programs at the uh universities or colleges that are available for students you have to qualify for it first of all and the terms are quite unique because when we think of loans like mortgages or even cars there's a pretty I would say a a definite uh uh year or duration that you're going have to pay it off but when it comes to student loans some of my friends are paying off student loans even to this day in their late 30s or even close reaching their 4S yeah so I want to talk about that in regards to my sister who got a St loan by the government um it took her about 13 years actually this year 2024 she finalized her student loan that's about 13 years she hold up her wedding uh because she said this would affect my my credits yes so I need to you know finalize this I her credit score her social security card what not it's all to be in fact but it took her 13 years and she kind of kind to have a stall in her life for that 13 years you can't run away from it it's like a shadow that's following you all the time do you think this is ready for the Indonesian citizens are the students ready or even the ecosystem is ready for it too yeah when we talk about student loan it's yeah definitely one of the alternative way for Education financing and we talk about accessibility I didn't I I think Indonesia need more like a higher enrollment rate rates okay but we cannot really compare Indonesia and the UK and the us because we are just different okay so in term of the accessibility whether it can improve the accessibility on higher education that's a big question okay because uh higher tuition fee is one of the issue in the country but that's not the biggest issue okay what is inequality in education so if we have like a very good University everywhere in in this country we going to have like a lower tution fees of course yes because like for me myself I need to travel I grow up in West Sumatra a very remote area in West Sumatra I need to go to J Jakarta to get a very good University right the impact is that the tuition fee will be much lower because it's very far away from my hometown that's right I need to pay more Transportation cost and of course housing exactly so so again it's a intense intense debate right now now but I think the US like you said is a very good example of how student loans should be managed because it creates a bubble later on correct and and when you have these long durations like um 15 years to pay off a loan or 20 years even the pay off a loan this tends to build up because every year you have fresh graduates as well that have to start uh uh working in in their own respective Industries there are many research on this and and one research say that people delay life milestone because the student loan yes so they delayed getting marriage stting business and that's kind of thing that currently happen in in many developed countries okay so knowing that there is uh at least data that we can kind of work off of from other countries that have already implemented the sort of system for years now what sort of student loan system do you think is suitable for students here Indonesia considering that we not everyone has access to all the best schools in their respective areas theoretically student loan is a market failure I mean like one of the solution for that is that the government shouldn't involve too much okay so meaning that let the market works I love the fintech ideas like it's digital quick and easy right sure and the government should just simply support them with the regulation okay so never ever in the situation that the government in in this case it's public university MH pick up one provider and then systematically push their own student to choose that provider I see because it create a inefficiency and you know if there is a monopoly from one provider the surfice will be lower okay will'll be very very poor so that's the idea I mean like of the student loan we can build the student loan system as long as it goes to the market or free market let the market Works without the government intervention at all apart from the regulation theoretically then if I was a new student and I'm trying I need a loan I have a selection of uh different finance companies that I can choose from um they can compete with each other in regards to interest rates and things of that sort so yeah so market efficiency will will go will get that because it create Innovation and even for the finch lending or the provider itself they may be more Cas cases cautious yeah not to give the money to the people who cannot repay back the risk the high risk lenders yeah more competitive yeah is this even um like just in general uh in your opinion is it even a a good thing for Indonesian students to have an option to borrow because we in here in Indonesia even with the uh the presence of online loans and fintech and all that sort a lot of it has been Abus some people are not good at understanding how to pay back are we like Caroline said are we even ready for something like this in your that's something we have to consider as well okay including the culture yes but the good thing I just want to be optimistic like Indonesia is one of the most generous country in the world yeah that's what research say meaning that there is a support system around us just like me myself like my family give me some money right with zero interest rate yes and then I apart from that I got like a mentorship like family support they give me advice not only money and then I don't need to pay back the money even so so that's kind of thing that actually we have so many alternatives to enter the universities MH and we got scholarship we can find the scholarship I got the scholarship for my bachelor my master my PhD really yeah it's possible no so how did you do it and why is this not some like way for student to see and approach your kind of way actually the government has done very well they open have all the opportunity in regards to scholarships exactly scholarship So I entered the university without the scholarship I just simply like study hard and then I become the best uh and then I have more chance to get the SCH and they offered you exactly exactly so there are actually so many opportunities out there even without scholarship we can still survive I can there are many uh people like they run business you know during the the University that's right I mean students are especially now the generation they're just more uh creative of making businesses on their own but in regards to that I'm really curious about scholarship how does scholarship really the system here in the NAIA because I'm really not aware of it yes L PDP if you have heard that like you said before is one of the biggest scholarship in the country because it is provided by the government okay so the government offered the scholarship and people can apply okay what I like with lpdp is that it ensure that inclusivity meaning that everyone can apply okay but the government try to put some like priorities for those who are from lowincome family okay they prioritize those that need it exactly exactly so so that's the thing because there are so many smart student but they just simply cannot access uh uh higher education because they cannot fight you know like they they cannot compete MH but so so that's why how the government should help them train them how to speak English how to you know what I mean like so they can apply for the University abroad with uh SCH profile because universities in abroad has a lot of scholarship programs absolutely but you need to make an essay you have to do a one-onone interview sometimes and share about your stories and that's where it's kind of like and I would say that not every school uh is looking for those to give opportunities to those that are more in need they want to choose what's best for the school as well right and I would argue that schools here for higher education probably a lot more affordable than overseas as well um in many in many ways when it comes to even expenses and things of that sort so getting back to those that actually need loans here in Indonesia how do we then um help to mitigate the risk of loan defaults because we know that that is likely to happen in some cases is there a way to lower those chances I finished my PD on financial literacy okay MH so that's the thing that I think the government should aware of we don't really have the system the curriculum that allows people to learn about how to manage the money okay yes uh what's the meaning of interest rate how to calculate it so that could be one of the entry point okay so that we can improve the youth youth financial literacy that's a very uh significant one yeah yeah apart from that we just simply have to open up all the opportunities for the people to enter the the university and allow them to apply the scholarship and there are many ways I mean like to enter the university right now so to open up the public private uh collaboration as well and internship program is also could be one of the solution so yeah student loan is one of the alternative education financing but there are many other alternative the only one it's not the only one and given the current situation there are so many unemployment rate and you know the growth of unemployment rate increase significantly especially for those who are University graduated okay yes yes what is happening that why why yeah why is that what's that phenomenon mismatch skills uh so what they finished studying is it's not necessarily what they can that yeah and apart from that the quality of educ ation uh a lot of factors yes poor quality of like uh the lecturer as well uh and the lecturer only got paid less than uh minimum weage for Jakarta yeah like for me myself I'm a uh I'm a PhD holder my basic salary for public university in Indonesia is less than 4 million okay EXC can imagine minimum wage so so that's the thing that we should yeah we should think about it so it's a deeper rooted problem than just on what we see on the surface isn't it yes and in regards to that uh I'm still at an awe right now with the numbers that you just mentioned to us but it's just yeah like you were mentioning before this is actually not the core of the problem there are so many problems that need to tackle but in regards to the uh the student loan that is now being apprehended by the government also by the Finance Minister who's trying to adapt the model like the US system um how do you think that this could be applicable in a way or how we can at least model it to a certain point where Indonesian it could be perceptive to Indonesian citiz biggest benefit for us as well right yeah that's a very difficult question yeah because we but we can learn from Thailand uh Thailand has two types of student loan okay A Student Loan Fund where the government act as a guaran for the for the loan and the second one is income contingency plan what is that uh like uh people later on pay the the the Deb B tax system bya tax system ah okay yes so they receive income automatically deducted by the loan services again it will be based on what you'll end up earning exact so if you're not earning anything you don't have to pay anything yet that is actually really smart yeah but yeah but in Thailand like the research says that 48% of the borrowers got defaulted oh okay good so there's the pros and cons which everything right yes yes so we can say that it's fail right so so that's why we have to think carefully yeah I mean I think the of to on on this part the government just simply have to uh strengthen the ecosystem of fintech Landing okay and then let the market works yeah uh so that people have the option the government shouldn't involve too much okay so for for private you University if if they want to collaborate with the fch landing Let It Go but for public universities uh the government should think twice okay because the public university goal one of the goal is to ensure inclusivity accessibility and affordability of education so public university has to support the student public un University cannot just simply treat the student as a c customer right okay you go what I mean like yeah so that could be the best scheme for our country let the market works let the market Works what's the worst thing that can happen if a student defaults on a student loan I mean if this sort of system is in place a student is unable to pay back the student loan how can this affect them in the long term productivity so if we have lot of loan we delay everything right so uh we delay investment and then it affects the overall economy of the country but that will be a chain reaction then to everything else right because if it affects productivity then it affects the industry it affect the industry it weaken the consumer spending uh if people don't spend you know the impact is the economic growth is going down it's a vicious cycle isn't it yes yes I just don't know how to implement it because back in the United States it will affect your credit score and then credit score you have everything you do your housing everything that is going to do anything with your fin You're motivated to pay that because you don't want your low credit nobody wants to run from your your from from your debt because a student debt because of uh because of your credit I don't know how it would apply here in India but things has changed the the United States I think started the program around 1960 1970 mhm where there was no digitalization in education but now things change and we have online education corre yeah that could be one of the solution yep you can do your schooling through correspondence exactly exactly and you know one of the biggest university in Indonesia university Indonesia no no universa un that he he has a largest student in Indonesia right and then you can pay only like 2 million rupia per semester wow it's it's wonderful you get the degree you get the skills it solve everything right so yeah and yeah so there are many way because things change we cannot just simply follow the United States yeah we can learn from them for sure but we just have to be careful yeah because we understand how the system works here so we should adapt it here absolutely all right ni thank you so much we wish have more we don't we don't know enough about this topic especially the way it relates to students and their behaviors here in Indonesia as well so we hope that whatever system does get implemented it is in the best interest of the students because we do want them to be productive and have a great future sure Deb free and just like you m media you're truly a role model I mean seeing you you have to go outside of your you know your region for you to get your attain your education and look where you are right now PhD older love that thank you very much for your time as thank you thank you and we're up for another commercial break when we return we'll bring you updates from around the world station we here on the C Morning Show only on C today [Music]