Implementation of Student Loan Asset-Backed Securitization in Malaysian Higher Education
IMPLEMENTATION OF STUDENT LOAN ASSET-BACKED SECURITIZATION IN MALAYSIAN HIGHER EDUCATION.
(A STUDY CONDUCTED AT MALAYSIAN ECONOMY IN THE ASIA)
Paper no.60
ABSTRACT
The research is to investigate the alternative financing in Malaysian Higher Education by introducing student loan securities as a type of asset-backed securitization. It will analyse and consider possible effects in order to relieve the pressure currently imposed on the Government Budget. The aim of this research is to identify the outstanding systems financed by capital market and banking systems in the United States and Chile and suggest how a similar system can be adopted to improve the National Higher Education Fund Corporation (PTPTN) as main corporation providing loans for student in Malaysia. The work considers the characteristics of the National Higher Education Fund Corporation (PTPTN), suggests a structure for student loans securitization, and study the potential of the Asset-backed Securitization process in resolving the student loans problem. The expectation is that the securitization process and the new financial instrument will benefit both the students and the government.
INTRODUCTION
The contemporary understanding of asset-backed securities (ABS) defines the process as a creative way of raising funds. A definition along these lines is provided in Fan et al. (2004), emphasizing that the funds are raised through the issuance of marketable securities backed by future cash flows from revenue producing assets. A wide variety of assets has been securitised, including lease, auto loans, credit cards receivables, commercial mortgages, student loans, equipment leases, franchise fees, state lottery
winnings and litigation settlement payments. The focus of this research is the student loans asset-backed securities and how the system is being implemented worldwide (Fried and Breheny, 2005; Hartung et.al, 2006).
Student loans are clearly defined as financial aid given to a
(A STUDY CONDUCTED AT MALAYSIAN ECONOMY IN THE ASIA)
Paper no.60
ABSTRACT
The research is to investigate the alternative financing in Malaysian Higher Education by introducing student loan securities as a type of asset-backed securitization. It will analyse and consider possible effects in order to relieve the pressure currently imposed on the Government Budget. The aim of this research is to identify the outstanding systems financed by capital market and banking systems in the United States and Chile and suggest how a similar system can be adopted to improve the National Higher Education Fund Corporation (PTPTN) as main corporation providing loans for student in Malaysia. The work considers the characteristics of the National Higher Education Fund Corporation (PTPTN), suggests a structure for student loans securitization, and study the potential of the Asset-backed Securitization process in resolving the student loans problem. The expectation is that the securitization process and the new financial instrument will benefit both the students and the government.
INTRODUCTION
The contemporary understanding of asset-backed securities (ABS) defines the process as a creative way of raising funds. A definition along these lines is provided in Fan et al. (2004), emphasizing that the funds are raised through the issuance of marketable securities backed by future cash flows from revenue producing assets. A wide variety of assets has been securitised, including lease, auto loans, credit cards receivables, commercial mortgages, student loans, equipment leases, franchise fees, state lottery
winnings and litigation settlement payments. The focus of this research is the student loans asset-backed securities and how the system is being implemented worldwide (Fried and Breheny, 2005; Hartung et.al, 2006).
Student loans are clearly defined as financial aid given to a
References: Brunner, J. J. (1997) From state to market coordination: the Chilean case. Higher Education Policy, 5 (3) October, pp. 225-237 Capital Market Master plan 2001-2010 (2008) Securities Commission (SC) [Internet] Available from: [Accessed 18 February 2008] Fan, G. Z., Sing, T. F., Ong, S. E. and Sirmans, C.F. (2004) Governance and Optimal Financing for Asset-Backed Securitization. Journal of Property Investment & Finance, 22 (5) pp. 414-434 Fried, B Fried, R. L. and Breheny, J. P. (2005) Tuition Isn 't the Only Thing Increasing: The Growth of the Student Loan ABS Market. Journal of Structured Finance, 11 (1), pp. 40-46 Hartung, D Reilly, F. K. and Brown K. C. (2002) Investment Analysis and Portfolio Management South-Western Educational Publishing, ISBN: 0324171730 Publishing Date: 2002, 7th edition Student Loan (2008)