High Tuition Fees, Scholarship Applications for Disadvantaged Students Soar

The Chairman of the National Selection of New Students (SNPMB) for the year 2024, Ganefri, who was contacted from Jakarta on Tuesday (9/4/2024), stated that in the national selection for admission to state universities, whether through achievement-based, test-based, or independent pathways, prospective students can apply for scholarships for underprivileged families through the Smart Indonesia Card (KIP) for Higher Education. By applying for KIP, prospective students who pass the state university entrance exam will be verified for eligibility. For those who are eligible, they will receive scholarships for tuition and living expenses until the completion of the diploma 3 or bachelor's degree program.

"The quota for KIP Scholarships depends on the government every year. According to regulations, at least 20 percent of the quota for state universities is reserved for students from low-income families. Some of the accepted students receive KIP Scholarships from the government. However, if the number of applicants exceeds the quota, university leaders must try to ensure that students can still study without financial constraints by searching for other scholarship sources," said Ganefri.

Acting Secretary of the Directorate General of Higher Education, Research and Technology, Kemendikbudristek, Tjitjik Srie Tjahjandarie asked PTN to be wise in setting student single tuition fees (UKT) rates. The costs borne by students must be adjusted to the economic capabilities of the student, the student's parents, or other parties who are paying for them.

"Universities must be inclusive and accessible to all levels of society. Therefore, be careful in setting tuition fees. Don't raise tuition fees. Instead, open up space or add tuition fee groups," said Tjitjik.

Regarding tuition fees or UKT at PTN, the Center for Digital Society (CfDS) as a study and study center for the Faculty of Social and Political Sciences, Gadjah Mada University (MADA) last week discussed research results with digital data analysis methods and desk study related to the polemic of online loans or online which began to appear on January 25 2024 by the account Menfess @itbfess on social media platform

"Most or 54.9 percent of netizens' responses were negative towards the solution of paying UKT with online loans (pinjol)," said UGM CfDS Research Officer Achmed Faiz Yudha Siregar in the CfDS Response discussion entitled "Is it true that Pinjol is a solution to the expensive UKT for students?"

Also read: Increasingly Higher Tuition Costs

Disagree with the pinjol solution

Achmed explained that from January 25, 2024, tweets related to UKT (university tuition fees) and online lending began to spread until late February, coinciding with the period of UKT payment at that time. Then, this issue escalated on February 4 because one of the political figures raised the issue to be made a public issue.

Based on the research results of the CfDS team consisting of Achmed Faiz Yudha Siregar, Arifatus Sholekhah, Alifian Arrazi, Bangkit Adhi Wiguna, and Falah Muhammad, most of the tweets show criticism or negative responses towards the policy of paying UKT through online borrowing services. They see that both negative and positive responses equally indicate disapproval of using online borrowing services to pay for UKT.

"Since the transformation of state universities into legal entities, there has been a significant trend of increase in tuition fees. In 1994, 81 percent of state university funds came from the state budget. However, after becoming legal entities, government funding allocation drastically decreased to 35 percent," said Achmed.

Another researcher from CfDS, Arifatus Sholekhah, said that from the studies conducted at UGM, Bandung Institute of Technology, and the University of Indonesia, there are offers to overcome the payment of UKT for those who are hindered by bank loans and online loans. Some of the interest rates are zero percent, in cooperation with state-owned banks, as well as online loans that vary, ranging from 1.6 to 1.75 percent per month.

Arifatus stated that the schemes offered by some state universities' legal bodies have not been appropriate. For example, the internal installment scheme offered by UI is limited only to undergraduate and vocational program students, and the cooperation between the Danacita online lending platform with UGM and ITB which has an interest rate of 1.60-1.75 percent per month.

There are loans with zero percent installment plans, partnerships with government-owned banks, but they are considered exclusive. There is a background check on the family's economic status, so loans are prioritized for those who can afford to pay. However, economically vulnerable families are in dire need of funds to finance their education.

Since the transformation of PTN into a legal entity PTN, there has been a significant upward trend in UKT.

UGM offers the UGM Scholarship for the Year 2024 which is allocated from the Outstanding Education Solidarity Fund (SSPU) for 2023 as a form of concern and commitment to provide ample opportunities for Indonesian youth to obtain the best education at UGM campus. The scholarship component is in the form of educational assistance equivalent to the Tuition Fee or a maximum of IDR 4 million per student per semester for a period of two semesters.

The CfDS team also conducted a comparative study on loans provided by federal and private parties in the United States. The presence of these loans has not improved the issue of rising education costs there. Meanwhile, Indonesia still relies on private loans due to the absence of government loan policies and schemes.

"Achmed said that there are concerns that private loans may not provide adequate protection for debtors, making them vulnerable to the possibility of default, and there are provisions that need to be further considered."

Achmed stated that there was a statement from the government to prohibit public universities from raising tuition fees. This is in line with the issuance of Ministerial Regulation Number 2 of 2024 regarding the Standard Operational Unit Costs at Public Universities under the Ministry of Education and Culture. Public universities are requested to add a tuition fee class instead of increasing the amount of tuition fees.

"This also still needs to be criticized, is it really a solution? Because, it may not necessarily be a solution because we do not know if the selection process for each UKT group is accurate or not," he said.

Also read: Pindar College

Recognized by OJK

Separately, the Indonesian Joint Funding Fintech Association (AFPI) ensures that financing from fintech lending for educational services is officially recognized as a business entity that has a legal basis and is also licensed by the Financial Services Authority (OJK). Therefore, the existence of a legal umbrella that regulates fintech lending ensures security in its operations so that it becomes a financial service solution for education.

Also read: College Debt Has Been Complicated All Time

AFPI General Chair Entjik S Djafar said that the role of fintech lending could encourage inclusion in the education sector. This has been done by a number of AFPI members with OJK permission as a financing solution or educational loan. This fintech lending collaboration is carried out with universities, course institutions and other competency development institutions.

”Education is the key to the progress of individuals and society as a whole. However, financial challenges often become a barrier to achieving quality education. "The fintech lending industry has committed to implementing the best services in optimizing access to educational services through collaboration between universities and financial service institutions," said Entjik at the LawTech Mini Roundtable event, at the end of March.

Danacita CEO Alfonsus Wibowo explained that the cost gap is one of the main obstacles causing low public participation in higher education in Indonesia, especially with limited external financing options. This encourages Danacita to participate in advancing education in Indonesia by increasing the number of higher education students through financing solutions that fully understand the needs of students and the world of higher education.

Since its establishment, Danacita has distributed more than Rp 400 billion in education expenses for students throughout Indonesia. "Education is a market segment that hasn't been serviced much. We are present to fill this gap and provide affordable funding access," said Alfonsus.

AFPI Executive Director Yasmine Meylia S said that fintech lending organizers would continue to strive to increase access to financing for the community, including the higher education sector. Of the 101 AFPI members licensed by the OJK, there are four platforms that focus on funding the education sector.

According to OJK data, until January 2024, funding from fintech lending to the education sector amounted to IDR 2.47 trillion or 1.49 percent of the total loan distribution to the productive sector which was recorded at IDR 165.82 trillion.