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Asia’s Student-Debt Time Bomb

Fueled by rising economic prosperity and aspirations, the global higher-education sector boomed during the 1990s and 2000s, and, unsurprisingly, student-loan debt has surged worldwide. But Asian countries with high tertiary-education participation rates have proved particularly vulnerable to this trend.

KUALA LUMPUR – Malaysia’s year-old government, led by Prime Minister Mahathir Mohamad, suddenly finds itself mired in a political scandal, following the online circulation of a sex video involving a cabinet minister and another man. Weaponized sodomy charges are nothing new in Malaysia, twice resulting in the imprisonment of People’s Justice Party leader Anwar Ibrahim. Unfortunately, the latest drama, like those preceding it, risks obscuring more essential problems.

One of the most pressing issues is that Mahathir’s government inherited a severely strained balance sheet. And part of its fiscal weakness is rooted in the RM39 billion ($9.5 billion) in outstanding debt owed to the National Higher Education Fund Corp (PTPTN).

Malaysia is not alone in this regard. Fueled by rising economic prosperity and aspirations, the global higher-education sector boomed during the 1990s and 2000s. Many countries helped to fuel that explosion by liberalizing higher education. Fee-charging universities proliferated, to the point that the majority of university students in the Asia-Pacific region now attend private, not public, institutions. Globally, one-third of all tertiary-level students today are enrolled in private institutions.

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