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Identifying the main factors affecting the expenditure of students at Universiti Utara Malaysia using PTPTN.

1. Introduction

Every student has daily expenses based on their basic necessities in life. The expense of a student is almost the same with other students, which are expenses on the food, cloth, transport, entertainment, living home, and of course their education fees. Students' expenses are quite large but their source of income is very limited. So they need to allocate their money wisely. Income of a student mostly comes from their parents, scholarships that they apply for, or might be from different loans. The most common loan for education in Malaysia is National Higher Education Fund Corporation or as known in Malay language Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN), which is a specific loan from Malaysian government for university's students. PTPTN is responsible for giving study loans to students pursuing tertiary education in Malaysia. PTPTN Education Financing Scheme was established for the purpose of providing education financing to students pursuing studies in local institutions of higher education. This education financing will enable students to finance either fully or partially the course fees and their cost of living for the duration of their study. PTPTN education financing facility is offered to students pursuing their studies at public (IPTA) and private (IPTS) institutions of higher education locally (Official Portal Perbadanan Tabung Pendidikan Tinggi Nasional, 2014). There are some conditions to apply for PTPTN education financing. The conditions are as follows:

1. You must be holding Malaysian citizenship.

2. Your age does not exceed 45 years old on the date application.

3. Been offered a place at IPTA/ IPTS and Polytechnic by fulfilling entry requirements determined by the Ministry of Education and Malaysian Qualifications Agency (MQA).

4. The pursued course must have an approval registration from the Ministry of Education.

5. For IPTS students, the pursued course must have a Certificate of Accreditation from the MQA and still valid on the date of application.

6. For students who have other qualifications, verification must be obtained from the department or agency as stated above.

7. Remaining period of study at time of the application should not be less than one (1) year.

8. Students must not have any other sponsorship.

9. Students should have opened SSPN-i account.

Normally students in Universiti Utara Malaysia will received an amount of the money from PTPTN which nearly RM2000 after deducted from their course fee for each semester. However, the pocket money from their parents is different due to their family financial circumstance. Thus, it is an important for students to spend their limited money wisely to satisfy their needs and requirements every semester. The expenditure of every student is not much different, but the amount of money they spent is totally different. This is because there are many other factors will influence one's expenses.

Education loans are the main source of financial for most of the university students in Malaysia either is public education loans or private education loans. The most common loan for education in Malaysia is the National Higher Education Fund Corporation (PTPTN). Nowadays, the students are facing problem with the rising cost which cause they have less money to spend on all other expenses that associated with being a student. Therefore, they need to have skills in managing their personal finances to ensure the existing financial resources are used effectively and efficiently. In general, most students begin their education at the university level without having to be solely responsible for their own personal finances. While in university, students must arrange their own expense. This condition will lead to financial problems, especially to those who have no or less in financial management knowledge and experience to manage money. The ability to manage financial resources is essential for daily life activities. Thus, in this research, we will define the real statistics about the expenditure among the students of University Utara Malaysia (UUM). Besides that, we also will determine the common spending habits of each students and which part of categories they expense the most. Besides, we also will determine the main factors that affect the expenditure of a university student. Every student has his/her own expenses to gain the maximum of utility. However, it is important to state that the loan that students borrowed from government was limited meanwhile the requirement from students was unlimited. For example, they need money to buy the food, cloth, transport, entertainment, living home, and of course to pay their education fees. The amount of PTPTN which is nearly RM2000 after deduct, the education fees was few to the student. Therefore, they need to make choice and opportunity cost in order to gain the largest satisfaction. Different choices are made for every expense by students. Expenditure will also be differing between both males and females. Therefore, this study was intended to identify the expenditure of students within Universiti Utara Malaysia by using PTPTN for a semester which depends on different factors. The study was specifically attempted to (i) to identify the expenditure by using PTPTN for every student per semester, (ii) to identify the main factors that affect the expenditure of university' student, and (iii) to identify which categories spent most per student.

2. Literature review

2.1. Expenditure

The expenditure can be defined as the payment of cash for goods or services, or a charge against the funds in settlement of an obligation as evidenced by an invoice, receipts, vouchers, or other document (WebFinance, 2015). In other words, expenditure is the total money that spent by someone for goods or services or the act of spending money. Cambridge University Press (2015) stated that the expenditure is the amount of money spends by a government or person and it is the act of using or spending energy, time or money. Besides that, the spending of most of the university students is derived from education loans.

2.2. Education loan

According to Investopedia (2015a), the education loan is the "money that borrowed to finance education or school related expenses. Payments are often deferred while in school and for a six month after graduation". Conjecture Corporation (2003-2015) stated that an education loan is a loan that taken to help pay for an education, normally at a college or trade school, but some also used to pay for private schools or prep schools as well. A study by Nidhi (2011) emphasized that education loan is a special kind of loan granted by banks under which some amount of money is given to students at a special rate. With the help of education loan, the students can achieve higher and expensive studies at lower rates while Ivon (2013) defined an education loan as the financing that provided by entity typically the government, a bank, or an organization to help a student continue their studies by covering things such as their education fees, book costs, and living expenses. Ivon (2013) stated that there are three types of major loan for undergraduate students in Malaysia which is Bank Education Loans, Government Education Loans, and other education loans. Besides that, there are some universities or colleges that might also offer loans for students, but normally was in partnership with a financial institution (Ivon, 2013). These education loans are presented in details as follows:

2.2.1. Bank education loans

According to Ching (2013), bank education loan is a loan products offered by the bank for the particular purpose of financing the borrower's education. Furthermore, bank education loan also can be defined as a study loans that offered by banks that could be an option for those of us who have passed the age limit restrictions that government loans or scholarships decided to (Admin, 2014). However, not all banks will offer loans for education. Most of them were offered a personal loan, which is basically a loan that given to customers for their personal use. It means that they also could use it as educational loans if needed. Ching (2013) stated that personal loan is a banking product that may not require further explanation. Essentially, personal loans allow people to borrow a sum of money from banks for multiple purposes. Indeed, personal loans can also be taken to finance one's education. Lending Tree (2015) mentioned that personal loan is an unsecured loan, meaning the borrower does not place any collateral or security to assure the repayment of the loan. For this reason, personal loans tend to carry higher interest rates. In Malaysia, there are different policies for personal loans in different banks. One of the examples on Bank Education Loans is Education Financing-I Falah which offered by Bank Rakyat, and Secured Study Loan which offered by OCBC Bank.

2.2.2. Government education loans

The Malaysia government has provided support to increase the country's workforce skills. This has enabled them to provide the students with an education loan to help facilitate their education. The Government Education Loans is an educational loan that offered by government for local students only and this type of funding is not allowed to the foreign students (WordPress, 2014). Normally, the interest rate that has been charged on education loans offered by the government was lower than banks or other institutions. Some of them even charge a 0% of interest rate, although there was an interview process to set for prior to getting the loan. In fact, the objective of the government itself is to help the people who needs help and cannot afford to pay their education fees to furthering their education. With the government education loans, students can make the repayment through the existing local banks. The example of Government Education Loans were includes National Higher Education Fund Corporation (PTPTN), Skim Prihatin Pendidikan 1 Malaysia (SPP1M), Social Security Organization (SOCSO), and Public Service Department (JPA).

2.2.3. Other education loans

There are some companies or institutions and non-profit organization also offers education loans for students to furthering their studies. According to Investopedia (2015b), non-profit organization can be defined as a business entity that is granted tax-exempt status by the Internal Revenue Services. Donations to a non-profit organization that often tax deductible for individuals and businesses to make contributions. Non-profit organizations must disclose the financial and operating information to the public, so that donors can ensure their contributions were used effectively. Basically, the interest rates that charged by them are not as low as the government education loans, but they was a good option for those who does not qualify for government education loans. Besides that, there are certain requirements and condition specified by respective awarding organizations that need to fulfil in order to apply for the loans. The example of other education loans was Koperasi Jayadiri Malaysia Berhad (KOJADI) and KUOK Foundation. Eventually, the education loans was different from each other by the limitations of age, period, interest rate, maximum loan amount, and loan providers which is public or private.

2.3. Learned lessons

A study conducted by Sorooshian and Tan (2013) on the student's behaviour toward spending habit in Asian University Students had mentioned that male in particular are interested in buying a device that known to be expensive, whereas females was more interested in buying clothes, bags and shoes that thought crucial, because they want to look good while going to the class. Based on their study, it can clearly be concluded that both male and female students have a different spending habit. For example, male students are preferred to purchase gadgets like smartphones or IPhone, IPad, tablet, laptop and so on. While female students normally tend to purchase fashion bags, shoes and cosmetic items. Thus, it can emphasize that gender could increase the expenditures of university students. A study on saving behaviour of Swedish students showed that female students have more positive attitude towards saving and slightly motivated on saving, while male students have more positive attitude towards stocks (Norasikin et al., 2012). Income is not the only determinant of saving and consumption of students. They save their money because of their parents want them to do so. Besides, their consumptions were mainly affected by how much their family, friends, and neighbours consume. Nowadays, most of the spending potential of young people was driven by their desires rather than economics necessity. They spent almost 82% of their income on entertainment, clothing, cosmetics and transportation. They only imitate their parents when it comes to purchasing on personal clothing, toiletry articles, transportation, insurance policies, equipment and food. This shows that they have different attitude compared to their parents (Norasikin et al., 2012). Elsewhere, a study by Ifaorumhe (2009) on photocopying practices in some selected universities in Western Nigeria as this type of services is one of the factors that affecting the expenditures of university students. Photocopying services are included those e.g. photocopying books, slides or assignments that would increase the expenditures of university students because they always need to print slides to do revision and submit their assignment in a hardcopy for their lecturer (Ifaorumhe, 2009). Taylor (1988) noted that in the United Kingdom, the country's school system had estimated using about 90 million copies of pages per year. In the university sector, the sole of a study showed that Australian university was used about 2.1 million pages were copied in one academic year. Thus, it can be concluded that by using photocopying services could increase the expenditure of university's students. However, the current study does not consider this factor as one of the main factors because it does not much affect the expenditure of students in UUM. But, the study was rather focused on other important factors like income. For instance, Fosnacht and Dong (2013) conducted at study on the financial stress and its impact on the First-year students' college experiences and they were explained about students and parents who are forced to bear on increasing of the cost burden. Students may be experiencing a financial pressure for the cost of attending university. When inflation occurs, the incomes of family would decrease. Therefore, there were many parents that unable to face the additional cost. Therefore, this study used the cost of attending to the university as a factor that affecting the expenditure of students. Other sources of financial pressures were including the unexpected emergency or expenses which is a car accident or hospital bill. As a student usually has some money saving, so they do not have extra money to pay for unexpected expenses. In additions, parents may lose their jobs and cannot contribute to the education fees of their children. This would increase the responsibility of the students to pay their university expenses (Fosnacht and Dong, 2013). Furthermore, financial planning education has played an important role on how students spend their money or credits. Number of credit cards information and education that give by parents to their children was larger than any other socialization agent. Parents were the most important in influencing the money attitudes of university student. There is a relationship between the total numbers of credit card information learned from parents with the using of credit card by student. Students that have a lower balance in credit card are more likely to be educated by their parents on how to spend in a proper ways and how to managing the credit debt (Nadome, 2014). In addition, to an agent of socialization, some social identity which including age, gender, and ethnicity are considered as predictors of students financial credit risk and used them irresponsibly. They are defined as financial risk to those that used credit cards with a higher frequency for various purchases and was involved in a less responsible behaviour by the use of credit card (Nadome, 2014). According to a study, financial risk students are more likely to be female, black, and finance independent of their parents. Nadome (2014) had also stated that female students have less financial knowledge, but more likely to have credit card and carry more debt compared to male. Meanwhile, white students compared to other races have more financial knowledge than their peers. This study also confirmed that girls are more likely than boys to have outstanding credit card balance, and usually have more debt than boys (Robb & Sharpe, 2009). Thus, it is also relevant because females may be demanded to look and dress a special or good way and take part in particular activities such as shopping in stores or online shopping. Therefore, this could entice them to spend more money on appearance items than males and obtain more debt (Leclerc, 2013).

3. Research method

The questionnaire was designed with the aim to identify the main factors that affect the expenditure of UUM students by using PTPTN. The questionnaires were distributed with a cover letter which is stated about the research title and a brief introduction of the research topic followed by a general guide for the respondents. The choices of answers were closed-ended questions which was simple-dichotomy question that requires the respondents to choose either one or two alternatives (Zikmund et al., 2013). The questionnaires were divided into three parts, and each part of it, was representing an independent variable. The first part was about the respondents' background or general information, and second part was about the factors that affect the expenditure which included age, gender, attitude and financial knowledge, while the third part was about the general research. Random sampling was used in this study where 100 set questionnaires were distributed to the students at Universiti Utara Malaysia from different colleges which included COB, CAS, and COLGIS and schools. However, out of 100 questionnaires, only 96 questionnaires were received and analysed, yielding a response rate of 96%. The data collected was processed by using Statistical Package for Social Science (SPSS) program for Windows (Version 19.0).

4. Data analysis and findings

4.1. Background of the respondents

Table (1) presents the background of the respondents who participated in this study. It shows that the majority of participants most came from females (65.6%). The survey was covered all semesters for different years of enrolment by students. For example, most of them were came from the sixth semester which are 59 respondents (61.5%) and followed by the second semester, 14 respondents (14.6%) and the rest can be seen in Table (1). The highest ranged ages of the respondents were 22-23 years old, which are 67 respondents (69.8%) and followed by 20-21 years old, which are 20 respondents (20.8%). The survey was also covered all the colleges at the university namely College of Business (COB), College of Arts and Science (CAS) and College of Law, Government & International Studies (COLGIS) and the analysis showed that the majority of them were come from COB which are 61 respondents (63.5%) and followed by CAS, which are 18 respondents (18.8%). The respondents main source of income or pocket money were mainly from PTPTN (87.5%), compared to parents (7.3%) and scholarship (5.2%). The respondents main source of income or pocket money were below RM300 is 7.3%, RM301-RM600 is 10.4%, RM601-RM900 is 2.1%, RM901-RM1200 is 35.4% and above RM1201 is 44.8%. The education fees of the respondents were ranged between RM1001-RM2000 (72.9%) as the highest followed by RM 2001-RM3000 (18.8%).

4.2. The most spending items by the respondents

Based on the analysed results, it was observed that most of the respondents spent much on food and transport. For instance, 82 out of 96 respondents spend more on food which were 85.4% while 46 out of 96 respondents spent more on transport which were 47.9%. Other spending can be given by the participants are shown in Table (2).

4.3. Types of entertainment which the respondents spent most

Based on the analysis, it can be seen that most of the respondents spent more on the types of entertainment was travelling (37.5%) followed by shopping (31.3%). Other types of entertainment spending by the respondents are shown in Table (3).

4.4. Relationship between the factors affecting expenditure (age) and respondents background

As shown in Table (4), Chi-Square test ([chi square]) was used to find out whether if there any relationship between the factors affecting expenditure (age) and respondents' background. However, based on the analysis, it can be stated that respondents background such as semester, age, college, and education fees have a significant relationship with the factors affecting expenditure (age).

5. Conclusion

This study concluded that the majority of the respondents was used PTPTN for their daily expenses in university. Their main sources of income are from PTPTN. Besides, it was also found that most of the respondents were spending about RM901-RM1200 per semester. Concerning the main factors that affecting the expenditure of university students, it can be concluded that there were four main factors that affected the expenditure which include age, gender, attitude and financial knowledge. With regard to which items spent most per student in the university, it was found that the highest items that the respondents spend most, were food and transport. Finally, this study has proposed several useful recommendations. One of these recommendations is that every university's student should have their own financial knowledge on what they should spend most and what they should not. Besides, they must also have their planning and budget made before they spend. Finally, students should spend on their needs but not on their wants.


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(1) School of Economics, Finance and Banking, College of Business, Universiti Utara Malaysia, Sintok, Kedah State, Malaysia, e-mail:
Table 1
Presents the background of the respondents

                                     Frequency   Percentage


Male                                    33         34.4%
Female                                  63         65.6%


1 semester                               1          1.0%
2 semester                              14         14.6%
3 semester                               3          3.1%
4 semester                              12         12.5%
5 semester                               7          7.3%
6 semester                              59         61.5%
7 semester                               0           0%


18-19 years old                          2          2.1%
20-21 years old                         20         20.8%
22-23 years old                         67         69.8%
24-25 years old                          7          7.3%


College of Business (COB)               61         63.5%
College of Arts and Sciences (CAS)      18         18.8%
College of Law, Government &            17         17.7%
  International Studies (COLGIS)

Main source of income

PTPTN                                   84         87.5%
Parents                                  7          7.3%
Scholarship                              5          5.2%
Others                                   0           0%

Income/ pocket money

< RM300                                  7          7.3%
RM301-RM600                             10         10.4%
RM601-RM900                              2          2.1%
RM901-RM1200                            34         35.4%
>RM1201                                 43         44.8%

Education fees

<RM1000                                  8          8.3%
RM1001-RM2000                           70         72.9%
RM2001-RM3000                           18         18.8%
>RM3001                                 --           --

Table 2
Respondents' spending on certain items that they consume more

Categories           Frequency   Percentage

Food                    82         85.4%
Clothing                20         20.8%
Book                    11         11.5%
Stationary               4          4.2%
Transport               46         47.9%
Electronic Gadgets      11         11.5%
Cell Phone               9          9.4%
Vacation                20         20.8%
Entertainment           34         35.4%
Others                   2          2.1%

Table 3
Spending most of the type of entertainment

Type       Frequency   Percentage

Shopping      30         31.3%
Travel        36         37.5%
Sports        13         13.5%
Movie         14         14.6%
Game           3          3.1%
Total         96          100%

Table 4
Relationship between factors affecting expenditure (age)
and respondents background

                        Value     Chi-Square
                                 ([chi square])

Gender                  1.111      0.292 (NS)
Semester                17.153    0.004 ** (S)
Age                     9.780     0.021 * (S)
College                 7.040     0.030 * (S)
Main source of income   2.478      0.290 (NS)
Income per semester     2.348      0.672 (NS)
Education fees          6.913     0.032 * (S)

S = Significant
NS = Non-significant
P-value < 0.005 *
< 0.001 **
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Article Details
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Title Annotation:Perbadanan Tabung Pendidikan Tinggi Nasional
Author:Omran, Abdelnaser
Publication:Annals of the University of Bucharest, Economic and Administrative Series
Article Type:Report
Geographic Code:9MALA
Date:Jan 1, 2016
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