Paying for College with Online Loans: A Lifeline or a Financial Trap?
Collaborating with fellow writer Alfaridzi H, we explore the rising phenomenon of how rising tuition fees are pushing Indonesian students toward financial risk.
In Indonesia, college students face a dilemma that might sound familiar around the world: how to afford higher education when tuition fees keep rising. What’s unique in the Indonesian context is the growing reliance on online loans, locally called pinjol, to pay for university fees.
On the surface, these loans seem like a quick and easy fix: money in your account within minutes with no long lines at the bank. But for many students, that convenience comes with a steep price.
Education at a Cost
Historically, public universities in Indonesia, known as Perguruan Tinggi Negeri or PTN, are seen and known as the more affordable available higher education, especially compared to private institutions. However, that image is starting to fade nowadays. The introduction of a tuition system known as UKT (Uang Kuliah Tunggal) was supposed to make things fairer, charging students based on their family’s financial background.
In practice? Not so much.
Students from modest households often find themselves paying the same as those from wealthier families. The formula behind the numbers isn’t always clear, and requests for adjustments can get tangled in bureaucracy. Even worse, students report that despite higher fees, the learning environment isn’t necessarily improving: outdated facilities, overloaded professors, and digital learning systems that don’t quite deliver.
Turning to “Pinjol”
In this environment, it’s no surprise that more students are turning to online loans or “pinjaman online” for help. These platforms advertise speed, flexibility, and minimal paperwork. But they rarely mention the downside that comes with using these services, which are sky-high interest rates, aggressive collection practices, and the risk of being trapped in a cycle of debt.
Some loans are illegal, operating without oversight along with using unethical tactics like public shaming or harassment. Even legal ones, registered under Indonesia’s Financial Services Authority (OJK), can have terms that are punishing for students with limited income.
What starts as an attempt to stay in school can quickly snowball into something much worse, starting from bad credit scores and legal trouble to long-term financial strain.
Why It’s Happening
At its core, this isn’t just about loans; it’s about a system that hasn’t caught up with the needs of its students. While programs like KIP Kuliah exist to help underprivileged students, they’re not always accessible or widely known. Some students give up halfway through the application because it’s too complicated or they’re unsure if they qualify.
Get Sabrina Andini Ikhwan’s stories in your inbox
Join Medium for free to get updates from this writer.
Meanwhile, universities may offer tuition discounts or payment extensions, but getting them often involves long waits and piles of paperwork. Faced with a deadline and no better option, students would sometimes take their chances by downloading a loan app.
Alternatives That Deserve More Attention
If you’re a student (or the parent of one), and tuition feels out of reach, know that pinjol isn’t your only choice. Consider:
- KIP Kuliah: A national program offering full tuition and a monthly living stipend.
- Scholarships: Offered by universities, government bodies, and private companies. They’re competitive, but worth the effort.
- UKT Relief Options: Many schools do allow you to request a fee reduction, especially if your family’s income has recently changed.
- Freelance or Part-Time Work: It’s not easy balancing work and study, but even small gigs can help, plusthey don’t come with interest rates.
What If You’re Already Stuck?
If you’ve already borrowed from a pinjol, here are a few things you can do:
- Verify the Lender: Use OJK’s official site to check whether the loan company is legally registered.
- Don’t Pay Illegal Lenders: If your lender is operating without a license, report them to the authorities (Satuan Tugas Waspada Investasi) and seek help from legal aid groups like YLBHI.
- Negotiate: For licensed lenders, you can request debt restructuring or a payment extension. It’s not always guaranteed, but it’s worth trying.
In the End: Education vs. Exploitation
Getting a degree is supposed to open doors, not leave you with a burden you carry for years. While pinjol might seem like a shortcut to keep your studies on track, it often creates more problems than it solves.
Indonesia isn’t alone in facing this problem, but the speed at which students are being driven toward risky financial products is alarming. What’s needed is better support, clearer systems, and more accessible information so that no student has to choose between learning and long-term debt.
Special thanks to Alfaridzi H for their insights, research, and contributions to this article.
Sources:
- @sbmptnfess on X (formerly Twitter) (https://x.com/sbmptnfess/status/1916731651528212759?s=46)
- @azizrisqii on X (https://x.com/azizrisqii/status/1907657435659252040?s=46)
- @choliniken on X (https://x.com/choliniken/status/1919615274099028018?s=46)
