Bandung. Bandung Institute of Technology (ITB) students, who were offered alternative loans by peer-to-peer lending fintech Danacita to pay for tuition, find the imposed interest rates to be excessively high, despite the Financial Services Authority (OJK) affirming that the rates comply with existing regulations.

ITB has partnered with Danacita as an option for students facing difficulties in paying single tuition fees (UKT). Students who fall behind on UKT payments are at risk of being unable to attend classes or may have to take a leave of absence.

In an official statement, OJK stated that they researched interest rates imposed by Danacita for ITB students. The findings revealed that the interest rates rolled out by Danacita align with OJK regulations.

"Based on OJK research, the interest rates imposed by Danacita are by OJK's regulation on fintech P2P lending," said Aman Santosa, Head of the Department of Financial Literacy and Inclusion at OJK, on Friday.

On the other hand, Muhammad Yogi Syahputra, the Chairman of the ITB Student Family (KM), said that around 120 students are struggling to pay UKT. The university has provided an alternative payment solution through Danacita's online loan service. However, students feel that the offered interest is burdensome.

"In this situation, ITB tried to provide a solution, including offering online loans through Danacita for UKT at ITB, amounting to Rp 12,500,000 ($789.79) per semester with a total payment (after interest) of Rp 15,500,000 payable in 12 months," explained Yogi.

This indicates that ITB students are required to pay an interest amount of Rp 3,000,000. In other words, Danacita establishes an annual interest rate of 24 percent, or 0.065 percent per day, below the maximum interest rate of 0.1 percent per day set by the OJK.

On its website,  Danacita notes a total of 27,440 entities as users and collaborates with 128 education partners. Since its establishment in 2018, Danacita has disbursed a total of Rp 275.99 billion in educational funds, with a 90-day nonperforming loan rate (TWP 90) of 2.69 percent.

The surge in online loans among millennials and Gen Zs has become a national concern, with an increasing number of young people struggling with rising debts. According to the OJK, as of September 2023, a substantial 19.52 million borrowers are contending with outstanding online loans totaling Rp 50.26 trillion. Within this demographic, millennials and Gen Z individuals, aged 19-34 years, make up 11.45 million users, collectively holding outstanding loans amounting to Rp 27.56 trillion.

A sizable portion of this demographic is maintaining current loans (up to 30 days), totaling Rp 24.62 trillion from 9.89 million users. However, 1.23 million millennials and Gen Z individuals are facing non-performing loans for 30-90 days, with outstanding amounts totaling Rp 2.27 trillion. The number of non-performing loans exceeding 90 days (TWP 90) stands at 331,000 users, with outstanding loans amounting to Rp 675.14 billion as of September 2023. This marks an increase from the previous month, August 2023, which recorded 259,000 users with outstanding loans of Rp 602.69 billion.