Teacher’s mounting loans: whose problem is it?

This year, the total number of permanent civilian and military/uniformed plantilla positions in the national government is about 1.71 million of which more than 1.46 million are filled and 247 thousand unfilled. Of the total number of permanent national government positions, the Department of Education (DepEd) accounts for 861 thousand of which 772 thousands are filled and 89 thousand unfilled. The items for teachers or technical positions alone is 827 thousand.

The basic compensation of an ordinary teacher is between 19 to 20 thousand pesos a month. After paying their retirement premium and other regular deductions of the government, a good amount would still be left which is way above the official government poverty threshold for a family of five. But wait, many teachers are buried up to their necks with loans from the GSIS and other lending institutions such as the Land Bank and a hosts of other private lending institutions (PLIs). Last year, the DepEd secretary was quoted as saying that teachers owed P123 billion worth of loans to the GSIS. Another P178 billion was also reported to be owed by teachers to the PLIs.

Burdened with paying the monthly interest and amortization of principal, a teacher would be lucky if he or she is left with 5,000 pesos a month. In fact, some are left with almost nothing at all.

How can a teacher live in that condition after considering that many of them also have children in school? It is hard to imagine what life a teacher has with such a burden especially that almost all of them are also forced by circumstances to provide many of the teaching materials on their own given the inadequacy of government support for the teacher’s need in the classroom.

To help the teacher, DepEd now implements a policy that no further deduction is allowed to pay for teacher’s loan once the minimum amount of five thousand pesos is left in monthly take home pay. As contained in DepEd Order No. 05, S. 2018, this policy also set out the revised order of preference in the Automatic Payroll Deduction System (APDS) where the payment of obligations to the GSIS, PhilHealth, HDMF and BIR shall be accorded first while the obligations to the private lending institutions (PLIs) was set to the last priority. In the old system repayment is queued on a first in-first served basis.

Naturally, the PLIs are up in arms. They say that it is unfair to them who had been there to help the teachers in time of their needs. They claimed that aside from lack of justification as to why loans from the government should be prioritized among others, the order of preference in the APDS discounts the contribution of banks in making the lending arena for teachers more competitive. They claimed that their participation of banks in the APDS has significantly lowered the cost of salary loans and have provided teachers with more credit options to send their children to school, renovate their houses, and have funds in case of emergencies.

Such is the good intention of the government colliding with the honest interest of the private sector. What is to blame? The financial illiteracy of teachers or their poverty? Which should prevail? The welfare of the poor teachers or the natural workings of the market systems which allows those with capital to earn more from their investments?