Based on the data provided by the Department of Education (DepEd), public school teachers had an aggregate outstanding loan of P319 billion. There was an increase of P18 billion from a total debt of P301 billion two years ago.
The total loan obligations of public school teachers consist of P157.4 billion due to the Government Service Insurance System (GSIS) as of May 29 and P162 billion in debt to accredited private lenders as of June 6. The aggregate amount could be higher since it does not include loans from unaccredited lenders known as the “loan sharks” who took advantage of the teachers’ need to cover huge expenses like rent and tuition fees of their children.
These loan sharks make it easy for the teachers to acquire loans. They require less documentation but collect high interest (usually “5-6” or 20 percent) and get collaterals like their ATM cards to ensure payment.
The government implemented programs to make the payment scheme bearable to public school teachers. They come up with a project named GFAL or GSIS Financial Assistance Loan in May 2018.
The program aimed to consolidate and transfer the loan of the teachers from accredited private lenders to GSIS. They can loan up to a maximum of P500,000.00 from the state pension fund. Said loan will be payable in 6 years at a low interest rate of 6 percent computed per annum to be deducted monthly from the teachers’ salary. If the teachers want all their loans to be consolidated (except for emergency and policy loans), the term of payment is up to 10 years.
Under the program, the GSIS released approximately P13 billion to 36,692 teachers last January.
Public school teachers at entry level had a gross monthly salary of P20,574.00 but they only took home as low as P5,000.00 because of the loan and premium deductions. Also, teachers who retire with an outstanding loan use their retirement benefits to pay off their obligations. They ended up with nothing on their hands.
According to Rep. France Castro of the Alliance of Concerned Teachers (ACT), out of 800,000 public school teachers, 75 percent were in debt. The only and best solution is to increase the base pay to P30,000.00 for teachers at entry level which comprises half of the population of public school teachers.