Early this month, ABS-CBN News featured an exclusive interview of some teachers who fell victim to the incompetence of some personnel of either the GSIS or the Department of Education, depending on which side we are to believe.
According to the news, some teachers were shocked to discover that the loans they obtained from GSIS had since doubled due to the failure of the government insurance company to collect their monthly amortization from their salaries.
The GSIS, however, pointed to the DepEd, blaming the agency for its failure to automatically deduct the monthly amortization from the teachers as authorized by law.
Be that as it may, whoever should be faulted, one teacher’s loan of P170,000 has doubled to P340,000 due to the incompetence and negligence of either agencies.
Unfortunately, this is not the only problems that our teachers face today. As fellow columnist Gary Olivar pointed out, with teachers, sadly lacking in the fundamentals of financial literacy, have become one of the primary targets of lending institutions, taking out loans left and right, from wherever they can. And this has been exploited by large banking institutions.
While the law provides that only thrift and rural banks be accredited by the DepEd for purposes of extending loans to teachers, giant banking institutions have managed to penetrate the teachers’ market by acquiring small thrift and rural banks, in the process, flooding the teachers’ with an abyss of funds for them to avail themselves of. Legitimate thrift and rural banks have no capacity to compete with this.
Unfortunately, DepEd has accorded these thrift banks backed by giant commercial banks the necessary accreditation.
But of course, even with their vast resources, these titans of the banking institutions face risks in extending loans to the teachers, courtesy of DepEd Circular No. 5.
DepEd Circular No. 5 defines the order of payment or deduction from a teacher’s payslip, identifying the banking institutions as the least priority. And to top it all, DepEd Circular No. 5 ensures provides that in no case shall these deductions reduce the employee’s monthly net take home pay (NTHP) to an amount lower than P5,000.
If a teacher receives a monthly salary of P20,000, she is bound to receive a net take-home pay of P15,000 after taxes, Philhealth, GSIS and HDMF contributions being first on the list of allowable deductions, are deducted.
Now, if the same teacher has borrowed money from a non-stock savings and loan association or SLA and the monthly amortization is P5,000 and said SLA has secured an authority to deduct, her salary is reduced further to P10,000.
And if that same teacher secured a loan from Land Bank and the monthly amortization is P4,000, that would leave her with only P6,000. But if this teacher got another loan from a private thrift bank and she has to pay P3,000 every month for the loan, the private thrift bank does not get paid. It is because the NTHP threshold is P5,000.
In other words, DepEd Circular No. 5 is designed to protect the teachers from their utter lack of financial literacy as they fall prey to the numerous lending institutions. It ensures teachers would have at least P5,000 left in their pockets after all those deductions.
Unfortunately, as the giant commercial banks have found ways to run around the law in seeking accreditation from the DepEd for the thrift banks acting as their front, they could also have found way to run around DepEd Circular No. 5.
According to bank insiders, Unionbank is reportedly on the brink of reaching an agreement with the GSIS, allowing the latter to intervene and refinance the teachers’ loans. Reportedly, GSIS will assume all the teachers’ loans extended to them by Unionbank. With GSIS now serving as the teachers’ creditors, the loans could now be paid as GSIS happens to be among the top priorities when it comes to deductions from the teachers’ salaries, thereby defeating the purpose of DepEd Circular No. 5.
This is not to say that teachers should be encouraged to renege on their loans particularly those extended by private thrift banks, be the legitimate ones or those fronting for large commercial banks.
Rather, as Olivar says, it would be prudent if DepEd (and the GSIS for that matter) would help in re-educating the teachers in matters of financial literacy, and help them avoid falling prey to the numerous lending institutions hounding them.
And as the country celebrates this month of September in their honor, no more propitious reward can be given these teachers other than according them such opportunity.
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Thanks for the heads up. Dear friend Faith Bacon called my attention to my last column to straighten up some information which I had missed. First, she said the Lopezes had divested of their interests in Maynilad since 2007. And albeit delayed, the Lopezes had also been addressing the West Tower pipeline leak.
My sincere apologies.