021 Financial Wellness for Public School Teachers
There has been much ado about the financial woes of the average Filipino public school teacher. We’ve all heard tales about the dire circumstances a lot of teachers have faced over the years—heavily in debt, with no end in sight. And this has been the case for so many generations of teachers now, even today, even when they’ve received so many salary increases (In fact, in general, Filipino public school teachers are now paid more than their counterparts in the private schools).
It’s therefore not surprising that some camps have argued against the education department’s Automatic Payroll Deduction System for teachers loans. At first glance, the argument seems valid—you take away access to these loans, teachers will no longer be in debt. Sadly, this argument has several flaws.
First, it doesn’t solve the debt problem since teachers will still borrow from other sources, including loan sharks offering absurd interest rates, should the government-sanctioned loans be removed (And because of these cut throat interest rates, they’d probably have more debts).
Second, it doesn’t recognize the obvious benefits these teachers loans provide the public school teacher.
I’ve seen this first hand in my former life as a board member of City Savings Bank. There I’ve encountered stories upon stories of how the bank had helped Filipino public school teachers in their time of need. There’s this time when one bank official personally delivered cash to a teacher—at the hospital—because she needed the money for emergency surgery. There’s this story of a teacher, now retired, who managed to pay for her four children’s college education through loans from City Savings (If I’m not mistaken, one is a lawyer now, the three others are doctors). In short, these loans are there for a purpose—to help teachers.
What’s not discussed often is the fact that the teachers’ borrowing culture is rooted on the lack of financial inclusivity in the country. That because the average Filipino has virtually no access to low interest loans, a lot of them rely on the only relative who has access—yes, the son, daughter, brother, sister or even distant cousin who is a public school teacher (Sadly, in many instances, these loans are never paid back by these relatives).
I’ve heard of a particular case wherein the teacher would borrow for the tuition of her children—and college tuition of her younger siblings. Surely, that’s not sustainable. Surely, that’s more common than this one instance.
There are two things that must be done to improve the situation—
First, there has to be more financial inclusion in the country. This, of course, is easier said than done. But to government’s credit, it has long recognized this need and has been working with the private sector—banks and fintechs—to make it happen.
Then we need to educate the Filipino teacher to make him more literate on the issue of financial wellness. Thankfully, there have been efforts to do that. I know City Savings has its PeraPerasyon program and BDO also offers financial management training for public school teachers (We offer lessons on financial wellness in the Educator Empowerment Program, as part of our curriculum for teacher welfare).
Loans are not inherently bad. Low interest collateral-free loans—like APDS loans—are great! Teachers just need to learn how to borrow wisely and manage their finances better.