Freedom of choice

It appears that public school teachers still prefer borrowing funds from public lending institutions (PLIs).

The Department of Education recently entered into a memorandum of agreement with the Government Service Insurance System (GSIS) whereby the latter would provide as much as P500,000 to buy out their loans from PLIs. This is to assist teachers in managing their debts.

But GSIS president and general manager Jesus Aranas reported that only 3,200 of the 800,000 public school teachers or only 0.04 percent who are GSIS members availed of the financial assistance loan.

Why is the DepEd, or the government for that matter, discouraging teachers and other DepEd employees from borrowing from PLIs, in particular thrift and rural banks, when it is obvious that the borrowers prefer PLIs?

In a democratic society, the government should uphold freedom of choice among its citizens especially in private matters. It is for the best of public interest to ensure that our liberties will not be suppressed by the State.

In other words, the government should not involve itself in micromanaging personal affairs of its citizens, especially in finances.

When the Department of Education issued DepEd Order No. 5 s. of 2018 to make sure of government’s policy of a minimum take home pay of public school teachers of P5,000, many thought the agency deserved an applause.

But later on, it became obvious that the order just dictated how teachers’ salaries would be deducted and to which should it be first allocated – a clear infringement of teachers’ right to organize their personal finances. Some regulations may be necessary, but micromanaging a private affair is not the business of government.

Item No. 3 of DepEd Order No. 5 directs the Automatic Payroll Deduction System (APDS) to prioritize the GSIS in loan payments, even if teachers and employees have prior loans from PLIs.

This provision is undemocratic as it forces teachers to pay their debt, through the APDS, to a specific agency rather than to one of their own choice.

Under Republic Act 10964 or the General Appropriations Act for 2018, it was provided that deductions from salaries and other benefits accruing to any government employee may be allowed for the payment of employee contributions or obligations subject to a specific order of preference.

Loans or contributions to the BIR, Philhealth, GSIS, and HDMF are first, followed by those owed to non-stock savings and loan associations and mutual benefit associations managed by and/or for the benefit of government employees. Third on the list are those to associations or provident funds organized and managed by government employees for their benefit and welfare; fourth, government financial institutions; fifth, licensed insurance companies; and lastly, loans to thrift banks and rural banks.

The same law also provides that in no case shall the deductions reduce the employee’s monthly net take home pay to an amount lower than P5,000.

To implement this, the Department of Education issued Department Order no. 5 (2018) which reiterated that the net take home pay (NTHP) threshold is mandatory so that any financial obligation incurred by any DepEd personnel shall not be deducted from his monthly salary if such deduction will lower his NTHP beyond the P5,000 threshold.

Except for the first category (BIR, etc.), the DepEd order said that “first-in, first-served” system, which is based on the date of receipt of the authority to deduct, shall be applied to contributions and obligations within each category.

Many teachers choose to borrow from PLIs because of their relatively lower interest rates compared to other financial institutions. Lest we forget, banks are subject to stringent regulations and guidelines from the Bangko Sentral ng Pilipinas (BSP) which requires them to uphold the highest standards in the lending business.

In a free market economy, the more players, the better. If there are more lenders, then interest rates will go down as these lenders compete for customers.

DepEd should not push our teachers against the wall. It should have, at least, consulted public school teachers as a matter of democratic responsibility before issuing this policy. Shouldn’t DepEd Secretary Leonor Briones walk the talk since she has been passionately advocating for citizen participation in governance.

It is the right and duty of Congress to inquire into the financial situation of public school teachers. Teachers should be trusted to make sound financial choices.

Government has also been encouraging the growth of thrift and rural banks to spur countryside or rural development. But this DepEd policy is forcing PLIs to stop lending to public school teachers and DepEd employees because there is no assurance that they will be paid.

For comments, e-mail at [email protected]