Teachers warned on loans owed
Govt says defaulters may face axe, ruin
Teachers who are threatening to stop repaying their loans in protest at high interest rates have found little sympathy from the government, which has warned they risk being declared bankrupt and dismissed from service.
Education Minister Teerakiat Jareonsettasin said yesterday the move was being led by one group and most teachers would likely not support the idea.
Leaders of a network of professional teachers’ organisations met in Maha Sarakham in Isan on Saturday and said their 450,000 members planned to stop paying off their debts to the state-owned Government Savings Bank (GSB) starting from next month.
Dr Teerakiat said the move would not affect an agreement reached with the GSB in May to solve teachers’ debt problems. The deal took effect in June and most teachers were satisfied with the solutions reached, he claimed.
He was referring to the GSB’s loan programme for members of teachers’ funeral funds.
The loans allow teachers to repay debts to other financial institutions or informal creditors, buy houses, vehicles or shares, start a business, or pay for other key transactions.
The borrowers under the programme currently owe more than 418 billion baht.
Many debtors have failed to pay more than three consecutive i nstalments, prompting the Education Ministry to sign the agreement with the GSB on May 7 to resolve the issue.
The deal amended some of the conditions attached. Instead of the GSB giving financial support to the Office of the Welfare Promotion Commission for Teachers and Educational Personnel, the bank has effectively reduced the interest rates by offering a refund of 0.5-1% to “good” debtors, who make up 90% of the total, from last month.
Deputy permanent secretary for justice Tawatchai Thaikyo warned yesterday that those teachers who plan to default risk bankruptcy and disqualification from government service.
“Be prepared to go bankrupt if you owe more than 1 million baht,” he said.
“If teachers and other educational personnel are declared by a court to be bankrupt, they will be disqualified from government service,” Mr Tawatchai said.
The latter could also cause their guarantors to become bankrupt, which would see them prohibited from ventured overseas, Mr Tawatchai said.
Ouaychai Wata, head of the professional teachers network, said after the meeting that the GSB was raising interest rates to astronomical levels.
Moreover, borrowers were being forced to buy life insurance from the bank, he added.
Each debtor was allowed to borrow up to 3 million baht, with their repayments spread over a maximum of 30 years.
The teachers’ network demanded the government approve a six-month moratorium on repayments starting Oct 1, to be followed by an interest rate cut to just 1%. Teachers now pay interest rates of between 5-7% on loans.
Mr Ouaychai said the declaration was a symbolic gesture by teachers who have collectively taken out over 300 billion baht in loans from the bank.
He said it was unfair to blame their indebtedness on an inability to service their debts and pointed the finger at the way the interest was calculated.
For the last seven years he paid monthly instalments in excess of 7,000 baht to repay a 1.2-million-baht loan, he said.
Video footage of the group demanding a moratorium on their debt repayments that was released went viral and drew much criticism on social media on Monday.
Many said it was inappropriate for teachers, who are regarded as role models for the nation’s youth, to resort to such action.
“When you owe someone a debt, you have to repay it. How can you think of defaulting yet still call yourselves role models for the country?” read one comment posted by a netizen on Mr Ouaychai’s Facebook page.
Prime Minister Prayut Chan-o-cha said yesterday the Education Ministry has discussed the issue with the GSB, which agreed to lower the rates.
“Most teachers are repaying their debts well and disagree with the move to default,” he said.
“Do not let the issue get out of hand,” he implored. “All parties must show understanding.”
In the aftermath of the 1997 Asian financial crisis, a well-known businessman who went bankrupt as a result of the abrupt baht devaluation gave a blunt message to his creditors: “no money, no fleeing, and no paying”.
This week a group of people in debt made a similar statement, though without justification. Surprisingly, they are teachers.
A video clip featuring a group of teachers gathered at Maha Sarakham Rajabhat University and declaring their intention to stop repaying their debts to the Government Savings Bank (GSB) went viral on Monday. The group, led by Ouaychai Wata, president of the Teachers’ Organisation Network, said they would stop their repayments on Aug 1.
The group claims it represents some 450,000 teachers who took out loans amounting to more than 400 billion baht from the GSB. The loans were dished out under a collaborative project between the Education Ministry and the bank, initiated 14 years ago to resolve informal debts worth several billion baht racked up by teachers across the country.
They claim that the debt repayment structure and interest payments are unfair and the terms of repayment were not clearly mentioned in the loan agreements. They also claim teachers’ indebtedness is not caused by their inability to service their debts alone, but also stems from the debt structure and interest rate calculation.
As a result, they are calling for a sixmonth suspension of their repayments followed by an interest rate cut to 1% — the same rate the bank offers to farmers under a subsidy scheme.
The group also raised the issue with Tuang Inthachai, chairman of the education and sports committee under the National Legislative Assembly.
However, this is a group of people who are supposed to be setting a good example, teaching young people discipline and good manners. Their actions appear quite the contrary of this.
What they are doing is attempting to avoid repaying loans they have taken out.
The principle is: Anyone who borrows has a commitment to pay it back.
These teachers claim they should be “fairly treated” in the same way as farmers who benefit from subsidies. This is unacceptable.
Farmers get subsidies because they might suffer declining agricultural
product prices or disasters that are beyond their control. But these teachers are indebted because they borrowed from loan sharks for their own purposes.
In addition, farmers do not have a fixed salary from the state, but teachers do.
The refinancing programme offered by the GSB to help teachers escape the clutches of loan sharks is one of the best offers the bank has ever given. Under the programme, teachers had their repayment period extended to 30 years at an interest rate of 5.5-6%. That is a very low rate considering that these loans have no collateral.
Other state officials do not receive this kind of financial support, not to mention the general public.
Moreover, the teachers should have known the terms of their loan deals before they agreed to them.
The problem is that teachers never stop borrowing. They may settle one
debt after being supported by a state programme but they often take more loans from other sources and their debt accumulates. A number of refinancing programmes have been introduced to help teachers but the problem seems never-ending.
Tackling this problem is a major challenge.
I have no idea how and why teachers
spend beyond their means. Have they no financial management plans? Or do they just want to get rich quickly by taking out loans for investments which go bad? Or are they addicted to gambling, or investing in shares and betting on illegal lotteries?
What I do know is that many teachers in Thailand spend a lot of money polishing their social status.
For example, if one teacher in a community buys a car, others will buy cars that are more expensive. This attitude also applies to other items.
Such debt problems are also likely to affect the quality of their teaching.
Some teachers have failed to meet their teaching time commitments as they have had to go and settle their debt problems while others have cancelled classes in a bid to avoid their creditors.
If teachers themselves do not understand the sufficiency economy theory, how can they teach it to their students?
Nevertheless, I hope the group of teachers who want to halt their debt repayments represent just a minority and that the majority of their profession do not agree with them.
If not, what hope is there for the future of our country’s education system?
These teachers are indebted because they borrowed from loan sharks for their own purposes.