House probe sought on lenders imposing excessive interest rates on loans to public school teachers

House probe sought on lenders imposing excessive interest rates on loans to public school teachers

The chairman of the House committee on Metro Manila development is seeking a congressional probe on lending companies and individuals imposing excessive interest rates on loans to public school teachers.

Citing the report of the Department of Education (DepEd), Quezon City Rep. Winston Castelo expressed concern that as of 2016, the accumulated debt of public school teachers in the country has reached a staggering P300 billion.

“According to the DepEd, the teachers have incurred P178 billion in loans from private lending institutions and P123 billion in credit from the Government Service Insurance System (GSIS),” he said.

Quoting the Securities and Exchange Commission (SEC), he said public school teachers are common victims of lending companies or individuals imposing excessive interest rates, such as those implementing 5-6 lending scheme.

A 5-6 lending scheme implies an annual simple interest rate of 20 percent.

“Because of low salaries, public school teachers often resort to 5-6 loans, in order to meet their basic needs and the needs of their families. This is an oppressive scheme, and because of the high interest rates, incapacitates them to pay off their debts,” Castelo said.

He noted that one of the campaign promises was a clampdown on the 5-6 lending scheme.

“Public school teachers are providing true public service and serving the country, unselfishly, despite the small pay they are receiving. They are critical players in nation-building,” Castelo said.

“We need to provide teachers with protection from companies and individuals who are victimizing them into taking out loans with exorbitant interest rates. Thus, there should be an investigation in order to put a stop to these schemes and protect teachers,” he said.

Manila Bulletin

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