DOF wants Landbank, GSIS to refinance teacher’s loans

Finance Secretary Carlos Dominguez III called on the Land Bank of the Philippines and the Government Service Insurance System (GSIS) to come up with a loan restructuring scheme to assist "debt-saddled" teachers to pay off their loans and provide them with lower borrowing rates.

The Department of Finance (DOF) learned in an executive meeting that the Department of Education (DepEd) has a high default rate of almost 40 percent on its GSIS loans, according to a statement released on Thursday.

The rate was said to stem from loans incurred by public school teachers who are unable to pay the GSIS back due to their other financial obligations to primary lending institutions (PLIs) who charge them with high interest rates.

Wanting to "rock the boat," Dominguez urged the LandBank and GSIS to "aggressively" compete with PLIs by offering lower borrowing rates.

The finance secretary said the easy-to-pay, low-interest scheme would provide teachers and DepEd personnel with lowered interest rates on their existing loans and allow them to set aside funds for their retirement.

“The teachers pay less, [the government financial institutions (GFIs)] earn more than leaving (their money) in government securities, and the funds that teachers earn anyway goes back to them as their retirement fund,” Dominguez said.

Dominguez reportedly told officials of the government-owned lenders present at the meeting to maximize lending to teachers.

“We have this demand (for loans) and we are not meeting them even if we can, and others are taking advantage and charging more," he said.

In response, GSIS acting president and general manager Nora Saludares said they were already drawing up a “financial assistance” package to refinance the DepEd employees' loans to PLIs.

Saludares reportedly said it was done in accordance to a DepEd directive which prioritizes GSIS premiums and loan obligations in salary deductions of teachers and other DepEd employees.

Moreover, Dominguez said he would formally ask the DepEd to ensure that the GSIS, as well as other government financial institutions who offer lower interests than privately-owned lenders, are prioritized in the queuing of loan payments.

“The queue should be determined by how much one charges (in terms of interest rates),” the finance secretary said. — Margaret Claire Layug/MDM, GMA News