Manila, Philippines -- Bagong Henerasyon Party-list Rep. Robert Nazal called on the Department of Education (DepEd) to ensure no teacher ends up saddled with huge financial debt as a result of the extension of the salary loan repayment period from five to seven years.

During the hearing on the proposed 2027 budget of the DepEd, Nazal sought clarification about the legal basis for the DepEd’s decision to extend the loan repayment term under the Automatic Payroll Deduction System (APDS).

“DepEd now accommodates APDS loans up to seven years. But the Magna Carta prohibits salary deductions except under authority of law, while the GAA authority for authorized deductions is enacted annually. What is DepEd’s specific legal basis for accommodating automatic payroll deductions for seven years?” Nazal said.

But more than the legal issue, Nazal said the problem of teachers with multiple salary loans is that almost none of them are receiving their salaries anymore because of debt.

“The problem of teachers who have multiple loans in their ATMs is also documented. And almost no one is able to get a salary due to debt,” Nazal said.

Before extending the loan repayment period to seven years, Nazal asked DepEd if this will actually help the teachers or if it will just result in the educators being in debt for longer periods.

Education Secretary Sonny Angara clarified that the move of the DepEd was the result of the clamor of teachers for a longer repayment period with lower interest.

“Because many of our teachers stay in the Department for a long time, and they're willing to have these longer loans. So it's a good thing that the BSP (Bangko Sentral ng Pilipinas) agreed. So now we are enforcing, or it's just an option,” Angara said.

There's no compulsion on the part of the teacher to enter into a seven-year loan. It's an option that they, it's like an item on a menu, they can order it if they wish. If they don't wish to engage in a seven, or to incur a seven-year obligation, there is no compulsion on them to incur it,” he added.

Angara also noted that the new scheme is still compliant with the GAA provision, which requires that the P5,000 net take-home pay of the teacher cannot be touched by financial institutions.

Nazal said that teachers should sign an agreement indicating that they agree to the seven-year repayment period, if it is voluntary on their part.

“Yes, it’s purely voluntary on their part,” Angara replied.

Nazal also raised the concerns of some teachers who are paying interest of 3.5 percent per month or roughly 42 percent annually.

He said the DepEd should find out if these reports are accurate and work with the BSP to determine which institutions are engaged in this unscrupulous business practice.

Angara said the interest rate ceiling is only at 9.5 percent per annum so what was cited by the complainants were most likely “colorum or not accredited.”

“They're probably not accredited institutions of the BSP. Those are loan sharks,” Angara said.

Nazal urged DepEd to always be on the lookout for these loan sharks who prey on teachers who do not earn much and have to resort to loans to make ends meet.