Thread: Easy loans for teachers more a bane than blessing?

Hundreds of thousands of teachers in Thailand, both working and retired, are suffering under severe debt. At the last count, some 900,000 teachers had incurred a total of 1.4 trillion baht in loans.


The Office of Basic Education Commission (Obec) reports that 2,864 current and retired teachers under its wing have been prosecuted for defaulting on loan payments. Over 100,000 other teachers, including retirees, are spending more than 70% of their monthly salary on repaying loans.


The director of a small state-run school confirmed the scale of the problem, saying she had witnesses for herself how at least one third of her teaching staff were struggling to make ends meet.


“Not only do they owe money to teachers’ savings cooperatives, banks or credit-card companies, they have also borrowed from loan sharks,” she said, speaking on condition of anonymity to protect her school.


The director added that while most teachers take loans to purchase a car, a house or support their families, many young teachers found themselves overwhelmed with debt just from shopping and keeping up with trends.


“Some probably won’t be able to clear their debts before they retire,” she said.


Easy loans to blame?


Authorities have been trying to solve the problem of teachers’ debt for decades. However, their efforts have barely made a dent in the crisis. Also, few teachers can resist relying on loans to make ends meet, simply because it is fairly easy for government teachers to borrow money.


Teachers’ savings cooperatives have so far granted loans worth a total of 890 billion baht. The average rate of interest on repayments is 5.64%. The Government Savings Bank has also approved 349 billion baht in loans to teachers, at an average interest rate of 6.9%. Another major creditor is the Government Housing Bank, which has granted 61 billion baht in loans to teachers at an average rate of 6.4%.


Though there are no official figures available, it is widely believed that loan sharks have also lent huge sums to teachers – and at much higher interest rates.


“Being a civil servant means it is easy for you to get a loan. But for teachers, it is even easier. You can apply for a loan at a teachers’ savings cooperative today and get an approval as well as the money in less than seven days,” a government teacher said.


He has worked as a state-school teacher for nine years and recently borrowed money to purchase a car because he landed a job in a province. Without a vehicle of his own, it would have been tough for him to get around. Also, he refused to live in the dilapidated accommodation that came rent-free with his new job.


Instead, he decided to commute more than 30 kilometers between his school and accommodation he had rented in the nearest town. So, he decided to seek a loan of 400,000 baht from a teachers’ savings cooperative to buy a car.


“Then, I borrowed more money to renovate my parents’ home,” he said.


Identifying himself only as Nid, he said he now had less than 10,000 baht to spend each month because creditors automatically deducted repayments from his salary.


“It is not easy to survive with such little money. Some months, I’ve had to borrow from credit cards. Then when the credit card debt grew too big to handle, I had to borrow from the cooperative again,” Nid lamented.


He said he borrowed more money to cover the cost of his wedding ceremony and reception. Nid and his wife, who is also a government teacher, now have debts of about 4 million baht.


“We think we will be paying them off until we retire,” he said. “However, if the government can lower the interest we are being charged, then life will become a bit easier for us.”


What do indebted teachers want?


Lower interest rates was the most popular answer in a recent survey that asked indebted teachers how their debt problems could be solved, according to an Education Ministry official overseeing debt-restructuring.


“They want the rate of interest to be reduced to a few percent,” the official said. “If the interest was cut, they would have more money for their daily expenses and could avoid incurring more high-interest loans.”


Some teachers were so deep in debt that practically all their salary went towards repayments, the official said.


“Under current regulations, deductions [for repayments] should not exceed 70% of their salary. However, many teachers also have to pay back loan sharks, she said, adding that the debt crisis among teachers is a difficult problem to solve.


Solutions proposed


Dr Kajorn Thanapase, director of the Financial Consumer Protection and Market Conduct Department, Bank of Thailand, and a member of the Education Ministry committee tasked with solving education personnel’s debt problems, reckons solutions are at hand. For instance, he said, interest rates could be reduced because state teachers can offer solid guarantees of repayment.


“Given that creditors can deduct their salaries directly, and the rate of non-performing loans among teachers is as low as 1%, creditors’ risks are very low. Therefore, the interest rate should be no more than 3%,” he said.


He added that teachers’ savings cooperatives should also stop focusing on generating high returns for their members, because they were established to provide teachers with access to soft loans.


Meanwhile, repayments should be capped at 70% of the indebted teacher’s salary, so they can manage their finances without needing to take out more loans.


“Every time an installment is paid, the principal should be lowered,” Kajorn added.


Currently, when a debtor defaults, the resulting penalty plus the instalment with interest leaves the principal debt amount untouched. That’s why some teachers cannot clear their debts even though they work hard all the way up to retirement.


“We may also have to let teachers clear their debts with their mandatory retirement savings. If their debts ease, the prospects for their retirement will improve anyway, as they will be able to avoid paying huge amounts in interest,” Kajorn said.


He added that laws should also be amended to ensure that teachers can keep their jobs even if they go bankrupt.


“As their employer, the Education Ministry should speak up and help these teachers,” Kajorn said. “The ministry needs to ensure that creditors do not treat indebted teachers unfairly.”


However, Kajorn also emphasized that teachers should avoid borrowing just so they can buy the latest gadgets or fashions, which is thought to be a factor in some teachers’ debt problems.

Easy loans for teachers more a bane than blessing? | Thai PBS World : The latest Thai news in English, News Headlines, World News and News Broadcasts in both Thai and English. We bring Thailand to the world

certainly a bane. the problem with education worldwide is that teachers are indispensable, but the salaries are not commensurate to how much they are needed. the teachers mentioned in this post are government school teachers. my wife works for an international school and there is no way she can get a loan.

There's a teacher near here that has 5 credit cards maxed out and can only ever pay off the interest every month for the rest of her career.

Also know of a non-teacher that earns 13,000 per month and was granted a no money down 30 year mortgage of 9,600 per month on a property for sale at 1.7 mill.

In general I find that Thais, irrespective of job, are useless at managing money. I'm sure they firmly believe they don't have to pay loans back. I've been caught out a couple of times as I'm sure many other farangs have been also. The first thing I was told by a S African 18 years ago was 'never lend Thais money you won't get it back'. I thought I knew better. I'm surprised Thais loan out money knowing how they are.

Living within your means would be a good start.

Originally Posted by Pragmatic

In general I find that Thais, irrespective of job, are useless at managing money. I'm sure they firmly believe they don't have to pay loans back. I've been caught out a couple of times as I'm sure many other farangs have been also. The first thing I was told by a S African 18 years ago was 'never lend Thais money you won't get it back'. I thought I knew better. I'm surprised Thais loan out money knowing how they are.

Thai are pretty much the dumbest in the region and easy pickings for the Thai-Chinese cartels that own and run the country.

The financial institutions never lose. The debtor defaults and the asset upon which the credit agreement is based is seized and recycled into a new agreement. The debtors can never evade payment for the outstanding arrears, and their whereabouts are traceable until death.
The Thai simply cannot grasp that they are placing themselves into an economic prison from which there is no parole, they have this puerile belief their luck will change and their pitiful lives will be worth something which explains their gambling and lottery addictions.
If there is another major global shock and trade contracts leading to recessions then their economy will be truly screwed which is quite good for those of us on non Thai Baht denominated incomes.

Originally Posted by Pragmatic

In general I find that Thais, irrespective of job, are useless at managing money.

There's a theory why South-East Asians having such a lack of foresight compared to Westerners (generally speaking).


For centuries westerners would need to plan and act for the winter, planning food and food storage etc etc, as failure to do so would mean them and their families dying.

Hence cultures and societies that and have developed acute foresight and plan accordingly.


In other regions, no foresight or planning was ever needed, just go to a tree and pick its fruit. Hence cultures and societies that place no emphasis on foresight and planning for the future.

Originally Posted by Edmond

Hence cultures and societies that place no emphasis on foresight and planning for the future.

Hence khvntzs and socks that place no emphasis on foreskin and screwing shelve their furniture

TFIFY

From what I can gather..here in the West it's the students that are in dept if your not on a scholarship and you want to go to uni. and your folks aren't rolling in cash then you get a hecs loan to finish your study. I don't know how long they are given to pay it back? Im hoping my oldest son wants to go to uni. He s switched on. I'm.100% behind supporting him.and I probably can pay his fees for a couple of years before my savings run out. I'm not on the fat bucks anymore but I dont/ can't work in weird places that pay the fat bucks anymore. I would like to go out and buy a Harley with the savings I have
But no. That shits on the Blackburn's. Covid , and my wife's health problems have taught me to expect the unexpected
But if the boy ends up in in uni. I will bust my ass to help him
.

Originally Posted by Edmond

There's a theory why South-East Asians having such a lack of foresight compared to Westerners (generally speaking).


For centuries westerners would need to plan and act for the winter, planning food and food storage etc etc, as failure to do so would mean them and their families dying.

Hence cultures and societies that and have developed acute foresight and plan accordingly.


In other regions, no foresight or planning was ever needed, just go to a tree and pick its fruit. Hence cultures and societies that place no emphasis on foresight and planning for the future.

That's definitely interesting. I used to think.there lack of planning etc was quite charming . Then later on it became frustrating but i couldn't change it. Just how it was. Still is. Sometimes I wonder who is right and who is wrong? I've never seen a lao person stressed out. But I've seen plenty of westerners blow a fuse over fuck all

Helges pretty old? Maybe he can elaborate on the hunter gatherer thing? Before they have supermarkets ? brutal winters might be a factor?

Originally Posted by BLD

Sometimes I wonder who is right and who is wrong?

Read your post.

Originally Posted by BLD

Helges pretty old? Maybe he can elaborate on the hunter gatherer thing? Before they have supermarkets ? brutal winters might be a factor?

HI, BLD

"He said he borrowed more money to cover the cost of his wedding ceremony and reception. Nid and his wife, who is also a government teacher, now have debts of about 4 million baht."

Holy fuck. They are never going to get out from under that.

^Can individuals file for bankruptcy here? Is it a thing?

Originally Posted by misskit

^Can individuals file for bankruptcy here? Is it a thing?

In the 4mil debt above, yes bankruptcy can be declared.
Any debt below 2 mil, bankruptcy cannot be declared.

Originally Posted by BLD

From what I can gather..here in the West it's the students that are in dept if your not on a scholarship and you want to go to uni. and your folks aren't rolling in cash then you get a hecs loan to finish your study. I don't know how long they are given to pay it back? Im hoping my oldest son wants to go to uni. He s switched on. I'm.100% behind supporting him.and I probably can pay his fees for a couple of years before my savings run out. I'm not on the fat bucks anymore but I dont/ can't work in weird places that pay the fat bucks anymore. I would like to go out and buy a Harley with the savings I have
But no. That shits on the Blackburn's. Covid , and my wife's health problems have taught me to expect the unexpected
But if the boy ends up in in uni. I will bust my ass to help him
.

Mate, the HECS thing is an amazing and generous scheme that yanks and poms can only dream about. In a nutshell the government pays 75% of the cost of every course to all Australian citizens (no residency requirement like the UK) then the students are asked to pay the remaining 25% as a HECS debt, what this means is they pay nothing up front to attend uni. This HECS debt only needs to be repaid when they are earning a full salary above a certain minimum. Maybe $35k/$40k per year? And they only have to pay a small percentage of their earnings, not the debt, eg: 3%.

There is no time limit. If they are not earning they don’t have to pay. If the move overseas they don’t have to pay.

How the fuck are 900,000 school teachers in 15.5 million baht debt each ?

Originally Posted by DrWilly

Mate, the HECS thing is an amazing and generous scheme that yanks and poms can only dream about. In a nutshell the government pays 75% of the cost of every course to all Australian citizens (no residency requirement like the UK) then the students are asked to pay the remaining 25% as a HECS debt, what this means is they pay nothing up front to attend uni. This HECS debt only needs to be repaid when they are earning a full salary above a certain minimum. Maybe $35k/$40k per year? And they only have to pay a small percentage of their earnings, not the debt, eg: 3%.

There is no time limit. If they are not earning they don’t have to pay. If the move overseas they don’t have to pay.

Well that's something I wasn't aware of. And great news.

Originally Posted by BLD

Well that's something I wasn't aware of. And great news.

https://www.studyassist.gov.au/help-loans/hecs-help

Originally Posted by Fondles

How the fuck are 900,000 school teachers in 15.5 million baht debt each ?

Had to pay 10 million to get the job, then charge the students to pass?

Originally Posted by Edmond

Had to pay 10 million to get the job, then charge the students to pass?

But 900,000 ?

Originally Posted by BLD

Well that's something I wasn't aware of. And great news.

Yep, it’s a good system. That’s why I advised Mendy to consider Australia for his daughter’s uni. Beats the UK options hands down.