SHAH ALAM, Jan 24 — Weak financial literacy among some teachers has been identified as a key factor that can lead to debt problems, putting them at risk of bankruptcy, said National Union of the Teaching Profession (NUTP) secretary-general Fouzi Singon.

He said the situation is further worsened by a loan approval system considered too lax, which allows teachers to take on additional loans even when their financial commitments have already exceeded safe limits.

“Although salary deductions through Angkatan Koperasi Kebangsaan Malaysia Berhad (Angkasa) are capped at a maximum of 60 per cent of monthly income, there are financial institutions that allow loans to be taken outside the system through direct deductions from bank accounts.

“This situation gives room for teachers to take on additional loans even though their actual capacity has already exceeded safe limits, thereby increasing the risk of multiple debts and long-term financial problems,” he told Bernama.

In this regard, Fouzi suggested that heads of departments or human resources divisions play a more active role in monitoring the financial position of educators before giving any form of endorsement, to prevent them from becoming involved in hidden loans that do not appear on salary slips.

Data from the Malaysian Insolvency Department (MDI) revealed that Selangor recorded the highest number of bankruptcy cases in the country, with a significant proportion of cases involving civil servants, particularly teachers.

Director-general Datuk Ishak Bakri said the main causes of bankruptcy included high personal loan commitments, adding that fixed-income earners were particularly vulnerable to the risk.

Fouzi added that some teachers’ interest in business and investments makes them vulnerable to seemingly attractive investment schemes or loan offers, despite limited financial knowledge.

He also referred to a loan fraud case involving a financial education platform which he described as the largest case ever handled by NUTP, involving about 1,700 teachers nationwide, including in Selangor, Melaka, Kelantan and Pahang.

He said most victims carried debts exceeding RM100,000 each, including cases involving married couples who were both teachers, which significantly impacted their household income.

“The scheme promised to settle existing debts and provide high monthly returns, on the condition that teachers took out new loans, facilitated by irresponsible bank officers.

“At the initial stage, some victims received payments before the scheme collapsed, leaving them burdened with multiple debts,” he said, adding that the case had been acted upon by the Malaysian Anti-Corruption Commission (MACC).

There were also cases of teachers becoming trapped in debt after being persuaded by spouses to take out loans, acting as guarantors for friends or relatives, as well as purchasing assets such as land and houses beyond their actual means.

All these factors eventually led to bankruptcy notices and long-term financial problems, triggering serious emotional stress among teachers, including sleep problems, family conflict and a decline in work motivation.

“In certain situations, extreme pressure can lead to actions beyond control, which in turn tarnish the image of the teaching profession and the education system,” he said, stressing that teachers’ salaries are actually sufficient to meet basic needs if managed properly.

He said newly appointed DG41 or DG9 teachers receive about RM3,200 to RM3,500 a month, including allowances, while teacher couples should be able to enjoy a comfortable life with proper financial planning.

On the higher incidence of teacher indebtedness in Selangor, Fouzi said this was not solely due to income levels, but rather the large number of teachers in the state, totalling 45,000, with more than 33,000 of them being NUTP members.

“When the number of teachers is very large, the likelihood of cases also increases. This does not mean Selangor has more problems, but the cases are more prominent due to its large population,” he said, while urging that financial literacy education be made mandatory for all teachers, including at Teacher Education Institutes (IPG), rather than being treated merely as supplementary courses.

In efforts to assist affected teachers, NUTP is working with Bank Negara Malaysia and the Credit Counselling and Debt Management Agency (AKPK) to restructure loans and ensure teachers retain at least 40 per cent of their net income.

He also stressed the need for psychological support to help affected teachers cope with financial and emotional stress.

Fouzi further advised teachers, especially younger ones, to seek professional guidance before taking out any loans, so as to protect their income and carry out their teaching duties with focus and composure. — Bernama