Teacher debt crisis: Three quarters owe 1.1 trillion baht - on average 3 million each

 

Image: Spring News

 

Debts owed by teachers in Thailand are 1.1 trillion baht. This represents 16% of all Thai public debt. 

 

Some 80% of teachers are up to their eyeballs in debt at an average of 3 million baht each.

 

Samkhan Jongkoyen is the secretary general of a coordination committee set up to tackle debt problems of teachers. 

He said that the problem is now of crisis proportions. 

 

He said that 400,000 teachers - 80% of the teachers in the land - are now in debt at an average of 3 million baht each.

 

Loans have been drawn from the teachers' welfare fund, funeral loan schemes and the TSC or Teacher Savings Cooperative. 

 

Money owed by teachers represents 16% of the entire country's public debt, he told a conference that marked National Teachers' Day on Thursday. 

 

The rising cost of living as well as poor financial management of both teachers themselves and financial institutions have been blamed for the crisis.

 

Source: Spring News

 

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This shows just how bad/stupid teachers are in Thailand, they are not capable of rational thinking and as several thais think that you dont really have to repay loans if you dont want to.  Teachers are meant to be smart but not here, they keep borrowing because they have a govt job and think they will be taken care of, maybe all teachers need to be taught basic economics, those approving the loans are just as bad, in any other country they would look at what you earn and have to pay out each time they are paid instead of just saying yes but in reality it is the teachers fault for wanting to live above their means. Time for the govt to stop bailing them out and have creditors seize personal property so that they learn they cannot just keep borrowing, we have had a few teachers over the years try to get us to loan them money but we refuse point blank because we know they will never pay it back, the lenders need to do the same thing or wear the defaulted loans

Edited January 18, 20206 yr by seajae

Cheap loans is one of the known perks of the job, same with many government type jobs, low pay, decent perks - teachers credit unions typically pay 6% interest on savings, another perk. 

Debts owed by teachers in Thailand are 1.1 trillion baht. This represents 16% of all Thai public debt. 

 

Should be: Debts owed by Thai teachers in Thailand are 1.1 trillion baht. This represents 16% of all Thai public debt. 

And back in UK. most households are in debt far more than 3 million baht.  It's called having a 25 year mortgage to buy a house.  No mention in OP as to nature of the debt.

 

It would be interesting to compare their debt statistics with those who earn similar amounts.

 

That might tell us if it was something "special" about teachers that causes them, even with 6% interest generating savings schemes, to get so heavily into debt.

 

My biased opinion is that they are exceptionally average, but believe themselves to be above average, blowing their earnings in order to display the material lifestyle of higher achievers, with higher salaries.

3 million  correlates with my one in debt teacher that I have met.    I think for many Thai's this is the first generation who had a chance at an education  and a prestigious government job.  Lots of gatherings to attend and show face.  Many needed a car to get to schools.  Why not build a house.  These funeral insurance loans so easy to get.  I  think I recall  a 6-9% insurance premium above the loan value mentioned  last year  when this was in the news.  They Could just keep refinancing everything into bigger and bigger loans.  A 60-70% payment to salary  ratio  was ok.  Meaning retirement income wont be enough. Payment periods well past normal  retirement years. No bankruptcy in Thailand.   I was told if as government worker quit paying they would lose their job.  I was also told only retired teachers participated in the protest last year because they would be fired if they were current teachers.  Basically the only way they will ever be free from these loans is when they die.  But even then I'm not sure what happens to the car the house the land. Just imagine, the profit was made on this much money

Edited January 18, 20206 yr by Elkski

58 minutes ago, seajae said:

This shows just how bad/stupid teachers are in Thailand, they are not capable of rational thinking and as several thais think that you dont really have to repay loans if you dont want to.  Teachers are meant to be smart but not here, they keep borrowing because they have a govt job and think they will be taken care of, maybe all teachers need to be taught basic economics, those approving the loans are just as bad, in any other country they would look at what you earn and have to pay out each time they are paid instead of just saying yes but in reality it is the teachers fault for wanting to live above their means. Time for the govt to stop bailing them out and have creditors seize personal property so that they learn they cannot just keep borrowing, we have had a few teachers over the years try to get us to loan them money but we refuse point blank because we know they will never pay it back, the lenders need to do the same thing or wear the defaulted loans

Several false assumptions.

Most of these teachers are probably married and are using the loans at the amount described I bet to buy housing which in fact is a rational decision. I know some couples in Bangkok wife is a teacher. So, they were able to get a lower interest mortgage because of the teachers loan options. To add, there is no comment about household debt.  So, it will show as the teachers loan when in fact a spouse and the teacher together can easily afford the payments. On this, there is no mention that any of these loans being in default.

It is an honorable profession much more so then some of the other options here.  Your comments that teachers are bad/stupid all seem like another unsubstantiated slam..

Edited January 18, 20206 yr by bkk6060

guess  they need an economics  class introducing at school then!

1 hour ago, rooster59 said:

Samkhan Jongkoyen is the secretary general of a coordination committee set up to tackle debt problems of teachers. 

what the hell  for? ok Im going out to  borrow  <deleted>loads of money and after will they set up a committee  for me too?

Considering most teachers are earning in the order of 25k/month.

And the monthly repayments on 3M (over 25 years) are about 23k/month

 

That's a bit of a disaster. 

Edited January 18, 20206 yr by BritManToo

35 minutes ago, Chazar said:

guess  they need an economics  class introducing at school then!

Or you do, money is so cheap these days it's stupid not to do. You build wealth with leverage.

 

Article is pointless if they don't say what kind of debt they are talking about and what the default rate is.

 

So what's the crisis exactly? Are they defaulting on loans rapidly? If not there's no crisis.

 

Obviously that teachers have more debt than anyone else, they work for the government which is more or less the most secure job and it's way easier to get a loan.

 

 

The scary thing for me is that these are the ones charged with teaching our children essential life skills.

this explains their horrendous attitude, having worked in many schools

On the flip side there appears as many generals as teachers here most with a very large Swiss account I would have thought to balance the books????

2 hours ago, Samuel Smith said:

And back in UK. most households are in debt far more than 3 million baht.  It's called having a 25 year mortgage to buy a house.  No mention in OP as to nature of the debt.

No but I know because I live here (in Thailand). It's not housing loans. It's borrowed cash.

Interesting book "Millionaire Expat" by Andrew Hallam highlights as well the financial advisers who convince teachers (& others) to invest in very poorly structured and high commission investments that on face value look appealing.  Thai and foreign teachers are caught in these awful 'wealth management' schemes and can be  charged hideous exit fees to get out.  One story is from a teacher at a Thai school who was emailed by her faculty information of one wealth management firm.  They are very deceptive.  

11 hours ago, ThomasThBKK said:

Or you do, money is so cheap these days it's stupid not to do. You build wealth with leverage.

 

You must have studied in Thailand. I would even think you are at a level that you should teach.

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11 hours ago, ThomasThBKK said:

Or you do, money is so cheap these days it's stupid not to do. You build wealth with leverage.

 

Article is pointless if they don't say what kind of debt they are talking about and what the default rate is.

 

So what's the crisis exactly? Are they defaulting on loans rapidly? If not there's no crisis.

 

Obviously that teachers have more debt than anyone else, they work for the government which is more or less the most secure job and it's way easier to get a loan.

 

 

 

agree, too many people here jump to negative thai bashing comments, the article contains too little information, if the debt is to buy a property to live in then it's no different to many people back home in my country and could well result in being an investment - as such a 'debt' did for me.

 

also there is no comparison with debt held by employees in other sectors of the economy. poor article.

13 hours ago, Samuel Smith said:

No mention in OP as to nature of the debt.

The nature of most debt is face, appearing to be better off than you really are. You don't need to be rich but appearance to be rich is all important! Why would you own 25 super expensive watches when you only have one wrist? Face!

13 hours ago, seajae said:

This shows just how bad/stupid teachers are in Thailand, they are not capable of rational thinking and as several thais think that you dont really have to repay loans if you dont want to. 

 

It's not just them who are stupid (but we have known this for a long time);
bank employees, no, sorry, bank branch managers are too. and even more so than them.

How can one be reckless, even imbecilic to endanger the bank in which one works by granting reckless loans to civil servants who, apart from their salaries, have nothing.
the world of finance is stepping on its head;

a farmer cannot obtain credit even if he owns several dozen rai and his sons, for example, work overseas with salaries sometimes exceeding that of the bank manager.
But an official with a tiny salary can easily get a credit for buying the latest fashionable SUV when a Honda motorcycle could do the trick.

This trillion baht is a sword of Damocles above the banks of Thailand not to mention the millions of vehicles seized from other Thai people because they could no longer reimburse the installments ...

 

I smell like powdery smell ..
it should explode in no time

13 hours ago, Samuel Smith said:

And back in UK. most households are in debt far more than 3 million baht.  It's called having a 25 year mortgage to buy a house.  No mention in OP as to nature of the debt.

Impossible to make this comparison; you compare pears with apples.

A house in GB is an investment that pays for itself in 20 years because it is very expensive, but it is a profitable investment.
here a house often costs less than the SUV which is parked in front.
and then in the UK, I guess it's like in France, no bank will lend money to someone who is already in debt up to 30% of their net salary.

an article with minimal details but it does get to the point. From the little I know, the salary of teaches isn't all that much, and the average is said to be around 25k thb, which may be generous.

 

Loans for expensive cars and not so cheap houses, and children to support... without bothering with the specific math and allowing for a two income household, I don't see how this will work out in the mid term. Debt slavery will follow.

another point not only pertaining to thailand but to falangland too.

 

So many people believe that as their real estate appreciates in value they become better and better off. But, if you plan to buy another house it too has increased in price so the gains are matched with increased purchase price. Insurance increases, mortgage fees increased, upkeep/maintenance increases, property taxes increase. Not such a great deal in many cases.

15 hours ago, seajae said:

This shows just how bad/stupid teachers are in Thailand, they are not capable of rational thinking and as several thais think that you dont really have to repay loans if you dont want to

Bit offended my that. My wife is/was a teacher. Studied for ages. took out loans for studying. When she worked she paid back the loans, bought 4 plots of land, planted loads of vegetables and rubber and built a house, etc.

 

It's society in general , not just teachers.

The one side the article doesn’t mention and it’s probably impossible to determine is the amount owed to loan sharks.

 

I know a woman in Isarn that loans money only to teachers. Every month she has them lined up to borrow.  Her method is if the teacher pays the full amount owed from the previous month plus 5% interest another loan is available. She has a method of getting payment that involves the person paying the monthly salaries for which she pays 1% of the amount ‘commision’.

teachers use the funds to purchase houses, that would be ok. Something else would be in big trouble 

17 minutes ago, lujanit said:

The one side the article doesn’t mention and it’s probably impossible to determine is the amount owed to loan sharks.

 

I know a woman in Isarn that loans money only to teachers. Every month she has them lined up to borrow.  Her method is if the teacher pays the full amount owed from the previous month plus 5% interest another loan is available. She has a method of getting payment that involves the person paying the monthly salaries for which she pays 1% of the amount ‘commision’.

hmmm... my gf had, before I met her, borrowed 400k thb some years back. she's still paying back the interest of 6% monthly on a current balance of 100k, 6000, and that just covers the interest and will continue until the principle is paid. Mafia rates.

 

More recently she bough a new mcy for her mom and family upcountry... 3000b for 24 mths = 72k thb. That is from what I read on the internet, about 2x the cash purchase price. I asked her how much the mcy cost and she said 3000 a month. No, if you just bought it outright, how much?..... silence.   Say no more.

 

Recent I was told by a Thai that some years back, the wife of you remember who ran a national pyramid loan scheme that was well into the billions of dollars (as in USD) nationwide. He said that (if forget specifically which) the IMF or World Bank made some sort of contact with her and told her to stop or else because the scheme was getting so out of hand. Interesting news I never knew before... no wonder.

Edited January 19, 20206 yr by glennb6
oops

13 hours ago, BritManToo said:

Considering most teachers are earning in the order of 25k/month.

And the monthly repayments on 3M (over 25 years) are about 23k/month

 

That's a bit of a disaster. 

This make not teaching well on official work and the family children have to buy overtime same teacher, university only delivering toilet paper, what go more wrong ?

Edited January 19, 20206 yr by ICELANDMAN