THE National Union of the Teaching Profession (NUTP) has warned that weak financial literacy among teachers, combined with loose lending practices, is placing many educators at serious risk of long-term financial distress and bankruptcy.
Its Secretary-General, Fouzi Singon, said the situation is exacerbated by financial institutions that continue to approve additional loans even when teachers’ existing commitments have exceeded safe limits.
“Although salary deductions through the National Cooperative Movement of Malaysia Berhad (ANGKASA) are capped at a maximum of 60 per cent of a teacher’s monthly income, there are financial institutions that allow loans to be taken outside this system through direct deductions from bank accounts,” he said in an interview with Bernama.
“This situation allows teachers to take on additional loans even when their actual capacity has already exceeded safe limits, thereby increasing the risk of multiple debts and long-term financial problems,” he added.
Fouzi said such practices undermine existing safeguards and expose teachers to hidden liabilities that are not reflected in their official payslips.
He called on heads of departments and human resource divisions to take a more active role in monitoring the financial standing of educators before endorsing any loan applications, to prevent them from becoming entangled in undisclosed borrowing arrangements.
His remarks follow earlier reports that Selangor recorded the highest number of bankruptcy cases in the country, with teachers among the civil servants most frequently affected.
Director-General of the Malaysian Department of Insolvency, Datuk Ishak Bakri, previously said that high personal loan commitments were among the main causes of bankruptcy.
Data from the department also showed that individuals with fixed incomes were more vulnerable to insolvency.
Fouzi noted that some teachers’ interest in business and investment ventures has further increased their exposure to financial risk, particularly when they are lured by schemes that appear profitable but are poorly understood.
He cited a major loan fraud case involving a financial education platform, CSA Academy, describing it as the largest case ever handled by NUTP.
The scheme affected approximately 1,700 teachers nationwide, including those in Selangor, Melaka, Kelantan and Pahang.
According to Fouzi, most victims were burdened with debts exceeding RM100,000 each, with some cases involving married couples who were both teachers, severely undermining total household income.
“The scheme promised to settle existing debts and provide high monthly returns, on the condition that teachers took out new loans, assisted by irresponsible bank officers,” he said.
“At the initial stage, some victims did receive payments before the scheme collapsed, leaving them with multiple layers of debt,” he added, noting that the case has since been taken up by the Malaysian Anti-Corruption Commission (MACC).
Beyond investment scams, Fouzi said teachers also fall into debt after being persuaded by spouses to take loans, acting as guarantors for friends or relatives, or purchasing assets such as land and houses beyond their actual means.
Collectively, these factors often culminate in bankruptcy notices and prolonged financial hardship, which in turn trigger serious emotional strain among affected teachers, including sleep disorders, family conflict and declining work motivation.
“In certain situations, extreme pressure can drive individuals to act beyond their control, ultimately damaging the image of the teaching profession and the education system,” he said, stressing that teachers’ salaries are in fact sufficient to meet basic needs if managed properly.
He explained that newly appointed teachers at DG41 or DG9 grade earn approximately RM3,200 to RM3,500 per month including allowances, and that dual-income teacher households should be able to enjoy a comfortable standard of living with sound financial planning.
Addressing the higher incidence of indebtedness among teachers in Selangor, Fouzi said this was not solely due to income levels but also the state’s large teacher population, estimated at 45,000, of whom more than 33,000 are NUTP members.
To assist affected educators, 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.
Fouzi also underscored the importance of psychological support to help teachers cope with the emotional toll of financial stress, warning that unresolved debt issues can have far-reaching consequences for both educators and the wider education system.
If you want, I can also provide a shorter international wire version, a more analytical angle for a financial daily, or a headline set tailored for UK or Commonwealth audiences. - January 25, 2026
