What is GFAL?
- GFAL is the “GSIS Financial Assistance Loan to DepEd Personnel” that allows eligible borrowers (DepEd teaching and non-teaching personnel) to refinance their outstanding loans with private lending institutions (PLIs) duly accredited under DepEd’s Automatic Payroll Deduction System (APDS).
- Supported by a budget of up to P50 billion, GFAL offers a competitive rate at 6% per annum on a longer loan term of up to six years. This will enable eligible DepEd borrowers with existing loans with PLIs to have reduced monthly loan amortizations.
What led GSIS and DepEd to come up with the GFAL program? Why do I need it?
- GFAL is result of the more than a year-long negotiation dating back to the term of GSIS General Manager Francisco Duque.
- With hundreds of thousands of public school teachers and employees whose monthly loan payments have been affected by over-borrowing and may run the risk of losing their retirement or separation benefits. DepEd sees the need to address this concern urgently.
- Furthermore, as the DepEd Secretary is tasked by law to uphold the welfare of teachers and employees, included among her functions is “enhancing the employment status, professional competence, welfare, and working conditions of all personnel in the Department” (Section 7A of RA 9155, or the Governance of Basic Education Act of 2001).
Why 6%? Some PLIs offer just 2%
- DepEd negotiated for an interest rate that is lower than the ceiling imposed on accredited PLIs (i.e. 7.5% per annum), and 6% nominal interest rate per annum is the final rate that GSIS offered.
- Six percent, on diminishing computation, charged by GSIS, is much lower compared to the rates of most PLIs, including credit cards. Six percent nominal interest rate is realistic.
How much is the estimated monthly amortization of the loan?
- The monthly amortization will vary based on the principal amount.
- The borrower has the right to request for the Disclosure Statement from GSIS.
I don’t want to be included in GFAL. I’d rather pay my existing loans directly to the PLIs.
- GFAL is a financial assistance loan program extended by GSIS to eligible DepEd borrowers on a voluntary basis.
- Since GFAL is voluntary. DepEd personnel with outstanding loans with PLIs definitely have the option to create their own restructuring arrangements directly with the PLIs.
- Moreover, borrowers have the option to shorten the payment period, depending on their capacity to pay.
Who are considered as elegible DepEd borrowers?
To be eligible, DepEd personnel with outstanding loans with PLIs must satisfy the following requirements at the time of application:
- An active member of GSIS with permanent status, and paid premiums for the last three years;
- Has no pending administrative case and/or criminal charge. Provided, however, that if the pending case or charge is filed by an accredited PLI after the issuance of DepEd Order No. 38, series 2017 on July 21, 2017 due to the borrower’s non-payment of his/her obligations, as a result of the prioritization of GSIS and Home Development Mutual Fund (HDMF) loan payments, the borrower shall remain eligible, subject to the submission of documentary proof as may be required by the GSIS under the detailed guidelines of GFAL;
- Has no loans in default with GSIS. Should a DepEd borrower with existing loans in default with GSIS choose to participate in GFAL, he/she should first restructure his/her defaulted loans through the Enhanced Consolidation Loan (Conso-Loan) Plus Program of GSIS;
- Has an outstanding loan from accredited PLIs.
What documents do I have to submit?
An application for GFAL shall be supported by:
- An Appplication Form be developed by GSIS, dully filled out by the DepEd borrower, and endorsed by the DepEd Agency Authorized Officer (AAO) with the borrower’s Consent to assign the proceeds of the loan to the PLI concerned for the payment of the borrower’s loan/s with the said PLI.
- Documents showing the borrowers indebtedness to the accredited PLI/s, which shall include: Loan agreement, loan voucher and/or other certified documents indicating the original loan amount, net loan, term of loan, interest rate, monthly amortization and due date of the first loan amortization (certified by the PLI)
- Certified Statement of Loan Account issued by the accredited lending institutions with the concurrence of the borrower as to its correctness.
- Other documents that the GSIS and DepEd may require to verify the balance of existing loan/s, in case the PLI cannot issue a statement of account.
How much is the maximum amount that may be borrowed?
- The maximum loan amount per borrower is P500,000, provided that the resulting NTHP is not lower than the amount required under the General Appropriations Act (GAA), after all required monthly obligations have been deducted.
- Pre-existing GSIS loan/s of the borrower shall not be deducted from the proceeds of the GFAL payable to PLIs;
- The loan amount to be granted shall be based on the actual need of the borrower, which should mot be more than the outstanding loan balance as certified by the PLI/s;
- The amount set by GSIS as loan amount shall be considered fixed and non-negotiable.
This is also consistent with DepEd Order No. 5, s. 2018 or the “Revised Guidelines on the Implementation of P5,000 Net Take Home Pay for Department of Education Personnel”, and Section 48 (Authorized Deductions) of the 2018 GAA; “In no case shall the foregoing deductions reduce the employee’s monthly net take home pay to an amount lower than Five Thousand Pesos (P5,000).”
I have outstanding loans with different PLIs, may I still apply for GFAL?
- Yes. A single borrower may file multiple GFAL applications. However, these shall be restructured into one (1) loan and the proceeds shall still be paid by GSIS to the individual PLIs.
Will I get the GFAL loan in cash?
- No. The loan amount shall be payable directly to the PLI/s. For this purpose, the eligible DepEd borrower is required to submit the Consent stated in item number 7.a.
- Similarly, DepEd Order No. 18, s. 2018, or the “Revised Guidelines on Accreditation/Re-Accreditation of Private Entities Under the Automatic Payroll Deduction System Program”, provides that “in case of loan take-out, buy-out, or refinancing by another lending institutions, the lender (PLI) shall accept payment directly from the other lender [GSIS in the case of GFAL] provided that it is with consent from the borrower. Official receipt shall be issued on the date of payment.”
How do I know that may payment through GFAL is prioritized?
- DepEd is mandated by law, through the General Provisions of the GAA, to put the highest priority on personnel’s contributions or obligations due to the Bureau of Internal Revenue (BIR), PhilHealth, GSIS, and HDMF in making authorized deductions through the Automatic Payroll Deduction System (APDS).
- Consistent with DepEd compliance with the GAA, restructured loans under GFAL will be prioritized in the authorized deduction from the monthly salary of elegible DepEd borrowers, until fully paid.
- DepEd and GSIS have also agreed to prioritize borrowers whose monthly payment for obligations exceed the P5,000 monthly NTHP to allow them to service their current obligation.
I’ve encountered stories that DepEd remittances to GSIS were late or not updated. How will DepEd and GSIS ensure that authorized deductions from my monthly salary for GFAL are promptly remitted and reflected on my account?
- One of DepEd’s commitments is to ensure the timely payment of GFAL loan repayments due from the borrowers, which must be remitted to GSIS not later than the 10th day of the calendar month following the due month.
- GSIS, on the other hand, shall ensure that the Weekly Notice of Deduction (for newly granted loans), and regular monthly electronic billing files are sent regularly to DepEd through the GSIS Electronic Billing and Collection System (EBCS).
How much is DepEd’s share in GFAL?
- None. DepEd does not collect service fees from GSIS.
How will GFAL affect my monthly net take home pay (NTHP)?
- Obtaining a loan under the GFAL may increase or decrease the NTHP of a DepEd borrower, depending on which deductions due to PLIs will be absorbed/consolidated by the GFAL.
- Regardless of the change in the NTHP, however, the total monthly loan obligations (deducted and undeducted, if any) due from a DepEd borrower will definitely be lower due to the lower interest rate and longer term of the GFAL, which will result in a lower monthly amortization (see 2nd paragraph of the answer to question no. 1).
Who are considered as accredited PLIs by DepEd?
- DepEd shall provide GSIS a duly certified list of PLIs accredited by the Department.
- DepEd has been implementing a centralized accreditation for the inclusion of PLIs in its APDS. This accreditation also provides standards that PLIs must comply with to be included in the APDS. To enhance the existing rules and criteria for accreditation/re-accreditation, DepEd issued (DepEd Order No. 18, s. 2018), which supersedes prior re-accreditation/accreditation guidelines for private lending institutions, DO 49, s. 2017 and DM 228, s. 2011.
- Only entities specifically authorized by law to be paid through salary deductions of teachers’ and personnel’s contributions and obligations may apply for accreditation/re-accreditation. Specific guidelines for accreditations/re-accreditation are stated in DO 18.
How much is the service fee of PLIs participating in APDS?
The following service fees shall be collected by DepEd implementing units, in favor of the DepEd Provident Fund:
- 1% – on loans granted by banks, insurance companies, financing companies.
- 0.5% – on loans granted by non-stock savings and loans association, mutual benefit associations, and DepEd personnel cooperatives and other associations.
- 3% – on insurance premia due to insurance companies.
- 1% – on mutual benefit membership dues/contributions due to associations cooperatives, non-stock savings and loan associations, and mutual benefit associations.