Reasons, Effects, and Challenges of Loans: Input to Financial Literacy Enhancement

Abstract

Teachers shape society's future by educating next generation despite countless challenges, especially to finances. This study explored the reasons why teachers apply for loans, the effects of obtaining multiple loans on financial management practices, challenges associated with teachers' experiences in accessing and utilizing loans, and proposed input for financial literacy enhancement. Snowballing sampling technique was used in identifying 20 elementary school teachers as participants in the District of Cuartero. Inclusion and exclusion criteria was used as basis in identifying participants. This was a basic qualitative study with researcher-made interview guide as main research instrument in gathering data. Thematic analysis was used to analyze the data. Among the reasons why teachers applied for loans were financial obligations, household and personal expenses, and filial obligations. They used borrowed amount to pay previous loans, start a business, pay for education and medical expenses, build houses and repay parents sacrifices. Obtaining multiple loans had negative and positive effects on individuals' financial management practices. Positive effects identified were the improvement in credit score and financial flexibility. Negative effects included low net pay and falling into the debt trap. Identified challenges in accessing and utilizing loans were complex terms and conditions, repaying loans, processing loans, low net pay, and stress over financial problems. Financial literacy denotes understanding and competence in managing money effectively. A financial literacy program was proposed as output by enhancing various financial concepts, facilitate implementation of effective debt management strategies, promote entrepreneurship and turn into sustainable businesses and build institutional financial literacy workshops.