Thursday, July 25, 2013
There is a colloquial saying that teaching is the only profession where you steal supplies from home and bring them to work. And while this is quite commonly true, what is more likely is that teachers often use their personal money to buy necessary supplies for their classrooms, for example see here, here, here, here, here, and here. In fact, teachers spend anywhere from $1.3 Billion to $3.5 Billion in out-of-pocket on classroom materials per year.
The other day I received this check (loan offer) in the mail (pictured below). If you read it closely, as I did, the check is a real check than can be cashed immediately for the purpose of purchasing supplies for my classroom (or “take a vacation” or “buy new clothes”…something that many teachers on their salaries have difficulty affording). But, it is obvious that the intended use of the loan is for classroom supplies. Being that the check is a loan, it comes with a hefty APR of 28.77%, which is what many credit cards charge after defaulting on payments. It also fits the financial definition of loan sharking. Not to mention, given the payback schedule of 10 months, the Effective Annual Rate is actually 32.88%. Thus, according to the document, once I cash the check totaling $1,205.40, I would owe $1,370 to be paid over 10 months time. That is, during the course of my annual contract, I would pay $137.00 per month for the entire school year.
And, as pointed out above, with the vast amount of personal money being spent on classroom supplies, there apparently is a huge market to cash in (pun intended) on teachers with these types of loans. And while all of the teachers using their own money would not necessarily cash a loan check like this one (perhaps some will use their own money and a loan check), the amount of personal money teachers spend represents potentially $177.5 million to $477.9 million in loan profits under the same loan parameters on the estimated range of $1.3 – 3.5 billion in personal spending.
So, not only does this type of practice ensure that teachers have even more opportunity to use their own money for supplies, it is an attempt to cash in and make a profit off of those teachers while charging teachers (at an Effective Annual Rate of 32.88%) to use their own money. While we as a society have continued to overlook the realities that our nation’s schools face – namely the realities of those teachers on the front lines who bring their personal lives and money into the equation – banks have joined ranks with those seeking to get even more out of our teachers.