Payday Loan Businesses Forced To Pay Into Education Fund

March 3rd, 2011 by Reed Allmand

Payday Loan Businesses Forced To Pay Into Education Fund-Image via Wikipedia

In 2009, the governor of Delaware and the legislature created a new state law which required high-interest loan businesses to pay a $1,500 annual fee per office, with the fund earmarked for public financial education.  Because of the fund, that state has awarded $500,000 in financial literacy grants to 13 nonprofit organizations.

Gov. Jack Markell said the 13 programs, by nonprofit groups statewide, can change lives.

“These organizations help people make the most of the money they have and, through education, help people avoid financial predators,” he said in a statement. “Financial literacy helps people open a new chapter in their lives — one dedicated to economic opportunity and empowerment.

“In difficult financial times, these skills are even more important,” he said. “It is also vital that we educate our young people so that they grow into adulthood already equipped with good financial habits.”

Could something like this work in Texas? Or, a better question would be should we implement something like this in Texas?   While it is definitely a good idea to educate Texans so that they are more financially savvy, taxing payday lenders and other predatory lenders is not enough. We need to focus our attention on eliminating these types of businesses completely.  Many of these payday lenders are engaged in predatory lending practices which prey on people’s vulnerability, not just their ignorance.  This is why you have some instances where well educated but financially struggling individuals take out payday loans. They are simply desperate. For Texas, a better solution would be to create laws which minimize and eventually eliminate the negative impact payday loan lenders have on our community.

(source: http://www.delawareonline.com/article/20110225/NEWS02/102250342)

About Reed Allmand

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Allmand's vision is rooted in his own financially precarious childhood in Abilene "My father always had difficulty holding a job and supporting our family, so after my parents divorced when I was 12, my sister and I got jobs to help make ends meet," he recalls. "I remember what it felt like as a child to worry that our car would be repossessed or home foreclosed on."

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