Kansas needs to do better for people who need payday loans to get by

Let’s start with the conclusion: Kansans should not be charged more than 300% interest rate on loans. It’s any Kansan, and it’s any loan.

Unfortunately, this is the case right now with payday loans in our state. These small loans, capped at $ 500 a piece, have onerous terms and can lead to repeat borrowing. Those who use them tend to face more economic challenges and don’t have the option to dip into their savings, turn to a family member, or use a credit card.

Bills have been introduced several times in the Kansas legislature to combat the practice, but this year’s bill seems to have a better chance than usual.

According to a story by Titus Wu of the Topeka Capital-Journal: “Bill 2189 would establish a new structure where payments are made in installments over a minimum period of three months. … The bill also sets a 36% cap on interest rates, and in return, credit companies can increase their fees and lend more than usual. There could be a maximum monthly charge of $ 30 and up to $ 25 in sales charges. You can lend up to $ 2,500, much more than other states.

The bill is seen as a compromise between consumer advocates and lenders. On the one hand, the maximum interest rates are reduced. On the other hand, there are possibilities to lend more money per loan.

We don’t necessarily want to go into detail here, but the spirit of compromise is commendable. So often these days we see opposing parties in any kind of debate digging in and even refusing to give the other party a hearing. This is understandable, perhaps, but it is also the antithesis of all progress. How can we do anything?

Beyond this bill, the presence of payday lenders signifies a need in our communities. Too many people do not have enough cash for the essentials, and too many of them feel the need to turn to potentially exploitative financial options.

Our education systems, our communities and our state should do better for these people. They should be educated on the downsides of short term loans and the basics of financial literacy. They should have employment opportunities that allow them to earn a living wage. And if they are facing hard times in the short term, the state must be willing and able to help them.

Sure, that’s a bunch of solutions for a seemingly simple problem, but it would also be the healthiest outcome for all of Kansas.

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