The pandemic amplified the challenges many people face with payday lenders, particularly those in low-income and Black neighborhoods, leading Kansas residents to come together to change the state’s payday lending laws.
Wichita Black Alliance, Saint Mark United Methodist Church, Kansas Interfaith Action, and Topeka JUMP hosted a payday loan town hall on Monday at Wichita’s Atwater Neighborhood Resource Center. The event was designed to educate Kansans about payday loans and provide a safe space for individuals affected to share their stories.
Victoria Boyd, a Wichita resident, shared how her $500 payday loan nearly tripled in size after missing a payment and interest was added, which eventually led to 25% of her check being garnished. Boyd said the loan company never sent her notice of wage garnishment and she has started taking legal action against them.
KS Sen. Oletha Faust-Goudeau and Vice Mayor Brandon Johnson came to the town hall offering their support and promising to continue fighting for payday loan reform. Faust-Goudeau was a sponsor of a 2020 payday loan bill introduced into the Kansas legislature.
“The payday loan system traps people in a vicious cycle; after you take one loan out, you are forced to open another to pay off the initial loan,” said Senator Faust-Goudeau.
A payday loan is a short-term unsecured loan, characterized by high-interest rates. Families who use a payday loan are disproportionately minority, and these individuals are least able to secure more traditional forms of credit. Since payday lending operations charge higher interest rates than traditional banks, they have the effect of depleting the assets of low-income and Black communities.
One in ten Kansas adults has taken out a payday loan. Kansas people who find themselves in a financial bind and have a poor or no credit history are sometimes forced to turn to payday lending companies, where they might pay up to 391% interest. A $300 loan often becomes a $750 obligation in just five months.
Organizers want the Kansas legislature to cap interest rates, require payment plans, and restrict wage garnishments on payday loans.
Kansans for Payday Loan Reform organizer Shanaé Calhoun said the movement has been vocal about its position with payday loan reform. Seventeen states have reformed their payday loan laws to make them less onerous on their citizens, and Calhoun hopes the Kansas legislature can model their proposed bill after other state’s legislation.
“We’re interacting with lawmakers and having a conversation about this issue,” she said. “We’ve been building support across the state with organizations and faith communities since August 2019.”Calhoun believes that additional community engagement is needed, even though the grassroots collaborative comprises roughly 24 groups.
Senator Faust-Goudeau and the other community leaders also urged Kansans to utilize every mode of communication to share their dissatisfaction to Kansas lawmakers.
For more information visit https://kspaydayreform.wixsite.com/website