MINNEAPOLIS (AP) - A University of Minnesota student has been battling payday lending for the past three years.
The Minnesota Daily (https://bit.ly/2pYmJz9 ) reported that Adam Rao has worked with two different companies, Exodus Lending and Sunrise Banks, to help those affected by payday lending, a form of high-interest, short-term money lending.
Rao said people often get stuck in a cycle of paying fees to keep payday loans open until they can repay the total, leading to a much bigger cost. The practice primarily affects people with lower and moderate incomes, he said.
“The business model (of payday lenders) is designed to, and does, trap borrowers into long-term debt,” said Ron Elwood, supervising attorney for the Legal Services Advocacy Project.
Rao said more can be done about payday loans through education and legislation.
The Minnesota Legislature legalized payday lending in 1995. There have been several efforts to regulate it, but none have been successful.
There is currently no cap on payday loan interest rates in Minnesota. Exodus co-founder Meghan Olsen-Biebighauser says 15 states have a 36 percent interest rate cap.
“That’s what we would love to see here,” she said.
Sara Nelson-Pallmeyer, Exodus’ executive director, said the company plans to focus on educating the public about payday issues this year.
“One of our goals is to become the most influential voice on payday lending,” Nelson-Pallmeyer said, “so that people know that payday lenders are taking advantage of people.”
___
Information from: The Minnesota Daily, https://www.mndaily.com/
Please read our comment policy before commenting.