Payday Lenders Target AZ College Students
PRESS RELEASE – For Immediate Release
October 16, 2008
Contact:
Melissa Hodgdon, Arizonans for Responsible Lending (978) 476-9370
Diane Brown, Arizona PIRG (602) 252-9227
Arizona academics alarmed at students’ susceptibility to predatory payday loans
Students say “vote No” on Prop 200, payday industry’s deceptive ballot measure
PHOENIX – Early findings of a University of Arizona study find that 5 percent of University of Arizona freshmen took out a payday loan last year, as reported by two professors at the University of Arizona’s Norton School of Family and Consumer Science.
Payday loans are small loans of about $300 that carry extremely high interest rates of around 400 percent and routinely trap customers in a cycle of long-term debt.
Dr. Soyeon Shim, one of the professors involved in the study and the mother of a college sophomore, is alarmed by the number of freshmen tempted into the loans, which have been outlawed in 15 states and the District of Columbia.
“When students are in a bad financial situation, the stress has harmful cascading effects on their academic performance, relationships with friends and family, and ultimately their future academic planning,” said Dr. Shim.
The 2000 Arizona law that has exempted payday lending from the 36 percent interest rate cap that regulates other lenders is set to expire in 2010, but the payday lending industry has initiated and funded a campaign to legalize their 400 percent rates by voter approval in this year’s election.
Arizona State University Professor David Wells has studied the measure, Proposition 200, and concluded that it would benefit only the industry.
“Based on the experience of other states, the ‘reforms’ offered by Proposition 200 do not adequately protect against repeat borrowers,” said Wells. “Instead, Proposition 200 will work to generate greater profits for payday lenders.”
Students with the Arizona Public Interest Research Group (Arizona PIRG), who have long been concerned with student debt traps, oppose the false reforms offered by Proposition 200.
“I am working to oppose Proposition 200 because payday lenders are preying on students,” said Neal Denardi, Arizona PIRG student organizer at the University of Arizona. “We can’t let these practices go unanswered.”
Arizona State University student and Arizona PIRG leader Jason Donofrio agreed. “We are working on campuses to get the word out – Proposition 200 is no reform. A No vote protects our students and our state.”
More information is available at www.200isnoreform.com and www.arizonapirgstudents.org.
See “Payday Lenders Target Arizona College Students” in the research section of the Supporter Tools box on www.200isNoReform.com.
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Paid for by Arizonans for Responsible Lending, No on 200
Senator Debbie McCune Davis, Chair
Major Funding by UFCW Local 99, Phoenix
Center for Responsible Lending, Durham NC, SEIU, Washington DC
and Strategic Issues Management Group, Tucson
Additional Support from Arizona AARP
www.200isNoReform.com * (602) 312-1100