Decision looms on payday loans

Decision looms on payday loans

Payday loans are marketed as solutions to short-time financial crises. But these high-interest loans often trap low-income borrowers in long-term cycles of debt. A bill on Gov. John Bel Edwards’ desk would expand short-term borrowing in Louisiana by allowing for loans of up to $1,500 (they are currently capped at $350) with triple-digit interest rates. The Advocate’s Blake Paterson explains that Senate Bill 381 by Sen. Rick Ward was rushed through the Legislature at the behest of out-of-state loan companies, but that a coalition of advocacy groups led by the Louisiana Budget Project are urging the governor to veto the measure: 

(C)ritics say it’s a predatory product and that allowing payday lenders to make larger, longer-term loans with sky-high fees will trap low-income Louisiana residents in cycles of debt. “This harmful bill targets Louisiana’s hardworking families who do not deserve their scarce wealth stripped by a machine designed to trap them,” said Davante Lewis, with the Louisiana Budget Project, which advocates for low- to moderate-income residents.

The bill would authorize loans that could be paid back in installments, rather than a lump sum. Lenders would be allowed to charge 36% interest along with a monthly “maintenance fee” of up to 13% of the original loan amount.

Alex Horowitz, a consumer finance researcher at The Pew Charitable Trusts, said he’s never seen a fee that large. “We find that the bill would expose Louisiana consumers to financial harms, rather than create an affordable loan market like the ones seen in states that have successfully reformed their payday loan laws,” Horowitz wrote in a letter to both Ward and Edwards.

Lowering maternal deaths 
Last year’s American Rescue Plan Act included a provision that allowed states to offer a full year of postpartum Medicaid coverage for new moms, instead of the 60 days currently covered by the program. The move was aimed to address the United State’s high rates of pregnancy-related deaths. Last month, Louisiana became the first state to take advantage of this opportunity, which is welcome news in a state that has the second-highest infant mortality rate in the country. LBP deputy director Stacey Roussel explains why the Pelican State was a good test case for policies to combat unacceptable levels of preventable maternal deaths. 

“As a state, we have a saying that we’re on the bottom of the good list and the top of the bad way too often,” said Stacey Roussel, the deputy director of the nonpartisan Louisiana Budget Project. Roussel’s organization backs policies to help low-income and working class people. In Louisiana, to talk about maternal mortality is to talk about deep poverty. Louisiana has the second highest poverty rate in the country. Maternal health advocate Frankie Robertson with the Amandla Group rattles off the ways that impacts people’s access to pregnancy care: “Not having adequate child care. Not being able to leave work and sacrifice pay to sit for hours at a prenatal appointment or a postpartum appointment.”

Listen to Roussel and other health care advocates discuss high rates of pregnancy-related deaths and the potential impact of Biden’s push to expand Medicaid coverage for pregnant people on the latest episode of the Tradeoffs podcast.

Teacher experience and certification matter
Public school teachers perform better as they gain experience. Certified teachers perform better than non-certified teachers. Teacher pay raises lead to increased retention. Those are some of the major results from a new report by the Louisiana Legislative Auditor, released this week, that was aimed at understanding how Louisiana can attract and retain more high-quality teachers in public schools. The report found that teachers in public charter schools are much less likely than public school teachers to be certified. 

Salary plays a key role in recruiting and retaining teachers because it impacts teachers’ decisions about where to work by increasing or decreasing the desirability of a particular position. As a result, schools and districts that have higher salaries may be able to hire more highly qualified and experienced teachers than those that offer lower salaries. This is important because research shows that certain attributes of teachers, such as years of experience and certifications, may impact the quality of instruction students receive.

White House plans debt forgiveness
Americans owe a collective $1.75 trillion in student loan debt, and President Joe Biden is under pressure to permanently forgive all or most of that amount. Last month, Biden announced an extension of the student loan payment freeze until Aug. 31, and took action that will make it easier for millions of federal student loan borrowers to receive forgiveness. Now, the White House is poised to forgive $10,000 in student debt per borrower, with an announcement as early as this weekend. The Washington Post’s Tyler Pager, Danielle Douglas-Gabriel and Jeff Stein report

The White House’s latest plans called for limiting debt forgiveness to Americans who earned less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly, two of the people said. It was unclear whether the administration will simultaneously require interest and payments to resume at the end of August, when the current pause is scheduled to lapse. The people, who spoke on the condition of anonymity because they were not authorized to discuss the deliberations, cautioned that some details of these plans could change before the White House makes the decision official.

Programming note: The Daily Dime will not publish on Monday, March 30, in observance of Memorial Day. 

Number of the Day
27% – Percentage of the census tracts in Orleans parish that bear a high energy burden, meaning they spend 6% or more of their annual income on energy (Source: Office of Energy, Efficiency and Renewable Energy via WRKF)