Local leaders have long heard about the destruction unregulated and predatory payday loans cause for their communities, but despite their advocacy, wealthy lobbyists with skin in the game have ensured the push for regulation has never gained traction.

Now, looking ahead to the 2024 legislative season, these leaders are coming together to demonstrate that this is not a partisan issue, but an issue that affects all Kansans, and that payday loan reform will benefit everyone.

Chuck Weber, director of the Kansas Catholic Conference, and Rabbi Moti Rieber, executive director of Kansas Interfaith Action, are champions of the movement toward payday loan reform in Kansas. Weber and Moti uplift the work of the Kansans for Payday Loan Reform Coalition and motivate their communities to come together across politics and faith to fight for reform.

For Moti, payday loans are one of many issues that work together to create instability for working people and their families. The state’s refusal to raise the minimum wage and expand Medicaid, in addition to the stringencies put on access to SNAP and other benefits, create a debt trap where the only option for many people is to take out a payday loan.

Because the industry remains unregulated, lenders can charge exorbitant interest fees and are not required to allow payment installments. With average interest rates of 391%, many Kansans are forced to take out additional loans to keep up with payments as they often can’t pay the loan back in full at the time it is due, thus creating a cycle of debt seemingly impossible to escape.

“Payday loans are an issue for working people because most people don’t have savings to deal with unexpected expenses,” Moti said. “When something comes up, they end up either putting something on their credit card or taking out a payday loan. . .The mythology of conservatives is bootstraps and personal responsibility, but it does not take into account the many, many ways that circumstances can contribute to people being in a difficult financial state.”

As a former Kansas state legislator, representing the 85th District from 2015 to 2018, Weber had a philosophy of “let the market decide” on the issue of payday loan reform. However, a lobbyist with the Kansas Catholic Conference opened his eyes by taking the time to help him understand that people who use payday loans often have no other option.

Like Moti, Weber recognizes that other factors contribute to the Jenga-like instability that Kansans face financially: one emergency and the tower crumbles.

“Inflation is drastically impacting the household budgets of Kansans, particularly middle-to-lower income families,” he said. “This causes stress in the household and can contribute to the breakdown of the family. This is my number one concern—family stability that is threatened by rising costs to just make ends meet.”

Weber experienced this personally when one of his six brothers became caught in the debt trap caused by predatory payday loans. Though Weber and his wife were able to lend a hand, this was a strain on them as well. The experience underscored the need for urgency on this issue as not every family is as fortunate and able to similarly recover.

“Far too many Kansans do not have a relative or friend with whom they can lean on financially during difficult times and the payday loan industry knows that and preys upon this dynamic,” Weber said.

The movement for payday loan reform has such strong support from faith-based communities for particularly this reason: there is a tradition across faiths and cultures against exploiting others financially.

“Our churches, synagogues, and mosques are on the front line of life for families,” Weber said. “Pastors, rabbis, and Imams see how everyday stress impacts the well-being of the people who worship inside their doors. These leaders see that instability in the home leads to disruption of the family that quickly leads to other problems.”

Part of the problem on the road to reform is a lack of awareness by those seemingly unaffected by the exploitation of the payday loan industry, what Moti calls a “separation of experience.” While faith leaders are vocal about the issue because they consistently hear and see its impact on their community, legislators and lobbyists are either unaware or uninterested in sparking change.

“Wealthier people, the people who own the political process, don’t deal with this issue in the same way that working people do,” he said, pointing out the stark difference between wealthy neighborhoods filled with large homes and luscious green spaces, compared to low-income communities, often communities of color, riddled with liquor stores and payday loan businesses.

“I think it’s mostly a question of not really knowing how people live,” he continued. “This conception that some ‘other’ is dealing with this because they somehow mismanaged their life – that’s what some people think, because it serves them well to think that, but there’s a lack of compassion, of understanding, of experience of how people who are not wealthy live.”

Though it is important that the public is aware of and advocating for the issue of payday loan reform, both Weber and Moti agree that real change will require legislative support – a feat that is particularly difficult as many people with the power to make change benefit from the industry as it is. 

“A lot of the contract lobbyists also have payday loan clients, it’s an extremely wealthy industry and they spend a lot of money keeping it that way,” Moti said. “The conversation is stymied by the financial wherewithal of the industry. . . the imbalance of power and the imbalance of financial resources is really what the major problem is.”

Through Weber’s experience as a legislator himself, he sees the reticence caused by the “American philosophy of autonomy” that seemingly entitles legislators across political affiliations to do as they please and leave borrowers to fend for themselves.

“Unrestricted autonomy in financial matters and other areas is never good,” he said. “While it would be good for people to ‘self-regulate,’ this is simply not going to happen when one party – the payday loan industry – holds leverage over the borrower.”

Weber was disappointed especially by the lack of support and awareness from Governor Laura Kelly, whose reticence to weigh in on the need for payday loan reform is a “great excuse” for senators and state representatives to continue to ignore this issue.

According to Weber, though it will take legislators and the executive branch to make reform happen, part of the fight will be continuing to raise awareness and ensuring that all Kansans – across political parties, faiths, and financial status – understand that an unrestricted payday loan industry hurts families and therefore hurts all of Kansas.

As a scare tactic, some lobbyists and legislators push that reforming payday loans is akin to getting rid of them altogether, taking away the option of emergency funds for those in need. However, the Kansans for Payday Loan Reform Coalition is not looking to cancel payday loans, but rather make three major changes to make terms more manageable:

  • A cap on interest rates.
  • Regulation that allows for payment installments.
  • A limited repayment amount.

With the introduction of House Bill 2242 toward the end of this year’s legislative session, the Coalition and its community leaders hope to keep momentum going into 2024 and use public support to light a fire under legislation to finally take action on payday loan regulation.

The Coalition has created a template to contact legislators each payday and remind them that the 175,000 Kansans who use payday loans annually are at risk of getting their paychecks sucked into the debt trap. Let your voice be heard.

To stay up to date on the work of the Coalition and support the fight for payday loan reform, visit https://kspaydayreform.wixsite.com/website and follow the Coalition on Facebook, Twitter, and Instagram.