OPINION: Now’s the time to fix payday lending in Ohio


Every day, hardworking Ohio families trying to make ends meet take out payday loans to cover basic living expenses. All too often they end up trapped, for months or even years, in a costly cycle of debt, paying fees that are hundreds, or even thousands of dollars more than the original loan.

The payday lending problem is exceptionally bad in Ohio. In fact, our state has the highest payday loan prices in the nation, with lenders charging 591 percent interest on average. This is not an area where Ohio should be a leader.

In addition to making it harder for Ohio families to escape the cycle of debt, Ohio’s economy suffers, as $145 million is paid in fees and interest each year, mostly going to out-of-state companies.

This is something we should all care about. We can and must fix this situation.

That’s why I, together with my colleague, State Rep. Mike Ashford, introduced bipartisan legislation earlier this year to reform payday loans. With the Ohio Legislature now reconvening after summer recess, it is important for our state that this bill now move forward.

House Bill 123 would provide fair and affordable loans for families in need – and close the regulatory loopholes that have been exploited by payday lenders since Ohio voters capped the interest rate in 2008. In spite of the will of Ohio voters, payday lenders today are charging even higher prices than before and the problem is worse than ever.

More than a million Ohioans have taken out payday loans. These are working people who make an average of $30,000 a year. Borrowers represent a wide cross-section of Ohio’s residents, including single parents, veterans and senior citizens. The problem is not isolated to urban areas – 76 of Ohio’s 88 counties have payday loan stores, with 1.5 million rural Ohioans living in these areas.

Borrowers’ experiences are consistent: They are employed (they must have an income to qualify for a loan) and have damaged credit scores. Families, often living paycheck-to-paycheck, turn to payday lenders for short-term loans in an attempt to pay bills on time. The loans have unaffordable payments. Borrowers can’t afford to pay the loan back without taking out another, so they end up in debt for months on end.

HB 123 would address all of these problems and is based on a proven, successful model that ensures access to credit remains widely available — but at reasonable rates. In summary, the bill will:

• Cap interest rates at 28 percent, plus a maximum monthly finance fee of $20.

• Require affordable monthly payments for borrowers, shielding 95 percent of a borrower’s monthly income.

• Provide borrowers a reasonable time frame to repay the loan.

It’s important to note that, for several reasons, recent payday regulations finalized by the federal Consumer Financial Protection Bureau won’t solve the issue in Ohio. The CFPB rule does not limit the rates and fees that lenders are allowed to charge; only state legislatures have the authority to rein in prices.

Passing the HB 123 legislative compromise is expected to save Ohioans $75 million each year, which will benefit local businesses and create jobs in communities throughout Ohio. I am encouraged by the growing ranks of Ohioans for Payday Loan Reform, a coalition that includes community, faith, business, veterans and consumer groups from across the state.

The time for reform is now.

Rep. Kyle Koehler is a businessman from Springfield who represents House District 79.



Reader Comments ...


Next Up in Opinion

Opinion: The shameful silence of the CEOs

Congressional Republicans would be more willing to stand up to Donald Trump if their major financial backers — big business and Wall Street — had more backbone. Ever since 1971, when then-future Supreme Court Justice Lewis Powell urged corporations to mobilize politically, corporate money has flooded Washington — most of it into Republican...
Opinion: U.S. not as intolerant as we make it out to be

I don’t normally watch the GLAAD Media Awards. Not that there’s anything wrong with them. GLAAD, by the way, originally stood for “Gay & Lesbian Alliance Against Defamation” before the organization declared that GLAAD was its name and not an acronym. But I did see a video of Britney Spears’ acceptance of GLAAD’s...
Opinion: Educational fraud continues

Earlier this month, the 2017 National Assessment of Educational Progress, aka The Nation’s Report Card, was released. It’s not a pretty story. Only 37 percent of 12th-graders tested proficient or better in reading, and only 25 percent did so in math. Among black students, only 17 percent tested proficient or better in reading, and just...
Opinion: Remembering Barbara Bush, grieving mother

My mother and Barbara Bush were contemporaries. Despite coming from very different backgrounds — daughter of a Kansas farmer and daughter of a New York City businessman — they had a common experience, a very human link. It’s a sad connection that I suspect also has many a woman feeling fondly toward Bush, who died Tuesday at 92. Both...
Opinion: Paul Ryan is the ultimate party man

The mistake about Paul Ryan, the one that both friends and foes made over the years between his Obama-era ascent and his just-announced departure from the House speakership, was to imagine him as a potential protagonist for our politics, a lead actor in the drama of conservatism, a visionary or a villain poised to put his stamp upon the era. This Ryan-of-the-imagination...
More Stories