Payday Paydirt
The Issue
Payday lending is big business in America. How much do you think the government should regulate payday lending?
Your Opinion
Prediction
Before we learn more about Payday Lending, make a prediction! Are there more McDonald's Restaurants or Payday Lending Stores in the US?* (you'll find the answer below*)
Critical Reading
Read the NY Times article Payday Lending Faces Tough New Restrictions by Consumer Agency. Every time you learn something new snap your fingers. Every time you learn something that makes you mad stomp your foot. Pro tip: don't stomp too loudly if you are upstairs from anyone. As you read the article answer the questions on the Payday Lending Reading Guide.
Expert Opinion
We've shared three editorials and two political cartoons offering a range of opinions on payday lending. Evaluate any one editorial and one cartoon and be prepared to explain what you agreed with and disagreed with about both.
LA Times - Finally, A Crackdown on Predatory Payday Loans
Freakonomics - Are Payday Loans Really as Evil as People Say?
American Banker - Why Payday Loans are Good for Millions of People
Teamwork
Your amazing teacher will put you in a team that will complete this Payday Lending Teamwork-sheet.*
Video
This EXTREMELY WONDERFUL video about the CFPB was not made by the DIRECTOR OF STAR WARS and is not rated NC-17! Please take note of who made this video, their point of view and bias.
Point of View
Complete the following (PLPoVP) Payday Lending Point of View Page then share your answers in class and try not to break into song!
Create
Here’s a typical payday lending scenario:
Currently, a cash-strapped customer might borrow $400 from a payday lender to purchase, for example, a car repair or, medicine, or a sofa. The loan would be due two weeks later — plus $60 in interest and fees. That is the equivalent of an annual interest rate of more than 300 percent, far higher than what banks and credit cards charge for loans. Because most borrowers cannot repay their debts quickly, the loans are often rolled over, entangling those who take them in hard-to-escape spirals of ever-growing debt. In a typical scenario, before long, the person who borrowed $400 might spend years paying back that money, having repaid the original $400 many times over, but still falling behind on the repayment of interest.
Actual Payday Loan Scenario
Find the story (in the media) of a payday lender who was caught in a cycle of repayment in a local news report, or even better, find an actual person who has taken out a payday loan and ask them to share their story with you. Answer the following questions about their story:
How much did they borrow?
Under what circumstances did they borrow the money from a payday lender?
Why didn’t they get a loan with a lower interest rate?
What did they do with the money?
What was the interest rate on the loan?
In total, how much did they pay back?
How long did it take to pay back the loan in full?
Based on their experience, would they take out a payday loan in the future?
Write up the story and share it in class or online.
Discuss
Hey, y'all! This would be a great time for a fishbowl about Payday Lending!
Write
Write Makes Might
Now let’s synthesize all we've learned by writing!
Let’s start by writing. And here’s a pro-tip, not everyone actually agrees with you. Your job is to convince other people of the validity of your argument. Start by convincing yourself and then scale up. Here’s the question you’ll be arguing about.
How should the U.S. regulate payday lending?
Write it out and turn it in to your teacher. *Bonus - send it in as a letter to the editor or to your Congressperson.
Act
Do any one of the following:
1-Payday loan rules were announced by the Consumer Financial Protection Bureau, and are likely to sharply curtail the use of payday loans. Check out the rules right here on the CFPB website, or if you are feeling happy, you can check them out at the home of all government rules- the Federal Register.
2-Rewrite any of the three rules just made by the CFPB so that (just about) any high school student could understand them.
3-Contact the head of the CFPB telling them what you think they should do regarding payday loans.
4-Go on the Federal Register and make a comment about the new payday lending rules.
5-Go to a payday loan shop in person or online and ask for information about making a loan: rates, time to repay loan, etc…. Do Not take out a loan. Share this information with class.
Re-Reflection
Your Opinion again
Now that you’ve learned about and acted on this issue, share your opinion - retake our payday lending survey.
Exit Interview
How did your opinion change?
In what way did your opinion not change?
What do you know now that you didn’t know before.
In the comment section below, share your final opinion on payday lending:
