Student Newspaper Talks About Credit Unions, Payday Advances
By Paul RizzoPayday Loan Writer
The Flyer News is the Unversity of Dayton student newspaper. It recently got involved in the ongoing payday loan debate within Ohio. The story is paraphrased below …
Getting into debt is easy; removing oneself from debt is an uphill battle that many people will lose.
One major reason for this is the position they are put in by predatory payday cash advance lenders, according to the creators of StretchPay, a new program at many Ohio credit unions that offers small loans without the compiling high interest rates of many predatory storefront lenders.
StretchPay is a reasonable alternative to payday loans, according to Bro. Victor Forlani, a UD management lecturer. Forlani helped lead the effort to create the StretchPay system.
To qualify for StretchPay, a person becomes a credit card member for an annual fee of $35. They pay $40 for a $250-a-month loan and $45 for a similar $500 loan. The borrower must pay the entire balance of the loan within 30 days before taking a new advance.
“This is a key provision because it prevents their debt from compounding due to compounding interest,” Forlani said.
Different from payday advances: The model is designed to be inexpensive, low-risk and easy. It’s built around credit unions offering short-term salary fast cash loan advances in exchange for an interest rate and an annual fee.
Members who take out such loans are offered free financial counseling, the goal being to move people away from living paycheck to paycheck.
While UD students aren’t the main concern for which the program was developed, debt among college students has become ever more common.
“The usual culprit is overdue balances on several credit cards which students settle with the proceeds from a [quick cash advance],” Forlani said.
A senior UD student, who wished to remain anonymous, said that his credit card debt is exceeding $5,000. He said:
“[Debt] is so hard to get rid of. I am somewhat of a compulsive buyer; however, this StretchPay system will hopefully help me get out of debt.”
Forlani has a passion for helping the hard-working, low-income families that often get taken advantage of by high-interest, supposedly cheap payday loan storefront lenders. He added that the experiences of the families that StretchPay helps exemplify the good that can come from various firms and organizations banding together.
Forlani used UD business students as assets while forming the program; they often did tedious but important research.
The Ohio Credit Union League helped develop the StretchPay program and form Credit Union Outreach Solutions. Credit Union Outreach Solutions combines UD’s Catholic, Marianist tradition of community service with the credit unions’ mission to help working people save money and manage their finances.
“StretchPay loans are a testimony to the university’s commitment to fair business practices and the people who depend on them most,” he said.
Meanwhile, Forlani has a message for the providers of regular and faxless payday loans.
“Some at our table wish to put payday lenders on notice that we’re going to be out there competing with you,” he said. “Charging an excessive interest rate to honest working people is wrong.”
