Don’t get fixated on BSU’s payday loan sponsorship. This is a much bigger problem | Opinion

Rick Just
·2 min read

There is some outrage in the community because Boise State University has selected an “official short-term lender.” Most people call those businesses payday lenders.

I believe that outrage is misplaced. No one would think twice if BSU signed a similar agreement with Idaho Central Credit Union or Wells Fargo. So, the outrage is over the type of financial institution the university chose to associate with.

Idahoans should be outraged, not about the BSU agreement but about the interest rates of payday lenders.

If you thought payday loans were an outrageous 25% or 30%, you’ve never applied for one. In Idaho, there is no top limit on what payday lenders can charge. None.

Idaho’s regulation of the payday loan industry is a light touch. Lenders must put the Annual Percentage Rate (APR) in boldface type. You can’t borrow more than $1,000. Beyond that, lenders have few restrictions.

I checked the loan rates one nationally affiliated payday lender charges in Idaho. Payday loans there have an APR of 482.32%. Signature loans run 625.71%. A 30-day title loan has an APR of 304.17%. Other lenders have similar rates.

The industry blanches at the thought of regulation, saying that capping rates will put them out of business. Yet, federal law capped their rates for loans to military personnel at 36% APR in 2006. Do lenders still loan to people serving in the military? There are at least four payday loan establishments in Mountain Home.

In Colorado, voters passed a 2018 initiative capping payday loans at 36% APR, matching the federal rate for military personnel. Predictions of doom from the industry turned out to be wrong. There are still plenty of payday lenders in Colorado, at least a dozen in Denver alone.

Some Idahoans absolutely need payday lenders. They have few choices when borrowing money. But should it be so expensive to be poor?

Idaho is the least regulated state in the nation. That’s good, for the most part. But isn’t it time to put some sideboards on the payday loan industry?

Sen. Rick Just is a Democrat representing District 15.