Latest News & Events

Wine & Beer Tasting Fall Fundraiser

Sunday, November 5th from 5pm – 8pm

West Chester University
Alumni & Foundation Center
202 Carter Dr. West Chester, PA. 

Click the invitation above to register!

Pennsylvania’s Payday Loan Laws

Each year, Ohioans pay $500 million annually in fees to payday loan lenders. Laws in Ohio regulating payday and other predatory lenders do not match the books in Pennsylvania. In 1998, Pennsylvania passed a law prohibiting check-cashing companies from issuing a loan based on a post-dated check. While not necessarily check-cashing companies, these laws apply to most payday loan lenders in the state. In order to better understand how Pennsylvania’s laws protect consumers we must understand how payday loans work and why they’re so dangerous to vulnerable low-income earners.

Payday loans function by giving high-interest loans (often as high as 300%) in exchange for a guarantee that the loan will be repaid in two weeks or when the lendee receives their next paycheck. Many payday loan companies require a post-dated check or electronic access to the recipient’s bank account to ensure payment. Payday loan companies often occupy physical business storefronts. However, many states like Pennsylvania prohibit physical storefronts for payday lenders and relagate them to online-only stores. Low-income earners who take out a payday loan often overdraft their bank account and are struck with additional penalties and fees for doing so. This helps create a perpetual cycle of borrowing from which many borrowers are unable to escape.

According to PEW Research Center, a 2012 study found that 69% of first-time payday loan users took out a loan to cover recurring expenses such as rent or monthly bills. The study also found that in states where laws restricted or prohibited the use of payday loan storefronts, 95% opted to look elsewhere for help including cutting back on expenses, delaying paying of bills, and borrowing from friends & family.

It’s encouraging to see 81% of responses in the study say they’d cut back on expenses to help solve their financial problems rather than take out a payday loan if access to them was restricted. It indicates that laws protecting consumers will lead them to make better choices. The laws in Pennsylvania target payday loans in a number of ways.

As previously mentioned, Pennsylvania passed a law in 1998 prohibiting companies from issuing loans based on post-dated checks. This law cuts many payday lenders off because their entire scheme is based on this repayment contract. However, some companies still operate and work around these laws. The Consumer Discount Company Act was passed to regulate interest rates. According to a study by the Department of Defense, the average borrower pays back $864 on a $339 loan. With many payday interest rates exceeding 300%, Pennsylvania ensures that no small loan lender can charge more than 6% on any short-term loan, creating a safety cap for consumers. At most, a lender can charge up to 24% interest but must complete a licensure process to do so. These measures make predatory lending a less profitable business for payday lenders.  

At Interfaith Housing, we strongly discourage the use of payday loans. They trap consumers in a cycle of paying back insurmountable sums of interest and fees. We understand many low-income earners are desperately in need of financial assistance and turn to payday lenders to alleviate what they perceive is an immediate threat to their livliehood. They take out a loan to pay rent and avoid eviction or pay PECO to keep the lights on. But studies show it’s not worth it and when access to these “quick fix” loans is restricted, people make better choices.

Bill to Renew CHIP Funding Passes Senate and House Finance Committees

We’ve been keeping an eye on developments surrounding the Children’s Health Insurance Program (CHIP), the government program that gives 9 million children in the United States access to healthcare. Many children with parents in our program are enrolled in CHIP. We see what a valuable program it is for single parents whose budgets are already burdened by the high cost of living. CHIP provides piece of mind for our hardworking participants who rely on it. On September 30th, Congress let funding for CHIP expire. As many as 10 states’ programs, including Pennsylvania, will run out of money by the end of 2017, leaving the 177,000 PA kids enrolled in CHIP in a precarious situation.

This week, a bill that will fund CHIP for the next five years was rushed through the Finance Committees of the Senate and House of Representatives. This is a positive step toward making sure CHIP is funded before any states’ programs are no longer solvent. Currently, the fewest number of children are uninsured in the nation’s history. Since 2008, the uninsured rate of children in America dropped from 9.5% to 5% in 2016, a decline of 44% owed in large part to CHIP. As more kids get their coverage through CHIP, the more important funding becomes. The bill will now get marked up by committees before hitting the floor of Congress for a final vote. However, negotiations hit a snag last night as House members battled over how to fund CHIP for the foreseeable future.

According to the New York Times, House Republicans proposed cuts to Medicaid and Medicare as a means of funding CHIP while Democrats balked at cuts to healthcare programs while Congress is offering tax cuts to top earners in their proposed tax reform bill.

What Comes Next

The bill will likely languish in Congress until the end of the year but, hopefully, both parties can come together and fund CHIP before things get any worse. Several states including Utah and Texas have put an enrollment freeze on CHIP until funding is secured. Freezes have happened before including a brief stint in 2003. During that time, many children were unable to access the care they needed.

Shredding Event at First Resource Bank

Join us on Saturday, October 14th from 9am – 12pm at First Resource Bank in Exton, PA for their Shredding Event and raffle to benefit Interfaith Housing. Bring your old documents down to be shredded and enter the $5 raffle for a chance to win a piggy bank full of cash! Proceeds go to Interfaith Housing as we continue our mission of preventing homelessness among Chester County’s working single parents. We’ll see you there! Click the flyer below for more information.