Military veterans agree with Watchdog columnist Paul Muschick that payday loans are financial quicksand for low- and moderate-income borrowers. The U.S. Department of Defense in 2006 thoroughly studied the effects of payday loans on our nation's military. It concluded that that payday loans create a dangerous debt trap for military families. As a result, President George W. Bush signed into law a 36 percent annual rate cap for payday loans made to active duty military and their dependents.
While veterans are not covered by the protections of the federal law, they are protected by Pennsylvania's usury cap for small loans, which the Department of Defense recognized as among the strongest and most effectively enforced in the country. But out-of-state payday lenders have set their sights on Pennsylvania's financially vulnerable and are working to convince our legislators to gut our state law. We applaud Sens. Boscola and Mensch for standing up for veterans last session and helping stop a bill in the Senate that would have legalized predatory payday loans in Pennsylvania. We urge all lawmakers to oppose any effort this session to roll back our existing consumer protections.