I am all for financial education. In fact, Iâ€™d love to know if there was any way the federal government could actually mandate a high school and college class in basic economics and personal finance. I believe Americans are woefully undereducated about these topics.
And I think the payday loan industry would agree with me.
So I endorse the United Wayâ€™s recent gathering in North Texas. Any group that can pull together banks and credit unions and regular folks with financial education as a goal is a great thing. However, I want to point out two other things.
First, this meeting was geared towards getting the â€œunbankedâ€ and â€œunderbankedâ€ to join traditional banks and credit unions. The problem with this approach is the implicit assumption that people somehow arenâ€™t educated about these financial entities. The fact is that these people have deliberately chosen not to align with banks because they donâ€™t trust them, and they don’t like the bevy of fees they can get hit with.
Second, this is a vastly superior approach to helping people understand debt than removing an option like payday loans via legislation. Any educational program that helps people find the lowest cost solution to their financial needs is welcomed and smart.
And thatâ€™s exactly how payday loans should be approached. The same education should be provided as to their pros and cons, alongside pawn and auto title loans and bank overdraft fees.
Education, not legislation.