A Way Out of a Lending Quagmire

July 14, 2013
South Bend Tribune  
payday lending news

University of Notre Dame undergraduates are leading an initiative to rescue borrowers in South Bend, Ind., from predatory lending traps. The Jubilee Initiative for Financial Inclusion (JIFFI) was launched in March, when it began to make installment loans to three clients -- who have since successfully paid off their loans. Peter Woo, one of the group leaders, was working with Maitri Pune, a nongovernmental organization in India that asked him to do research on tribal lending. He found that deep debt drove thousands of tribal farmers to take their own lives. "I wanted to find a way for students to make a difference in South Bend where our campus is based," Woo says. "We originally started by trying to learn about the issue of payday loans and other similar products." Current Indiana law allows payday lenders to charge annual percentage rates of up to 391 percent on loans between $100 and $550. The loans' short terms mean that people in desperate situations must repay principal and interest in two to four weeks or face increasing fees. JIFFI's first three clients had low credit scores but no legal judgments that would interfere with repayment. Using the loan underwriting as a backdrop, JIFFI works with clients to develop monthly budgets and increase their personal finance skills.
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