DURHAM, N.C. -- A lawyer at the Center for Responsible Lending (CRL) will testify tomorrow before a subcommittee of the U.S. House of Representatives' Committee on Small Business on how payday lenders prey on military personnel.

The Subcommittee on Rural Enterprise, Agriculture and Technology meets in Kansas City, Missouri amid newspaper reports on service members victimized by payday lenders, who often get their customers trapped in loans running into more than 400 percent interest.

Kathleen Keest, a lawyer for CRL, will tell the legislators that predatory payday lending costs Americans over $3.4 billion in excessive fees and that military personnel are prime targets for this abusive product.

"Military families are the ideal targets," Keest will testify. The reasons: Starting pay for a private first class is less than $17,000 a year. Many military families are young, typically without much experience in managing finances and without a cushion of savings to help them through emergencies.

"It is easy to see how soldiers would find a need for quick cash in these circumstances," Keest will testify before the subcommittee, chaired by Sam Graves, a Missouri Republican. "What is less obvious, but even more compelling, is the difficulty of escaping the debt cycle once the soldier is in it."

Payday lenders typically take a postdated check from a borrower for the amount borrowed plus a fee, payable on the next payday. Borrowers can get caught in a cycle of debt in which they continue to make huge interest payments on the same debt.

Soldiers can also be jailed or discharged for not repaying debt, and payday lenders have threatened to report soldiers who fall behind to their commanding officers.

Keest will tell legislators that Congress should bar payday lenders from repeatedly rolling over loans, collecting interest again and again on the same amount. The loans should have 90-day terms, not the usual two weeks, and payday lenders would be required to consider whether borrowers actually can repay their loans, among other solutions.

These fixes will help all payday borrowers, not just service people, avoid sinking into a cycle of debt from which they may not be able to escape.

Contact: Michael Flagg at 202-349-1862 or mike.flagg@responsiblelending.org