by Marcus Washington
NASHVILLE, Tenn. - Payday loan stores have popped up all across Middle Tennessee and on Tuesday, a large group of people gathered to talk about the good and bad of the business.
A room inside the Country Music Hall of Fame was nearly packed full of people on both sides of the discussion of payday loans.
"Payday loans are not all good or bad. They help some consumers and they can have devastating consequences on other consumers," said Paige Skiba, Associate Professor of Law at Vanderbilt University.
Each year more than12 million adults borrow money from payday loan businesses, with interest rates close to 400 percent.
"For payday lenders, a good customer is a customer who cannot repay the loan without borrowing again. Rather than being a temporary solution, we found that most payday borrowers remained in debt an average 212 days of the year," said Oneshia Herring, Legislative Counsel for the Center for Responsible Lending.
According to Richard Cordray with the Consumer Financial Protection Bureau, the majority of consumers are back borrowing money again within 14 days.
Many times, this return visit is to either pay more bills or to get money to pay on the previous loan.
"Our concern instead is that all too often those loans lead to a perpetuating sequence. That is where the consumer ends up being hurt rather than helped by this extremely high cost loan product," said Cordray.
While pay day loans are credited for creating more debt and even bankruptcy, some said the short term credit is not always bad.
"We talk about restrictions on the lender, but we ought to be talking about how we design products that meets the customer's needs," said Jamie Fulmer, Senior Vice-President of Public Affairs at Advance America.
"I support causing all lenders to register with CFPD and second I support codifying into rule the CFA best practices, which are not followed by many of the lenders in the industry," said Lynn DuVault with Jones Management/Check into Cash.
The payday loan debate is not one that will end soon, but many wonder if there is a solution in sight.
"We help people avoid needing to borrow on these very expensive loans in the first place," said Skiba.
Congress actually prohibits payday loan business from doing business with service men and women and their families.