5% of last year's UA freshmen got payday loans, survey says

[cashlenders]

At least 5 percent of last year's freshmen at the University of Arizona obtained a payday loan, a figure the surveyor described as "very alarming."

Arizona's Norton School of Family and Consumer Sciences conducted the survey, which measured the financial habits of 2,172 freshmen - about a third of the class - who enrolled in fall 2007.

Student use of payday loans more than doubled based on a survey taken a year ago that included freshmen through seniors, said Professor Soyeon Shim, the group's director.

"As consumers, students shouldn't be using payday loans as a resort to deal with financial stress," Shim said.

The survey results are being used by opponents of Proposition 200, who say payday-loan stores prey upon vulnerable consumers, like students, who need of a quick infusion of cash. Voters will decide upon the measure on Nov. 4.

Opponents of the measure want the proposition defeated because its demise likely would force the industry to close its doors in Arizona.

Payday-loan chains are bankrolling Proposition 200, which would repeal a state law that stops the licensing of payday lenders on July 1, 2010. A lender needs a license to operate.

The measure also would lower fees, stop costly loan extensions and create repayment plans.

Payday-loan operators are offering the changes as an incentive to voters to let the stores stay in business.

Stan Barnes, chairman of the Yes on 200 campaign, said he didn't know how to put the university study into context with the ballot measure.

"It sounds like a small number (5 percent) to me. I don't know what it means to Prop. 200," Barnes said. "All I'm thinking about is getting a yes on 200."

Barnes said he did not know what percentage of Arizonans use payday loans, except the 640 branches in Arizona have "tens of thousands of customers."

Shim, the UA professor, said she's not taking a position on Proposition 200. However, she said payday loans are expensive because the annual percentage rate would be up to 391 percent even if the measure passes.