Payday loans trapped this RI woman. Now she’s fighting to reform them.

June 6, 2024 5:08 pm
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Jessica Vega was driving one day when she got a massive headache that ran all the way down her shoulders and spine.

“I was just shaking,” she recalled. “Because I was so stressed out with everything.”

The source of that stress? Payday loans.

Vega is now a senior policy analyst at RI Kids Count, and she previously served as City Council president in Central Falls. In other words, she doesn’t fit whatever stereotypes you might hold about someone who turns to payday lending.

But in her early 20s, she was trapped in a cycle of debt, working two jobs to try to keep her head above water, and under an overwhelming amount of pressure − an experience she’s been reluctant to share publicly until now.

Jessica Vega knows firsthand how borrowers get trapped in a cycle of debt through so-called payday loans.

Getting sucked in

Vega was the first member of her family to graduate from college. After receiving a bachelor’s degree in psychology from Rhode Island College, she was eager to be independent and move into a place of her own.

“I thought I was going to take over the world,” she jokes now.

She rented an apartment in Pawtucket, but was surprised by how quickly the bills began to add up. There was the car, which she needed for her job, and the insurance. The phone bill. Food. Rent. Student loans. Basic household supplies.

Her paycheck didn’t stretch far enough to cover it all, so eventually she found herself in a bind.

“A friend had told me about payday lending, so I thought it was a great idea,” Vega recalled. “Like, why not get some quick cash?”

It wasn’t like she just wanted to buy a new outfit, she points out. She needed help paying for her student loans and rent − “all those things that were a necessity, things I actually needed to survive.”

The Advance America branch on Reservoir Avenue in Providence.

Falling further behind

Vega was surprised by how simple the process was: In her recollection, she only needed to show her ID, and maybe a paystub.

“I wasn’t really asked that many questions,” she said. “It was really, really easy to access the money, which, at the time, felt like a blessing.”

The problem, she now realizes, is that her financial situation hadn’t fundamentally changed.

It wasn’t like she’d gotten a raise at work − so when it came time to pay back the loan, she still couldn’t afford those expenses. And, now, she was paying interest.

Payday lenders can charge the equivalent of 260% annual percentage rates in Rhode Island, and Vega is now among the advocates pushing to change that. At the time, though, she ended up going to a second payday lender to get the money that they she needed − essentially robbing Peter to pay Paul.

More than a decade later, Vega can’t remember how much she ended up paying in total. But she recalls that she’d originally taken out the largest loan available, somewhere around $400. Every time she went to make a payment, there were extra fees for interest, which was money that she didn’t have.

How payday loans work:Rhode Islanders are taking out risky loans from online ‘rent-a-banks.’

Clawing her way out

The pattern repeated for about a year. To get out of the cycle of debt, Vega took on a second job doing home-based therapy − meaning that she was essentially doing the same full-time job for two different institutions.

She’d get done with one job and then head to her second, which also took up her weekends. That’s when she found herself driving in the car one day, practically paralyzed by stress.

Vega also moved back into her mother’s apartment, which was “already cramped,” she said. The dining room became the living room, and the living room became Vega’s bedroom.

“I consider myself really lucky,” Vega said.

While her parents weren’t in a position to help her financially, she said, the fact that she could move back home was a huge privilege − and one that’s not available to everybody.

Sharing her story

Vega later learned that she could have turned to an institution like the Capitol Good Fund or a credit union for a loan. But without any financial literacy education at home or at school, she didn’t know that. And the payday lenders’ advertisements were everywhere.

For over a decade now, advocates have been pushing to cap those lenders’ interest rates, so that they’re subject to the same rules as banks and credit unions.

The bill passed the House of Representatives last year, but didn’t move forward in the Senate.

“Holy crap, I have experience with this,” Vega recalls thinking after she joined RI Kids Count last year, and learned about the legislation.

She testified in favor of the bill, but in a “generic” way, she said. Cultural taboos against discussing money held her back from sharing her own story, as did the fear that she’d be perceived as irresponsible.

This year, though, she decided to share her own story at the hearing.

“I did not want to put my personal business out there, because I was like, ‘Oh my god, how are people going to view me?'” Vega said. “But then I was like, I need to speak up. I have this platform, I’ve been through this experience, I need to say something.”

While the industry argues that the payday lending offers a valuable service to people who would otherwise bounce checks or pay late fees, advocates argue that it’s a fundamentally predatory practice.

Having been there herself, Vega knows firsthand how borrowers get trapped in a cycle of debt.

“It’s not because they’re not working or they’re not trying,” Vega said. “It’s just that sometimes you don’t have enough, and that’s really what leads people to be stuck in these situations.”

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