Delaware Payday Loan License Fees Fund Financial Literacy Efforts

Inside Subprime: October 16, 2019

By Grace Austin

There are new efforts to promote financial literacy in Delaware, through grants and curriculum, with funding coming from the unlikely source of payday loan and title loan fees.

The state of Delaware regularly provides grant funds to help teach citizens of all ages how to better manage their money. The Financial Literacy Education Fund (FLEF) was established in 2010. It’s now given away about $2.2 million to many organizations.

The program has supported everything from coaching families toward home ownership to providing single parents with tools for financial independence. Nonprofits, schools and community groups have all been recipients.

“We want all Delawareans to be set up for success, and financial literacy is one tool that can help at all stages of life — whether you’re a recent grad ready for the workforce, an entrepreneur with a great business idea, or a retiree looking toward your next chapter,” said Gov. John Carney. “With these grant funds, we will work with a variety of organizations across the state to meet people where they are and help guide them to a more financially secure future.”

Hundreds of thousands of dollars will be made available for the program this year.

The grant program derives its funding from a license fee charged to businesses that issue high-cost payday loans and car title loans. The average APR on a payday loan in Delaware is 517 percent. 

According to the State Bank Commissioner, “programs designed to reach underserved populations and regions of the state that have had limited access to financial literacy services are encouraged” to apply to the FLEF, and pointed to “veterans, seniors and minority communities” as particularly important groups to serve.

>These are also groups that are often the most likely to take out payday and title loans.

The new FLEF grants’ announcement follows an increasing focus on financial literacy programs and initiatives throughout the country. One Pennsylvania bill was recently introduced to offer credits for students for passing personal financial education classes. Delaware is in desperate need of a comparable requirement, according to some academics.

In 2017, Delaware ranked amongst the worst in the country for financial literacy. The Center for Financial Literacy at Champlain College says only 11 states require high school students to take 15 or more hours of personal finance education and eight require 7 to 13 hours. The rest of the country has fewer or no requirements. Those states with no high school requirements include California, Connecticut, Delaware, Massachusetts and Pennsylvania, plus the District of Columbia.

The Delaware Department of Education did address the issue in June 2016, when a specific task force on financial literacy was convened. What that group ultimately recommended, though, was that public schools offer the classes as opposed to requiring them. So far, the state has worked on providing a streamlined framework for the classes, but tells WDEL they hope to have the curriculum in place for the 2020-21 school year.

The combined efforts by the state to improve money literacy are aimed at helping citizens manage their money better and avoid financially risky decisions like taking out payday or title loans.

Learn more about payday loans, scams, and cash advances by checking out our city and state financial guides, including Delaware, Dover, Wilmington, Chicago, Illinois, Florida, Texas, and more.

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