It’s no longer up for debate: the United States is in the grip of an affordability crisis. Americans of every kind have less money to cover their core expenses. But while rising prices and stagnant wage growth is challenging for any household to manage, these challenges hit people with disabilities especially hard.
What tools are available to those of us who get caught in a personal crisis on top of the broader affordability crisis? Unfortunately, the answer is: not many, and many of the most accessible ones are also profoundly predatory. In this commentary, The Century Foundation and the Center for Responsible Lending have teamed up to look at an increasingly popular, but exceptionally dangerous, set of financial products and their impact on the disability community—payday loans.
When the Only Options Are Bad Options
It’s important to first establish that while we’re talking about consumer products that one can “choose” to use or not to use, in practice, there often isn’t any meaningful choice in the matter at all. Many of us have been there, especially in this economy: you’ve been making it work, paycheck-to-paycheck, but something comes up—an unexpected medical or vet bill, car maintenance, a heat wave spiking your utilities bills. When you’re struggling to afford the basic necessities, saving is out of the question, and there’s nothing left over to cover emergencies or the unexpected. With few good options left, a high-interest, short-term, loan, otherwise known as a payday loan, may seem like the only choice.
This is especially true for the disability community. More than one in four Americans live with a disability, and in 2025, less than 23 percent of working-age adults with disabilities had a job, compared to approximately 65 percent of the non-disabled working-age population. But in this economic crisis, simply having a job doesn’t guarantee any financial security. It is estimated that up to 28 percent of working-age disabled adults live in poverty, even though they’re employed.
In this economic crisis, simply having a job doesn’t guarantee any financial security.
It’s no wonder then that the Financial Health Network, in partnership with the Harkin Institute and the National Institute on Disability, found that 90 percent of working-age people with disabilities are not financially healthy, compared with 70 percent of non-disabled peers, and over 50 percent felt like they couldn’t pay their bills on time. The problems compound based on factors such as gender, race, and sexuality: for example, while 10 percent of working-age people with disabilities overall are financially healthy, only 7 percent of disabled women can say as much.
The disability community is comparatively poorly integrated into, and served by, the country’s financial systems to begin with. People with disabilities are “underbanked” (i.e., they have a traditional bank account, but also rely on alternative and less stable financial services) at three times higher rates than people without disabilities. Because disabled people struggle to establish credit, getting a loan approved is made even harder. And to make matters worse, the consequences of these inequities fall far harder on the disabled community: households with an adult with a work-limiting disability need 28 percent more income, on average, to reach the same standard of living as those without a disability, because of additional expenses like personal care assistance, specialty foods, or adaptive equipment—to say nothing of seemingly simple things like accessible housing and transportation. All of these come at a high price, and many of them are not covered by insurance.
Backed into a financial corner, people with disabilities have to take what they can get. Payday loans offer to step in at our worst moments, and it makes little difference if one doesn’t know that they’ll be adding fuel to the fire.
How Payday Loans Work—and Make Things Worse
Payday loans are short-term, high-interest loans, typically for small amounts, meant to be repaid on the borrower’s next payday. Payday loan companies market themselves as quick and easy solutions for immediate financial emergencies. Borrowers usually provide a post-dated check or electronic access to their bank account as collateral, allowing the lender to withdraw the full loan amount plus steep fees when the loan comes due.
And we do mean steep: some payday lenders charge a 400-percent annual percentage interest (APR) for a two-week loan. Even if the recipient can pay off the original loan amount, they also have to pay the steep fees, which then often forces people to dip into their next paycheck. It’s easy to see how quickly a vicious cycle can develop as a result.
These financial products are fine-tuned to capitalize on exactly this cycle. Payday loan companies know that most emergencies don’t resolve themselves neatly in a pay period, regardless of the type of emergency or the people experiencing it. When one pay period bleeds into a month, which bleeds into three, the fees rapidly build up; and even if the original problem has been resolved, a new one has taken its place. More likely though, a new problem has simply joined the old one: medical and transportation emergencies can take weeks, putting people further away from being on firm financial footing, if they were to begin with.
The numbers on Americans’ usage of these products are sobering. One in twenty people use payday loans each year—about 12 million people. Moreover, most take out more than one payday loan a year, often right after the other, and many still haven’t paid off the balance six months later. Six out of seven users of payday loans cannot pay back their initial loan, called a principal, on time, and instead pay interest in the form of fees every two weeks or every month, potentially for months afterwards.
What if you don’t get a paycheck? The “payday” part is simply branding. For example, research at the Retirement and Disability Research Center out of the University of Wisconsin–Madison found that people who are on Social Security are at increased likelihood of obtaining payday loans, and that lower-income Social Security Administration beneficiaries use payday loans more intensively. Specifically, a new nationally representative poll commissioned by the Julian Bond Institute at the Center for Responsible Lending in 2025 finds that about 1.6 million—or about one in twenty-five—people with disabilities used a payday loan, draining over $860 million. A study in 2018 by health researchers even showed a connection between using payday loans and poor health, highlighting the way in which these predatory products and poor health can feed each other.
People who are on Social Security are at increased likelihood of obtaining payday loans, and that lower-income Social Security Administration beneficiaries use payday loans more intensively.
The huge cost of these loans leaves people in an even larger financial hole, and in a debt trap as well.
The resulting downward spiral can be severe—so severe that, to protect military readiness, Congress passed the Military Lending Act in 2006 (signed into law by President George W. Bush) to prohibit lenders from charging more than a 36 percent annual percentage rate to active-duty military service members and their families. Similar protections for all borrowers were enacted by twenty-one states and the District of Columbia. But non-military families in twenty-nine states remain unprotected.
The harm these products cause, both in general and to the disability community specifically, are clear, and most of those vulnerable enjoy no meaningful government intervention on their behalf. Payday loans promise quick relief but deliver lasting damage, trapping millions of Americans in a cycle of increasing financial hurt; and Americans with disabilities are disproportionately impacted, with 1.8 million recipients of SSI likely using payday loans, and with payday lenders draining $662 million annually from the disability community.
It’s important to note, too, that these predatory products come in many forms. Payday loans are a wolf in sheep’s clothing, but they also wear other disguises. More recently, financial firms have been marketing programs like “earned wage access” (EWA), also known as on-demand pay, which are sometimes jointly sponsored by the employer and an EWA-provider, but more commonly do not involve any employer at all, and are just advances with repayment taken from the consumer’s bank account on payday. These programs have many of the same drawbacks as payday loans.
While policymakers at the state level have had success in setting interest rates and lending caps, EWA firms have attempted to evade regulator oversight by claiming that their products are not loans. A 2024 Consumer Financial Protection Bureau (CFPB) interpretive rule affirmed that these products are loans, and thus subject to federal lending law, but the CFPB’s current acting director Russ Vought has reversed that rule. This means that there are numerous ways these “quick money” programs are draining disabled people’s pocketbooks.
Consumer Protection and Strong Oversight Are Paramount
We need a ramp out.
Equitable financial access for people with disabilities is critical to the economic recovery and success of this population, and to our overall greater financial health as a country. Disability is the only demographic that someone can join at any time, and that most people who age are likely to join in their lifetime; and at present, one in nine working-age adults (18–65) have a disability that may put them at risk of exclusion from the economic mainstream. Millions of disabled Americans are at risk for financial stress, poverty, and predation from unscrupulous actors.
It is necessary first, and foremost, to understand in the most basic sense that payday loans are a disability justice issue. This means that the harms fall disproportionately on those with disabilities, but also that the harms they suffer increase precarity for other populations as well. Without an accessible path to financial freedom for people with disabilities, we cannot expect other demographics to be protected from such harmful practices. Policymakers need to address the root causes that create economic disparity within the disability community, as well as take steps to ensure that all customers are shielded from shady lenders whose models rely on that disparity.
From there, we must not only expand federal policy protections to all American families, either via the Military Lending Act or other national legislation: states must also individually leverage their jurisdictions to enact similar protections. States that have not yet stopped the payday debt trap should do so, so that constituents have a ramp out of the vicious cycle and onward towards the American Dream.
Tags: disability, payday loans, affordability crisis
No Ramp Out: The Payday Loan Hole of the Disability Community
It’s no longer up for debate: the United States is in the grip of an affordability crisis. Americans of every kind have less money to cover their core expenses. But while rising prices and stagnant wage growth is challenging for any household to manage, these challenges hit people with disabilities especially hard.
What tools are available to those of us who get caught in a personal crisis on top of the broader affordability crisis? Unfortunately, the answer is: not many, and many of the most accessible ones are also profoundly predatory. In this commentary, The Century Foundation and the Center for Responsible Lending have teamed up to look at an increasingly popular, but exceptionally dangerous, set of financial products and their impact on the disability community—payday loans.
When the Only Options Are Bad Options
It’s important to first establish that while we’re talking about consumer products that one can “choose” to use or not to use, in practice, there often isn’t any meaningful choice in the matter at all. Many of us have been there, especially in this economy: you’ve been making it work, paycheck-to-paycheck, but something comes up—an unexpected medical or vet bill, car maintenance, a heat wave spiking your utilities bills. When you’re struggling to afford the basic necessities, saving is out of the question, and there’s nothing left over to cover emergencies or the unexpected. With few good options left, a high-interest, short-term, loan, otherwise known as a payday loan, may seem like the only choice.
This is especially true for the disability community. More than one in four Americans live with a disability, and in 2025, less than 23 percent of working-age adults with disabilities had a job, compared to approximately 65 percent of the non-disabled working-age population. But in this economic crisis, simply having a job doesn’t guarantee any financial security. It is estimated that up to 28 percent of working-age disabled adults live in poverty, even though they’re employed.
It’s no wonder then that the Financial Health Network, in partnership with the Harkin Institute and the National Institute on Disability, found that 90 percent of working-age people with disabilities are not financially healthy, compared with 70 percent of non-disabled peers, and over 50 percent felt like they couldn’t pay their bills on time. The problems compound based on factors such as gender, race, and sexuality: for example, while 10 percent of working-age people with disabilities overall are financially healthy, only 7 percent of disabled women can say as much.
The disability community is comparatively poorly integrated into, and served by, the country’s financial systems to begin with. People with disabilities are “underbanked” (i.e., they have a traditional bank account, but also rely on alternative and less stable financial services) at three times higher rates than people without disabilities. Because disabled people struggle to establish credit, getting a loan approved is made even harder. And to make matters worse, the consequences of these inequities fall far harder on the disabled community: households with an adult with a work-limiting disability need 28 percent more income, on average, to reach the same standard of living as those without a disability, because of additional expenses like personal care assistance, specialty foods, or adaptive equipment—to say nothing of seemingly simple things like accessible housing and transportation. All of these come at a high price, and many of them are not covered by insurance.
Backed into a financial corner, people with disabilities have to take what they can get. Payday loans offer to step in at our worst moments, and it makes little difference if one doesn’t know that they’ll be adding fuel to the fire.
How Payday Loans Work—and Make Things Worse
Payday loans are short-term, high-interest loans, typically for small amounts, meant to be repaid on the borrower’s next payday. Payday loan companies market themselves as quick and easy solutions for immediate financial emergencies. Borrowers usually provide a post-dated check or electronic access to their bank account as collateral, allowing the lender to withdraw the full loan amount plus steep fees when the loan comes due.
And we do mean steep: some payday lenders charge a 400-percent annual percentage interest (APR) for a two-week loan. Even if the recipient can pay off the original loan amount, they also have to pay the steep fees, which then often forces people to dip into their next paycheck. It’s easy to see how quickly a vicious cycle can develop as a result.
These financial products are fine-tuned to capitalize on exactly this cycle. Payday loan companies know that most emergencies don’t resolve themselves neatly in a pay period, regardless of the type of emergency or the people experiencing it. When one pay period bleeds into a month, which bleeds into three, the fees rapidly build up; and even if the original problem has been resolved, a new one has taken its place. More likely though, a new problem has simply joined the old one: medical and transportation emergencies can take weeks, putting people further away from being on firm financial footing, if they were to begin with.
The numbers on Americans’ usage of these products are sobering. One in twenty people use payday loans each year—about 12 million people. Moreover, most take out more than one payday loan a year, often right after the other, and many still haven’t paid off the balance six months later. Six out of seven users of payday loans cannot pay back their initial loan, called a principal, on time, and instead pay interest in the form of fees every two weeks or every month, potentially for months afterwards.
What if you don’t get a paycheck? The “payday” part is simply branding. For example, research at the Retirement and Disability Research Center out of the University of Wisconsin–Madison found that people who are on Social Security are at increased likelihood of obtaining payday loans, and that lower-income Social Security Administration beneficiaries use payday loans more intensively. Specifically, a new nationally representative poll commissioned by the Julian Bond Institute at the Center for Responsible Lending in 2025 finds that about 1.6 million—or about one in twenty-five—people with disabilities used a payday loan, draining over $860 million.1 A study in 2018 by health researchers even showed a connection between using payday loans and poor health, highlighting the way in which these predatory products and poor health can feed each other.
The huge cost of these loans leaves people in an even larger financial hole, and in a debt trap as well.
The resulting downward spiral can be severe—so severe that, to protect military readiness, Congress passed the Military Lending Act in 2006 (signed into law by President George W. Bush) to prohibit lenders from charging more than a 36 percent annual percentage rate to active-duty military service members and their families. Similar protections for all borrowers were enacted by twenty-one states and the District of Columbia. But non-military families in twenty-nine states remain unprotected.
The harm these products cause, both in general and to the disability community specifically, are clear, and most of those vulnerable enjoy no meaningful government intervention on their behalf. Payday loans promise quick relief but deliver lasting damage, trapping millions of Americans in a cycle of increasing financial hurt; and Americans with disabilities are disproportionately impacted, with 1.8 million recipients of SSI likely using payday loans, and with payday lenders draining $662 million annually from the disability community.
It’s important to note, too, that these predatory products come in many forms. Payday loans are a wolf in sheep’s clothing, but they also wear other disguises. More recently, financial firms have been marketing programs like “earned wage access” (EWA), also known as on-demand pay, which are sometimes jointly sponsored by the employer and an EWA-provider, but more commonly do not involve any employer at all, and are just advances with repayment taken from the consumer’s bank account on payday. These programs have many of the same drawbacks as payday loans.
While policymakers at the state level have had success in setting interest rates and lending caps, EWA firms have attempted to evade regulator oversight by claiming that their products are not loans. A 2024 Consumer Financial Protection Bureau (CFPB) interpretive rule affirmed that these products are loans, and thus subject to federal lending law, but the CFPB’s current acting director Russ Vought has reversed that rule. This means that there are numerous ways these “quick money” programs are draining disabled people’s pocketbooks.
Consumer Protection and Strong Oversight Are Paramount
We need a ramp out.
Equitable financial access for people with disabilities is critical to the economic recovery and success of this population, and to our overall greater financial health as a country. Disability is the only demographic that someone can join at any time, and that most people who age are likely to join in their lifetime; and at present, one in nine working-age adults (18–65) have a disability that may put them at risk of exclusion from the economic mainstream. Millions of disabled Americans are at risk for financial stress, poverty, and predation from unscrupulous actors.
It is necessary first, and foremost, to understand in the most basic sense that payday loans are a disability justice issue. This means that the harms fall disproportionately on those with disabilities, but also that the harms they suffer increase precarity for other populations as well. Without an accessible path to financial freedom for people with disabilities, we cannot expect other demographics to be protected from such harmful practices. Policymakers need to address the root causes that create economic disparity within the disability community, as well as take steps to ensure that all customers are shielded from shady lenders whose models rely on that disparity.
From there, we must not only expand federal policy protections to all American families, either via the Military Lending Act or other national legislation: states must also individually leverage their jurisdictions to enact similar protections. States that have not yet stopped the payday debt trap should do so, so that constituents have a ramp out of the vicious cycle and onward towards the American Dream.
Notes
Tags: disability, payday loans, affordability crisis