WASHINGTON (12/31/09)--In an op-ed piece published in The Wall Street Journal Tuesday, Virginia Gov. Timothy Kaine explained how a state credit union has found a way to give consumers small-dollar loans without a big price tag. In July, Virginia launched the Virginia State Employee Loan Program--which is run by the Virginia State Employee Assistance Fund and Richmond-based Virginia CU. The program was created after legislative restrictions in 2008 reformed Virginia’s payday loan standards by doubling the time consumers have to repay the loans and creating a database to ensure borrowers have no more than one payday loan. Virginia’s program offers loans ranging from $100 to $500 for state employees. Loans are offered at a 24.99% annual percentage rate and are repaid through direct withdrawals from an employee’s paycheck over six months. Consumers are not penalized for repaying the loans early, Kaine told the newspaper. The loans also require borrowers to become members of Virginia CU and to complete an online financial fitness course on managing money. Since its inception, the program has facilitated 2,794 loans to state employees totaling $1,373,400, Kaine wrote. The program’s overwhelming response has triggered the state to explore more resources to fund the services. Other organizations, such as Riverside Health System in Newport News, have similar loan programs to help employees pay off high-cost, short-term loans, he added. The Obama administration is considering several major reforms to the U.S. financial system--including the payday lending industry. State governments have been challenged with finding a balance between capping interest rates on such loans without driving the option out of the market altogether, Kaine said. The Credit Union National Association (CUNA) and its member credit unions are committed to providing safe and affordable alternatives to predatory payday lenders. Credit unions nationwide have implemented various programs to provide alternatives to high-priced payday lenders, CUNA has said. Allowing credit unions to provide check-cashing services to non members within their fields of membership has given credit unions the opportunity to bring the unbanked and underserved communities into a mainstream financial institution, providing access to other services like savings and lending, CUNA added.