The Center for Responsible Lending’s (CRL) December 2025 report, Buried in Debt, purports to show that high-cost credit products drive financial instability and that interest-rate caps and product restrictions protect consumers. This conclusion is unsupported by the report’s own data and is undermined by fundamental methodological flaws.
CRL’s analysis suffers from severe selection bias, survivorship bias, misuse of cost metrics, failure to account for substitution effects, and the absence of any valid counterfactual. By examining only borrowers who successfully obtained credit and ignoring those denied access after rate caps, the report excludes the population most harmed by restrictive price controls and lending laws. It confuses correlation with causation, substitutes anecdote for causal inference, and embeds normative assumptions as empirical findings.
As a result, Buried in Debt is not credible policy analysis. It is an advocacy document that misrepresents market dynamics, overstates the harms of lawful credit, and encourages policies that reduce consumer choice while leaving more expensive and opaque financial penalties untouched.
Fatal Selection Bias
The central methodological defect in Buried in Debt is sample selection bias. CRL’s datasets, bankruptcy filings, SaverLife transaction records, interviews, and focus groups include only borrowers who successfully obtained credit.
This design systematically excludes borrowers who applied for credit and were denied after rate caps and regulatory tightening. Economic theory and empirical evidence both predict that when price controls are imposed, the highest-risk borrowers are the first to lose access. By excluding them, CRL guarantees that its analysis cannot detect the primary harm of restrictive credit policy: exclusion.
A study that omits denied applicants cannot credibly claim that “credit remains available” or that restrictions are protective. It answers a different and largely irrelevant question.
Recent media coverage underscores precisely the analytical failure at the heart of CRL’s Buried in Debt report. In a December 2025 Denver Post article summarizing CRL’s findings, the study’s authors argue that Colorado borrowers “have plenty of loan options” because bankruptcy filers and checking account holders typically have multiple credit lines. But this conclusion rests on the exact flawed mechanism as the report itself: it examines only borrowers who successfully obtained credit and ignores those denied access after rate caps and regulatory tightening.
If legitimate lenders are willing to lend and borrowers are willing to borrow, then everyone else should step out of the way.
Patrick M. Brenner
President, Southwest Public Policy Institute
The article even concedes, without resolving the contradiction, that Colorado’s own attorney general–commissioned data show subprime and deep-subprime borrowers are significantly less likely to obtain reported small-dollar loans than similar borrowers in neighboring states. Treating the existence of a few credit lines as proof of adequate access conflates balance-sheet artifacts with real-time liquidity and obscures the lived reality that, when emergency credit is unavailable, households resort to overdrafts, late fees, eviction risk, and informal lending. The media narrative thus reproduces CRL’s core error: mistaking survivorship for success, while the borrowers pushed out of the legal market remain invisible.
Survivorship Bias Miscast as Consumer Protection
CRL treats the presence of multiple concurrent credit products (“stacking”) as evidence that borrowers are overwhelmed by excess credit. This is a misinterpretation rooted in survivorship bias.
Borrowers who can stack products are, by definition, those who passed underwriting screens. Stacking more plausibly indicates credit fragmentation: no single regulated product is sufficiently large, timely, or flexible to meet liquidity needs.
CRL does not test whether borrowers stack because products are too plentiful or too constrained. It simply assumes the former. That assumption is unsupported and contradicted by independent research showing that rate caps reduce loan availability and force borrowers to patch together inferior substitutes.
APR Is an Invalid Metric for Short-Term Credit
The report relies heavily on the Annual Percentage Rate (APR) as a universal measure of borrowing cost. This is not merely a misuse of APR for short-term credit; it is a fundamental flaw in modern consumer lending regulation. APR is not a price. It is a mathematical abstraction that combines rate, fees, and time into a single annualized figure, obscuring the loan’s actual economic burden.
APR fails even for long-term products, including 30-year mortgages. Borrowers do not experience a mortgage as an annualized rate; they experience it as a stream of monthly payments and a cumulative transfer of wealth over decades. APR conceals how amortization front-loads interest, how small changes in term or payment timing dramatically alter total cost, and how compounding erodes equity long before principal meaningfully declines. A “lower” APR can easily correspond to a substantially higher total dollar cost, yet the regulatory framework treats the former as dispositive and the latter as secondary.
In practice, the law entrenched a regulatory framework that lets lenders use a deceptive measure to cover up a loan’s real cost: the annual percentage rate, or APR.
For short-term and non-amortizing products, the distortion becomes extreme. Annualizing a one-time, short-duration fee converts a fixed, disclosed cost into a triple-digit percentage that bears no relationship to how consumers borrow, repay, or assess value. In neither context, long-term nor short-term, does APR convey the information consumers actually need to make informed decisions.
CRL compounds this error by failing to report total dollars paid, payment timing, repayment predictability, or comparisons to substitute costs such as overdraft fees and late-payment penalties. In practice, APR functions as a rhetorical sorting mechanism, labeling loans as “high” or “low” cost based on an abstract percentage, rather than as an analytical tool capable of assessing consumer welfare. A modern disclosure regime would abandon APR as the primary metric altogether and instead focus on total cost, cash-flow impact, and time-based trade-offs, which borrowers actually experience.
Structural Poverty Is Mistaken for Product Harm
CRL correctly documents rising housing costs, inflation, and income volatility, but then attributes the resulting financial distress to the presence of credit products. This reverses causality.
Households borrow because expenses exceed income. The report offers no evidence that these households would be better off without access to credit. Indeed, widespread overdraft fees, utility shutoffs, and payment arrears are outcomes commonly associated with restricted access to predictable liquidity, not with credit availability.
The report conflates poverty with credit harm, producing policy conclusions unsupported by causal analysis.
Overdraft Fees Are a Confounder
CRL highlights cases of borrowers incurring hundreds of dollars in overdraft fees, implying that credit products caused financial instability. This ignores a critical substitution effect.
Overdraft fees are:
- automatic,
- poorly disclosed,
- unpredictable,
- often more expensive in dollar terms than regulated loans.
CRL does not analyze overdraft as an alternative liquidity mechanism that expands when credit access contracts. This omission leads to incorrect attributions of harm and obscures the reality that restrictive credit policies often push consumers toward worse outcomes.
Anecdote Replaces Causal Inference
The qualitative portion of the report, five interviews and two focus groups, is used to draw statewide policy conclusions. This exceeds the methodological limits of qualitative research.
Narratives are valuable for understanding experience, not for establishing causation. CRL uses anecdotal accounts of distress as proof of systemic harm, without controlling for income shocks, health events, housing instability, or policy changes.
This is not rigorous analysis.
Perhaps most damningly, Buried in Debt offers no counterfactual. It does not compare:
- outcomes before and after rate caps, or
- Colorado borrowers to borrowers in non-cap states.
Without a control group, CRL cannot claim that its preferred policies improve outcomes. It simply assumes improvement.
Peer-reviewed research, including work by Bolen, Elliehausen, and Miller, uses difference-in-differences designs to evaluate the effects of price controls on consumer credit access. CRL does not.
The report assumes that reduced borrowing is inherently beneficial and that risk-based pricing is suspect in small-dollar credit but acceptable elsewhere in finance.
This assumption is ideological, not empirical. Credit markets price risk across mortgages, auto loans, insurance, and corporate debt. CRL offers no analytical justification for exempting small-dollar credit from this logic.
Conclusion
Buried in Debt documents financial distress but fails to demonstrate that high-cost credit causes that distress or that restricting credit improves outcomes. Its conclusions rest on incomplete data, flawed mechanisms, and embedded advocacy priors.
Policies based on this analysis will reduce consumer choice, exclude the most vulnerable borrowers, and increase reliance on more expensive, opaque penalties. That is not consumer protection. It is regulatory harm.
The Southwest Public Policy Institute urges policymakers to reject analyses that ignore denied borrowers, misuse metrics, and confuse moral preference with empirical fact. A sound credit policy must be grounded in real access, real costs, and real outcomes, not in advocacy masquerading as research.
