0
Responsible Borrowing Act of 2023
1/2/2024, 4:45 PM
Summary of Bill HR 3414
The main purpose of the bill is to promote responsible borrowing by consumers and to protect them from predatory lending practices. The bill includes provisions that require lenders to assess a borrower's ability to repay a loan before extending credit, in order to prevent borrowers from taking on debt that they cannot afford to repay.
Additionally, the bill includes measures to increase transparency in lending practices, such as requiring lenders to provide clear and accurate information about the terms and conditions of a loan, including interest rates, fees, and repayment schedules. This is intended to help consumers make informed decisions about borrowing and to prevent them from falling into debt traps. The Responsible Borrowing Act of 2023 also includes provisions to strengthen consumer protections against abusive lending practices, such as prohibiting lenders from engaging in unfair or deceptive practices, and providing borrowers with recourse in cases of predatory lending. Overall, the bill aims to promote responsible borrowing and lending practices in order to protect consumers from financial harm and to ensure a fair and transparent lending market in the United States.
Congressional Summary of HR 3414
Responsible Borrowing Act of 2023
This bill authorizes institutions of higher education (IHEs) to prorate or limit the amount of a Federal Direct Loan that an enrolled student may borrow for an academic year or in the aggregate.
The bill specifies the factors that an IHE may use to limit these loans. These factors include the average or median starting salary for typical occupations pursued by graduates of the program (or the median earnings of students who complete such program), the enrollment status of the student (i.e., full- or part-time enrollment), the credential level of the program (e.g., degree or certificate), and the year of the program for which the student is seeking the loan.
Upon request of a student whose loan has been prorated or limited, an IHE may increase the amount of the loan within otherwise applicable limits at the discretion of the IHE's financial aid administrator.
