Owens Co-Sponsors the Responsible Borrowing Act

WASHINGTON, D.C. – Today, Rep. Burgess Owens (UT-04) co-sponsored the Responsible Borrowing Act, legislation to help alleviate excessive student loan debt by allowing institutions of higher education to implement guard rails on how much money students can borrow.

“The financial security of many Utah students and their families is at risk due to the student debt crisis,” said Rep. Owens. ”The Responsible Borrowing Act will provide institutions of higher education the tools to tackle excessive borrowing, address the student debt crisis, and help students achieve financial stability. I am proud to support this commonsense legislation and will continue to champion the unique academic and economic needs of America’s students.”

Background Information

The current student loan debt in the United States is over $1.6 trillion. Student loan debt in the United States has more than doubled in the last decade and continues to grow at an excessive rate. The massive amounts students are borrowing is affecting their ability to have a family, buy a car and own a home. Only 32 percent of young college graduates (25-39) with student loan debt say they are living comfortably, compared to 51 percent of college graduates without outstanding loans. With this crippling student loan crisis, we must find ways to ensure students are not borrowing more than they need.

Financial aid administrators want to help ensure students are borrowing a responsible amount as they see far too often students borrowing more than they need. Responsible institutions know this is a problem and want to prevent unnecessary debt for their students, but current law has tied their hands. As it stands now, students can borrow up to the maximum amount of a federal loan and the institution, which is held responsible for cohort default rates (CDR), has relatively no say in the matter. Only in a rare, case-by-case basis can a school deny or restrict the amount a student can borrow.

The Responsible Borrowing Act would help reduce the risk of overborrowing by allowing institutions of higher education to limit the amount of a federal loan that a student enrolled at their institution can borrow. The bill would only allow institutions to limit loans under certain conditions relating to average salaries for typical occupations pursued by graduates of a program, enrollment status of the student (i.e., full- or part-time), credential level of the program and the year of the program. Under the bill, if the institution limited the amount a student could borrow, the institution would be able to increase that amount if the student demonstrates special circumstances or exceptional need.

The full text of the legislation is available here.


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