Congress allows joint student loan separation

Congress approves bill allowing joint student loan separation


Congress passed a bill that lets couples with FFEL consolidated students loans split their debts and become eligible for forgiveness. 

Borrowers with Spousal Consolidation Loans, especially those from lenders in the Federal Family Education Loan (FFEL) Program, have not been able to take advantage of many of the historic steps the Biden Administration has taken to protect student loan borrowers. By separating these loans, these borrowers will finally be able to use important programs that help with federal student loan repayment. 

At a glance: 

  • Congress passed a bill that lets people with spousal loans on their student loans split their debt. 
  • Since Congress shut down the program in 2006, it was against the law to separate spousal loans. 
  • This made it impossible for those borrowers to get federal benefits like PSLF (Public Service Loan Forgiveness) and loan forgiveness for a wide range of loans. 
  • Once signed by Biden will allow the separated loans to become eligible for the existing federal student loan repayment programs. 

Borrowers with spousal loans can now separate their balances and become eligible for government assistance to pay off their debt. 

In 2006, Congress ended the spousal joint consolidation loan program. This program previously let married people combine their student debt balances into a single payment with a single interest rate. The idea was that this would be a more affordable way to pay back the debt. But once that program ended, those borrowers were stuck with the combined balances because the law said they could not be split up. This stopped them from consolidating their debt into federal direct loans and taking advantage of federal help like the Public Service Loan Forgiveness (PSLF) program and blanket loan forgiveness. 

After more than a decade, those who borrowed money are finally getting some relief. The Joint Consolidation Loan Separation Act of 2021 was passed by the House on Wednesday. It allows people with spousal loans to separate their balances. This bill, which is sponsored by Sen. Mark Warner and Rep. David Price, will make sure that borrowers do not have to keep paying off debt with an abusive ex-partner and that borrowers who are still together can each apply for federal loan forgiveness. 

In June 2022, the Senate passed the same bill with bipartisan support, but it took longer to get through the House because of opposition from Republican leaders, including Virginia Foxx, the top Republican on the House education committee. Foxx said during a Rules Committee meeting on Monday that she agreed with what the bill was trying to do, but she did not like how it was written and didn’t support it in its current form. 

On Tuesday, she even introduced the Simplified Joint Consolidation Separation Act as a counter to the original bill, saying in a statement that it would “help borrowers without handing Washington bureaucrats more control over the nation’s student loan programs.” 

Even so, the bill overcame opposition in the House and is now on its way to President Joe Biden to be signed into law. Price said that the bill is “far from” partisan because some Republicans support it. However, because of resistance from committee leadership, the bill could not follow the same path as the Senate and had to go through regular order to get to the House floor. 

The passage of this bill comes at a particularly crucial time for people who have student loans and debt with their spouse. They can now apply for the PSLF waiver, which ends on October 31 and lets past payments count toward debt forgiveness. They can also take advantage of Biden’s recently announced $20,000 in federal debt cancellation by filling out an application form that will be available in early October. 


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