A bill introduced in the House and Senate would allow borrowers to sever consolidated student loans with a spouse, or ex-spouse.
The Joint Consolidation Loan Separation Act would allow two borrowers to submit a joint application to sever their joint consolidation loan, or allow one borrower to submit a separate application in the event that they are experiencing domestic or economic abuse, or are unable to reasonably reach or access the loan information of the other borrower.
The bicameral legislation is sponsored by Sens. Mark Warner (D-VA), Orrin Hatch (R-UT), Elizabeth Warren (D-MA), and Marco Rubio (R-FL), along with Reps. David Price (D-NC) and Bradley Byrne (R-AL).
From 1993 until 2006, the U.S. Department of Education issued joint consolidation loans to married couples. Congress eliminated the program in 2006, but did not provide a means of severing existing loans, even in the event of domestic violence, financial abuse, or an unresponsive partner. As a result, there are borrowers nationwide who remain liable for their abusive or uncommunicative spouse’s consolidated debt with no legal options for relief.
“I first learned about this issue when one of my constituents in McLean contacted my office for help with a joint consolidation loan following a divorce. Her case showed us a reality faced by many Americans who continue to be responsible for these loans despite difficult, and sometimes dangerous, situations with their partners,” Warner said. “Congress should not turn a blind eye to this oversight.”
Hatch said people should not be unduly burdened by an old consolidation program.
“Over the years, I have met many constituents who were unfairly encumbered with a joint consolidation loan with no path for relief, Hatch said. “I gladly support this bill that will give affected individuals a way to relieve themselves from unfair debt.”
The National Network to End Domestic Violence and the Virginia Sexual and Domestic Violence Action Alliance both applauded the bill.
“A federal student loan shouldn’t shackle someone to a former spouse—particularly in cases of domestic and economic abuse,” Warren said. “Congress made the right call when it ended the joint consolidation loan program in 2006, and I hope Congress will pass this bipartisan bill to help more struggling student loan borrowers move forward with their lives and obtain their financial independence.”
The National Consumer Law Center also voiced its support.
“For far too long, many student loan borrowers have been stuck in joint consolidation loans, and this bill ensures that struggling borrowers, including survivors of domestic and economic abuse who previously consolidated their student loan debts, have the opportunity to regain their financial footing,” National Consumer Law Center Attorney Joanna Darcus said. “We applaud the sponsors of this bill for their efforts. This bill would benefit many vulnerable student loan borrowers, and we are proud to support it.”