Student loan borrowers who combined debt with a current or former spouse have just taken a ‘huge step’ toward relief, the Democratic senator says
A program closed in 2006 allowed married couples to combine their student debt balances.
But the law forbids segregating loans and prohibits borrowers from a loan forgiveness program.
Senator Mark Warner’s bill to allow the separation of these loans has just been passed by the Senate.
Student loan borrowers looking to separate their debt from a current or former spouse have just come one step closer to this relief.
After 13 years of operation, Congress shut down the Joint Spouse Consolidation Loan Program in 2006. It was created to allow married couples to combine their student debt balances with the idea that one monthly payment, with a interest rate, would be more affordable. But the law prohibits the separation of these loans, which means that if the couple divorces, or even in the event of domestic violence, the borrowers must continue to repay the debt together.
That’s why Virginia Senator Mark Warner sponsored the Joint Consolidation Loan Separation Act of 2021, which would allow borrowers to separate these spousal loans, and the bill passed the Senate on Wednesday and is now heading to the Room for a full passage.
“This is a huge step for everyone burdened with these loans,” Warner wrote on Twitter.
Another problem these borrowers face is the ban on student loan forgiveness. The Public Service Loan Forgiveness Program (PSLF) forgives student debt for public servants, such as teachers and nonprofit workers, after ten years of qualifying payments. To qualify, the borrower must have a federal direct loan – so even if a public servant with a spousal loan meets the PSLF criteria, they cannot apply because they cannot split the loan into a direct loan.
“I understand that people have to pay off their debt. I get that part,” Russell Case, a civil servant with a spousal loan, said earlier. Told Initiated. “But if the government promises debt forgiveness to civil servants after ten years and we find out afterwards that our loans are not eligible, that’s my biggest problem.”
There is a sense of urgency to pass Warner’s bill, given that the Department of Education PSLF derogationwhich allows any prior federal loan payment to qualify for the program, expires Oct. 31.
According to data provided by the Student Borrower Protection Center, only 776 borrowers with spousal loans are still in repayment, but Rep. David Price — the sponsor of the House version of Warner’s bill — previously Told Insider this type of debt can be “crippling”.
“My colleagues and I were delighted to reintroduce this common-sense, bipartisan legislation, and hope we can soon move the bill forward toward its long-awaited passage,” he said.
Read the original article at Business Intern