Congressman Higgins Announces Approval of Legislation Allowing Couples to Split Consolidated Student Loans

Press Release

Congressman Brian Higgins (NY-26) announced the approval of the Joint Consolidation Loan Separation Act (S.1098). Building on efforts by the Biden Administration to make student loan relief and repayment more accessible, this bipartisan legislation will help borrowers who are being unfairly held responsible for a partner's debt by separating student loans that were jointly consolidated under past agreements.

"Federal direct consolidation loans were intended to help spouses reduce interest rates on student loans, but when the program ended, some borrowers, especially those experiencing domestic violence and financial abuse, were left liable and financially tied to their partner's student debt," said Congressman Brian Higgins. "This legislation will not only provide relief for struggling student loan borrowers, but it also allows survivors of domestic abuse to regain their financial footing without the burden of their abuser's debt."

From 1993 to 2006, married couples were able to combine their student loan debt into joint consolidation loans. At the time, both borrowers agreed to be jointly liable for repayment, which proved to be problematic if they ever wanted to separate them. The joint consolidation loan program was eliminated in July of 2006 without providing a way to sever existing joint loans, even in the event of domestic violence, economic abuse, or an unresponsive partner. As a result, borrowers across the country remain liable for an abusive or uncommunicative spouse's portion of their consolidated debt without legal means to separate them.

This legislation, for the first time, gives borrowers the ability to sever an existing joint consolidation loan. By submitting an application to the U.S. Department of Education, they can split the joint consolidation loan into two separate federal direct loans. The remainder of the joint loan, which includes the unpaid loan balance and the accrued unpaid interest, will be split proportionally based on the percentages each borrower brought into the loan. The two new federal direct loans will then have the same interest rate as the joint consolidation loan.

In most cases, borrowers will have to apply jointly to separate a consolidated loan, except for instances where a borrower experienced abuse perpetrated by the other borrower, or if they cannot reasonably access the other borrower's loan information. It provides a pathway for an individual to apply to separate their debt from an ex-spouse or current spouse in the event of an absentee or unresponsive spouse, an act of domestic violence, or economic abuse.

Additionally, under this bill, loan separation would also make individual spouses eligible for the Public Service Loan Forgiveness (PSLF) Program. Borrowers who are employed full-time by non-profit organizations, the military, or federal, state, Tribal, or local government, including many teachers, may be eligible to have their loans forgiven. The PSLF program forgives the remaining balance on federal student loans after 120 payments or 10 years. For a limited time, it is easier than ever to receive forgiveness or credit toward forgiveness even if you have not served for 10 years, but you must apply before October 31, 2022.

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