Responsible for an ex’s student loans? You will like this law passed by the Senate

Student loan segregation may be just around the corner for some borrowers

It’s hard to imagine, but it’s a reality in Virginia. Did you know that a person previously married to a domestic abuser could still be legally responsible for paying off that person’s student loan debt — even after a divorce? With the recent Senate passage from co-sponsor US Senator Mark Warner (D-VA) Common Consolidation Loan Separation ActVictims are one step closer to financial freedom.

For convenience, here’s a timeline of the key points of change that led to today’s Senate passage:

  • 1993: A federal law was passed that allowed married couples to pool their student loan debt and be jointly liable for the repayment
  • 2006: Married couples could no longer consolidate their student loans, but those already involved in the “deal” could not separate their accounts
  • 2017: Warner authored the original version of the law after a voter expressed her struggles with a joint consolidation loan
  • 2021: Warner was co-sponsor of the Common Consolidation Loan Separation Act 2021 to absolve the victim of financial responsibility for an abusive ex-spouse’s student loan
  • 2022: The US Senate passed the bill, effectively sending the bill to the House of Representatives

According to Warner, who previously spoke to the US Department of Education Hearing of the Banking Committee As of May 5, there were more than 14,000 outstanding joint consolidation student loans totaling approximately $800 million.

Mike Pierce, executive director of the Student Borrower Protection Center, said at the hearing that under current law, one person could assume financial responsibility for the loan originally intended for joint repayment.

“Your bill would help dismantle these loans, but not just to give borrowers a fairer outcome, but to restore access to important parts of the student loan safety net that borrowers with these so-called spousal consolidation loans are denied. including access to government loan forgiveness and the ability to receive an income-based repayment that actually reflects their financial circumstances,” Pierce said in response to Warner at the budget hearing. “Right now, the student loan safety net is failing people with these so-called spousal consolidation loans, and your legislation would fix that mess.”

While the focus often turns to couples divorced as a result of domestic violence, the law doesn’t end there — it would give ex-couples the opportunity to do the same cancel the loan for example, in the event of economic abuse or the lack of responsiveness of a former partner.

That’s how it helps

If passed by the House of Representatives and signed by President Joe Biden, the law would amend the Higher Education Act of 1965 and authorize borrowers to segregate joint consolidation loans. According to Warner’s office, the change would allow for:

  • Borrowers must apply to the Department of Education to split the joint consolidation loan into two separate federal direct loans
  • The remainder of the loan is prorated with the principal based on the percentages that each borrower originally contributed to the loan
  • The two new direct loans from the federal government are to have the same interest rates as the joint consolidation loan
  • Borrowers are given the opportunity to transfer eligible payments to income-based repayment programs and the government loan forgiveness program

“The passage of this sensible bill through the Senate is a huge step for survivors of domestic violence and financial abuse who have fought for their financial freedom for decades. By finally allowing individuals to cancel their joint consolidation loans, this law will provide needed respite to vulnerable individuals wrongfully blamed for a former partner’s debt,” Warner said in a statement accompanying the law. “I urge my colleagues in the House to act urgently and get this bill to the President’s desk as soon as possible.”

Warner’s office also noted that the law had the support of a number of organizations, including the National Network to End Domestic Violence, National Center for Consumer Law, North Carolina Coalition Against Domestic Violenceand the Virginia Sexual and Domestic Violence Action Alliance.
Read more about the Joint Consolidation Loan Separation Act in an article published by the Legislature last year entered the Senate.

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