A bill introduced in the House and Senate would allow borrowers to break consolidated student loans with a spouse or ex-spouse.
The Joint Consolidation Loan Separation Act would allow two borrowers to apply jointly to terminate their joint consolidation loan, or allow a borrower to submit a separate application in the event that they experience domestic or economic abuse, or are unable to reach or access the loan information of the other borrower.
The bicameral legislation is sponsored by Sen. Mark Warner (D-VA), Orrin Hatch (R-UT), Elizabeth Warren (D-MA) and Marco Rubio (R-FL), as well as Representatives David Price (D- NC) and Bradley Byrne (R-AL).
From 1993 to 2006, the US Department of Education provided joint consolidation loans to married couples. Congress eliminated the program in 2006, but failed to provide a way to sever existing loans, even in cases of domestic violence, financial abuse, or an insensitive partner. As a result, there are borrowers all over the country who remain liable for their abusive or non-communicative spouse’s consolidated debt without legal remedies options.
“I first learned of this problem when one of my McLean constituents contacted my office for help with a joint consolidation loan following divorce. His 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, ”said Warner. “Congress must not turn a blind eye to this oversight.”
Hatch said people shouldn’t be unduly burdened by an old consolidation program.
“Over the years, I have met many constituents who were unfairly burdened with a joint consolidation loan with no back up,” Hatch said. “I am happy to support this bill which will give those affected a way to relieve themselves from an 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 chain someone to a former spouse, especially in domestic and economic violence cases,” Warren said. “Congress made the right choice when it ended the Joint Consolidation Loan Program in 2006, and I hope Congress passes this bipartisan bill to help struggling student borrowers move forward with their lives and to gain their financial independence.
The National Consumer Law Center has also expressed support.
“For far too long, many student loan borrowers have been stuck in joint consolidation loans, and this bill ensures that troubled borrowers, including survivors of domestic and economic abuse who previously consolidated their debts student loans, have the opportunity to regain their financial footing, ”said National Consumer Law Center attorney Joanna Darcus. “We commend the sponsors of this bill for their efforts. This bill would benefit many vulnerable student borrowers, and we are proud to support it.