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Congress Passes Legislation to Allow Separation of Spousal Student Loans

In September, Congress passed legislation that permits both borrowers of a joint student loan to apply to the Education Department to have their joint loan split up into two separate loans. President Biden is expected to sign the legislation into law. 

Previously, married couples were able to combine their student loan debt into joint consolidation loans, which would make them both liable for repayment of the loan. Congress eliminated the joint consolidation program effective July 1, 2006, but it did not provide a means of severing existing loans, even in the event of domestic violence, economic abuse, or an unresponsive partner.

The bipartisan Joint Consolidation Loan Separation Act would allow both borrowers to submit a joint application to the Department to split their joint consolidated loan into two separate federal direct loans. It would also allow one borrower to submit a separate application if they are experiencing domestic or economic abuse or are unable to reasonably reach the other borrower. The remainder of the joint consolidated loan will be split proportionally. 

Under the terms of the legislation, each borrower would also be able to transfer eligible payments made on the joint loan toward the Public Service Loan Forgiveness program, which erases the balance for public servants after 10 years of payments and service. 

AACTE urges borrowers to check if they are eligible for the “limited PSLF waiver,” a time-limited change to PSLF Program rules that allow borrowers to receive credit for past periods of repayment that would otherwise not qualify for PSLF. This opportunity ends on October 31, 2022, so AACTE urges borrowers to file the appropriate paperwork as soon as possible to ensure they benefit from this prime opportunity.

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