WASHINGTON – U.S. Sen. Mark R. Warner (D-VA) today applauded the Senate passage of the Joint Consolidation Loan Separation Act of 2021, legislation to provide much-needed relief for individuals who previously consolidated their student loan debt with a spouse. Although Congress eliminated the program on July 1, 2006, it did not provide a means of severing existing loans, even in the event of domestic violence, economic abuse, or an unresponsive partner. As a result, there are borrowers across the country who remain liable for their abusive or uncommunicative spouse’s portion of their consolidated debts. This legislation provides relief to these individuals by allowing borrowers to split this debt.
“The Senate passage of this commonsense legislation is a huge step for survivors of domestic violence and financial abuse who have spent decades fighting for their financial freedom. By finally allowing individuals to sever their joint consolidation loans, this bill will provide needed respite to vulnerable individuals who are being unfairly held responsible for the debt of a former partner. I urge my House colleagues to act with urgency and send this bill to the President’s desk as soon as possible.”
The Joint Consolidation Loan Separation Act would allow borrowers to submit an application to the Department of Education to split the joint consolidation loan into two separate federal direct loans. The joint consolidation loan remainder – the unpaid loan and accrued unpaid interest – would be split proportionally based on the percentages that each borrower originally brought into the loan. The two new federal direct loans would have the same interest rates as the joint consolidation loan. Additionally, the bill would enable borrowers to access student loan relief programs, such as the Public Service Loan Forgiveness (PSLF) Program and income-driven repayment programs for which they were previously ineligible due to their joint consolidation loans.
Sen. Warner authored the original version of the Joint Consolidation Loan Separation Act in 2017 after a constituent of his, Sara from McLean, Virginia, contacted him to communicate her struggles with a joint consolidation loan. Sara was raising two children on a public school teacher’s salary in Northern Virginia and trying to keep up with payments on her student loans. Unfortunately, her ex-spouse, whom she had divorced and moved thousands of miles away from to start fresh, refused to pay his share of their joint loan. Because joint consolidation loans create joint and several liability for borrowers, Sara faced the threat of having her wages as a public school teacher garnished if she did not pay both her and her ex-husband’s portions of their debt. Sen. Warner did not think this was fair and sought to create a solution, so that constituents like Sara could control their own financial futures. You can hear Sen. Warner tell Sara’s story here.
The Joint Consolidation Loan Separation Act has been supported by a number of organizations, including the National Network to End Domestic Violence, National Consumer Law Center, North Carolina Coalition against Domestic Violence, and the Virginia Sexual and Domestic Violence Action Alliance.