House approves Spouse Student Debt Splitting Bill
Congress continues fight to help people trapped in spousal student loans
Wednesday’s 232-193 vote comes three months after the Senate passed the Joint Consolidation Loan Separation Act passed by Sen. Mark R. Warner (D-Va.) and Rep. David E. Price (DN.C.) was introduced.
House Republicans objected to giving the Department of Education more powers over federal loans owned by private institutions because the bill would convert the debt into separate direct loans from the federal agency. They also argued that the Senate bill did not protect both borrowers and could take more than a year to implement.
Rep. Virginia Foxx (NC), the top Republican on the House Education Committee, on Tuesday listed her concerns about the House bill, calling it “well intentioned” but “flawed”.
She presented alternatives legislation This would allow borrowers to instantly split their debt into two loans that remain in the hands of private companies. Borrowers could then choose to consolidate into the direct lending program to be eligible for debt relief. A motion to review Foxx’s bill narrowly failed on Wednesday.
The Separation Act approved by the legislature allows borrowers to split their loans on the basis of initial share the debt they have incurred. The two new federal direct loans would have the same interest rates as the joint consolidation loan. Each borrower would also be able to transfer eligible payments made on the joint loan to the Civil Service Loan Forgiveness program, which wipes the balance for civil servants after 10 years of payments and service.
“I am pleased with the passage of this common sense law that will bring tremendous relief to borrowers who are victims of abusive or uncommunicative spouses,” Price said Wednesday. “These borrowers have been trapped with no legal options and this bill will give them the opportunity to regain their financial freedom.”
Since 2017, Price and Warner have introduced the bill three times. They took up the issue a few years ago after meeting with constituents desperate to separate their student loans from those of their ex-partners.
Warner said Wednesday he looks forward to getting it in front of Biden as soon as possible.
“For too long, individuals have been tied to abusive or unresponsive ex-partners through joint student loans,” Warner said. “This legislation offers financial freedom to those who have been unjustly held liable for their ex-partner’s debt for decades.”
Between 1993 and 2006, more than 14,700 people consolidated their debt through the spousal consolidation program, according to federal data obtained from the Student Borrower Protection Center. Many of the loans have been repaid over time, but about 770 loans remain, according to federal data.