House of Representatives to Vote on Joint Spouse Student Loan Splitting Bill
Sen. Mark R. Warner (D-Va.) and Rep. David E. Price (DN.C.) have introduced the bill three times since 2017. While they’ve garnered bipartisan support over the years, some Republicans have been concerned that the Department of Education could breach a contract based on a spouse’s word without legal documents to support their allegations of abuse or neglect.
“We have some resistance, but this is essentially a bicameral bicameral law, and it’s gratifying to draft it on that basis,” Price said Friday. “It’s kind of an object lesson on how hard it is to do things that seem pretty obvious, and this one always seemed obvious to me.”
Price and Warner took up the issue a few years ago after meeting separately with citizens desperate to separate their student loans from those of their former partners. warner said he was contacted by a mother of two in McLean, Virginia, whose abusive ex-husband refused to pay his share of their joint loan, putting her at risk of having her wages garnished as she herself struggled to keep up with the payments.
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For Price, the issue became a priority around 2014 after hearing from people who were also stuck in non-recourse loans with abusive or irresponsible partners. “We have heard of cases of domestic violence that have made impossible not only reconciliation but shared responsibility for those commitments,” Price said. “The consequences were serious, loans were ruined, wages were garnished.”
More than 14,700 people consolidated their debt through the spousal consolidation program between 1993 and 2006, according to federal data obtained by the Student Borrower Protection Center. Couples agreed to be held equally liable for each other’s educational debts in exchange for a one-time payment and a lower interest rate.
The program’s shortcomings became apparent when borrowers realized there was no way to break through the joint debt, even in the event of domestic violence or divorce. Congress ended the marriage in 2006 but did not offer people an option to opt out of the program. While many of the loans have been repaid over time, about 770 loans remain, according to federal figures.
“There aren’t enough of us to influence an election, so there wasn’t a lot of political motivation to do anything,” said Lori Klein, 58, a single mother of two in Raleigh, NC, who added, “Anyone can.” see how crazy this situation is.” Since then, she has struggled to pay off a marriage loan She said her husband left the family and moved to Turkey in 2006.
At the time, Klein was a stay-at-home mom with no income, $300 in savings and $68,000 in joint student loans. Her husband made neither payments nor alimony. Klein postponed her loan payments as she tried to keep the family afloat. Interest accrued, taking the balance to over $205,000 to date.
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“It was a blessing to get out of the relationship and not have my kids grow up with someone like my ex-husband, but this debt has been a dark cloud over me for years,” she said. “If I can get a handle on it, I could start saving aggressively for retirement.”
If the legislation is approved and enacted, borrowers like Klein could base their loans on the initial share They brought her in. Since her education loans were about 58 percent of her original commitment, she would only pay for that amount.
According to the bill, 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.
This last perk is particularly appealing to Michelle Gladu, a social worker in Syracuse, NY with $50,000 in student debt. Gladu, 55, discovered the limitations of marriage last year when she tried to take advantage of a temporary loan forgiveness program extension.
Gladu had heard of people with loans from the defunct Federal Family Education Loan program consolidating their debt to benefit from a waiver that temporarily expands access to the Public Service Loan Forgiveness program. but you learned that she could not reconsolidate their joint loan to do the same.
“Being able to segregate the loans would mean I could apply for “the Public Service Loan Forgiveness program” or even the other forgiveness that Biden recently announced,” said Gladu, who has been a resident for more than 20 years years in the public sector. “Not having that debt would be a huge help as my husband and I get older.”