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Joint Consolidation Loan Separation Act| New Hope for Forgiveness

Updated: Jul 15

The Joint Consolidation Loan Separation Act would allow borrowers to apply to split the joint consolidation loan back into separate federal direct loans.


  1. Joint Consolidation Loan Separation Act Offers New Hope for Forgiveness

Borrowers with spousal consolidation loans — a program that allowed married couples to consolidate their federal student loan debt for a lower interest rate and monthly payment — may soon see relief. The program was terminated by Congress in 2006, but there was never a method for spouses to divide their loans if they separated. Even if they both remarry, the two people are still linked for years.

The Joint Spousal Consolidation Loan Separation Act was unanimously adopted by the Senate on June 15, 2022. The Act, if passed by the House and signed by President Biden, would allow borrowers to split their debts into two federal Direct Loans.



It might also pave the way for them to have their debt forgiven under the Biden administration's PSLF Limited Waiver reform. The waivers made seeking forgiveness simpler for public officials and others who had been subjected to forbearance steering or other servicer mismanagement. Those modifications, however, had minimal impact on spousal consolidation loans.

Senator Mark Warner, a Virginia Democrat who is a co-sponsor of the bill, said, "Now, if you contributed 70% of the student debt, you will be responsible for 70%." "Thousands of people were saddled with tens of thousands of dollars in commitments, often from a domestic abuser."

“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.”

- U.S. Sen. Mark R. Warner (D-VA) What you need to know about joint consolidation loans is outlined below.

  • What is the Joint Spousal Consolidation Act and how does it work?

  • Joint Spousal Consolidation Loan History

  • Joint Consolidation Loans Have Issues

  • Efforts to Modify the Law

  • Decrees on Divorce

  • Options for Loan Forgiveness

  • Option of Bankruptcy for Joint Consolidation Loans

What is the Joint Spousal Consolidation Act and how does it work? The Joint Spousal Consolidation Act, if passed into law, would allow borrowers who have these types of loans to split their debt into two federal Direct Loans. In order to qualify, at least one person must attest that


  • They've been subjected to domestic or financial abuse.

  • They can't reasonably get or access the loan details of the other spouse.

The new Direct Loans will have the same interest rates as the joint loan once approved. In addition, under the PSLF Program, Limited PSLF Waiver, income-driven repayment forgiveness, and the IDR Waiver, each spouse can receive credit toward forgiveness.

Joint Spousal Consolidation Loan History

The federal government permitted married borrowers to consolidate their federal student loans into a joint consolidation loan as part of the Higher Education Amendments of 1992. Couples decided to be held equally responsible for their spouse's debt with this new loan. In exchange, they were given access to repayment programs that were more flexible, such as Graduated, Income-Sensitive, and Income-Based Repayment.

While having access to inexpensive payment plans was beneficial to married borrowers who were struggling to manage their student loan debt, many of those couples were unaware of the consequences of merging their debts. The couples would be perpetually bonded to each other under the new loan terms, even if they later divorced.


Congress crafted the terms so that regardless of the percentage of their loan balances or their marital status, both couples were equally accountable for each other's debt.

To put it another way, the law makes it impossible to split a Joint Spousal Consolidation Loan.

Joint Consolidation Loans Have Issues

The difficulties with joint consolidation debts after a divorce were obvious from the start. If one of the spouses refuses to pay half of the monthly payment, the other spouse will be responsible for the entire cost. Similarly, if the former couple wanted to utilize an IBR plan to pay down their student loans, both spouses would have to use the same plan and supply the same financial information. They would both be denied access to the payment plan if one of them failed to do so.


In 2006, Congress repealed combined consolidation loans due to these concerns. However, even in circumstances of domestic violence, economic abuse, or an unresponsive partner, it did not give a method to terminate existing loans.


The National Network to End Domestic Violence, the National Consumer Law Center, the North Carolina Coalition against Domestic Violence, and the Virginia Sexual and Domestic Violence Action Alliance have all endorsed the "Joint Consolidation Loan Separation Act." Efforts to Modify the Law A number of members of Congress have attempted to address the issue of spousal student loan consolidation. However, none of their attempts have yielded results.

  • Rep. David Price (D-NC-4) presented the Joint Consolidation Loan Separation Act (115-HR 2949) in the United States House of Representatives on June 20, 2017, and Sen. Mark Warner (D-VA) sponsored identical legislation (115-S.1384) in the United States Senate on June 20, 2017.

  • Rep. Bobby Scott (D-VA-3) introduced the same legislation wording in the Aim Higher Act on July 26, 2018. (115-HR 6543)

  • On October 11, 2018, Sen. Jeff Merkley (D-OR) introduced the Affordable Loans for Any Student Act (115-S. 3584), which had the identical text.

  • On April 13, 2021, a bipartisan group led by Reps. David E. Price (D-NC), Greg Murphy, M.D. (R-NC), and Haley Stevens (D-MI) introduced the Joint Consolidation Loan Separation Act, which was co-sponsored by Sens. Mark R. Warner (D-VA), Marco Rubio (R-FL), and John Cornyn (R-TX) (R-TX). On June 16, 2022, the Senate passed the Act. It's now in the hands of the House.

This legislation would allow a joint consolidation loan to be shared based on each spouse's debt share prior to the joint consolidation. No measures have made it out of committee thus far.

Decrees on Divorce

Because the federal government would not enable them to divide their loan obligations, many couples used their divorce decree to do so. Those decrees, however, are ineffective. Their student loan servicer will refuse to remove a spouse from the consolidation debt, regardless of what the former spouses agree to in their divorce. Under federal law, it is illegal to remove a spouse from a loan.

If one spouse has a court order directing them to refinance the debt in their name alone, the inability to remove a former spouse from the loan is a major issue. If their name isn't removed from the loan, their ex-spouse may try to hold them in contempt of court.


However, the spouse who has been compelled to refinance the loan frequently has few options. They are unable to combine the debt into their own name due to a decision by the US Department of Education. Meanwhile, refinancing with a private lender necessitates the creditworthiness of the spouse. Assume they have a low credit score, negative credit dings on their credit report, or a low income. Student debt refinancing will not be a possibility in that situation.


The spouse's only option is to make payments on the aggregated loan. However, they will require their ex-assistance spouse's in requesting a repayment plan based on their income, deferment, or forbearance.

Options for Loan Forgiveness

Joint spousal consolidation loans are technically eligible for loan forgiveness programs offered by the federal government. Borrowers, on the other hand, may have difficulty qualifying for them.

If one or both spouses work in the public sector, for example, they may be eligible for the Public Service Loan Forgiveness Program. However, they must have a Direct Consolidation Loan to be eligible for this student loan forgiveness program. They are not eligible for PSLF if they acquired a spousal consolidation loan through the Federal Family Education Loan Program (FFEL). They won't be able to consolidate again. They also won't be able to convert the FFEL loan to a Direct Consolidation Loan.

Under an income-based repayment plan, joint consolidation loan borrowers can have their remaining balance canceled after 20 to 25 years of payments. However, adhering to that plan necessitates ex spouses maintaining contact and agreeing to share financial information. Staying in touch for two decades may be the last thing you want, depending on how your marriage ended. The truth is that there are few ways to avoid repaying these debts.

Option of Bankruptcy for Joint Consolidation Loans

Americans who are drowning in credit card debt, medical expenses, mortgages, and other consumer loans can seek relief through bankruptcy. Their student loan debt, however, will stay unless they can show that repaying it would cause them and their family undue hardship.

Historically, bankruptcy judges have used the Brunner Test to evaluate undue hardship situations by looking at the debtor's past, current, and prospective income and payment history. Under that measure, a borrower does not face undue hardship if they can maintain a minimal level of living while repaying their loans. They will not be able to pay off their student loans.

Do you require assistance with a joint consolidation loan?

Spousal consolidations can be difficult to manage, especially if the interest rate is high or if your co-signer is difficult to work with. If left unmanaged, these loans can ruin your credit history, disqualify you from federally backed mortgages, prevent you from receiving additional federal student aid, and expose you to income garnishment, tax refund offset, and Social Security Benefit offset.

  • Make an appointment with TitanPrep to avoid this happening to you.

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