Federal Spousal Consolidation Loans Finally Have an Off Ramp

Well, this took years and years, but politicians finally took some action to allow people trapped in Federal Student Loan Spousal Consolidation Loans a way out.

The Spousal Consolidation Loan program was terminated in 2006. Still, it left no way for two people to get out of these loans if they divorced, died, or were even victims of domestic abuse or an unresponsive partner.

As a result, borrowers across the country remain liable for their abusive or uncommunicative spouse’s portion of their consolidated debts. Borrowers trapped in these loans can also not access federal relief, including the Public Service Loan Forgiveness (PSLF) Program. This legislation relieves these individuals by allowing borrowers to split this debt and apply for forgiveness benefits.

“I’m thrilled that borrowers who have been ensnared in these exploitative loans for decades will finally get relief,” said Sen. Warner. “Passing this law means freedom for thousands of borrowers – freedom from financial and domestic abuse, freedom to control their own financial future, and freedom to enjoy the same benefits as other borrowers across the country.”

It took 16 years to fix this apparent oversight finally. We should be grateful it was dealt with, considering all the infighting and bickering between politicians.

Senator Mark Warner of Virginia took a victory lap he was due. He first introduced the Joint Consolidation Loan Separation Act in 2017 and stuck with it till it passed and the president signed it into law.

Warner started this effort after a constituent, Sara from Northern Virginia, contacted him to communicate her struggles with a joint consolidation loan. Sara was raising two children on a public school teacher’s salary 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, refused to pay his share of their joint loan.

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Because joint consolidation loans create joint and several liability for borrowers, Sara threatened to have her wages as a public school teacher garnished if she did not pay 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 constituents like Sara could control their financial futures. Video and audio of Sen. Warner reconnecting with Sara is available here.

The bill had three other cosponsors, Senator Marco Rubio, Senator John Cornyn, and Senator Tina Smith.

You can read the Joint Consolidation Loan Separation Act here.

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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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4 thoughts on “Federal Spousal Consolidation Loans Finally Have an Off Ramp”

  1. I submitted an application & was denied. I was told spousal loans do not qualify & cannot be separated. That was the plan, to separate the loans, consolidate into a direct loan then apply for the PSLF program.

  2. The new spousal “act” to separate student loans is great if you are divorced, or a victim of spousal abuse. Now they can move forward w/getting direct loan & apply for the PSLF program.
    What about the joint spousal loan holders who are still married, have sacrificed to pay the loan as intended but still won’t qualify for PSLF program (after 43 years of public service) because spousal loans do not qualify for a direct loan!
    It sucks!! Just like the other Biden student loan forgiveness!!!


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