Sen. Mark R. Warner (D-Va.) and Rep. David E. Price (DN.C.) have introduced the bill three times since 2017. Although they have garnered bipartisan support over the years, some Republicans were concerned about allowing the Department of Education to break a contract based on the word of one of the spouses without any legal documentation to back up their claims of abuse or neglect.
“We have some opposition, but it’s basically a bipartisan, bicameral bill and it’s satisfying to craft it on that basis,” Price said Friday. “It’s kind of an object lesson in how hard it is to do things that seem fairly obvious, and this one has always seemed obvious to me.”
Price and Warner broached the issue several years ago after separate meetings with voters desperate to disentangle their student loans from those of their former partners. Warner said he was contacted by a mother of two in McLean, Va., whose abusive ex-husband refused to pay her share of their joint loan, leaving her at risk of having her wages garnished while she was struggling 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 loans with abusive or irresponsible partners without any recourse. “We’ve heard of cases of domestic violence that have not only made reconciliation impossible, but also joint responsibility for those bonds,” Price said. “The consequences have been severe, people’s credit being ruined, wages being seized.”
More than 14,700 people combined their debts through the spousal consolidation program between 1993 and 2006, according to federal data obtained by the Student Borrower Protection Center. The couples agreed to be held equally responsible for each other’s student debt 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 joint debt, even in cases of domestic violence or divorce. Congress ended spousal consolidations in 2006, but failed to provide people with a way out of the program. Although many loans have been paid off over time, there are still about 770 loans left, according to federal data.
“There aren’t enough of us to impact an election, so there hasn’t been a lot of political motivation to do anything,” said Lori Klein, 58, a single mother of two in Raleigh. , North Carolina, who added, “Anyone can see how crazy this situation is. She’s been struggling to repay a spousal loan for she said her husband abandoned the family and moved to Turkey in 2006.
At the time, Klein was a stay-at-home mom with no source of income, $300 in savings, and $68,000 in joint student loans. Her husband made no payment and provided no alimony. Klein postponed her loan repayments as she tried to keep the family afloat. Accrued interest has brought the balance to over $205,000 to date.
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“It was a blessing to get out of the relationship and not see my kids grow up with someone like my ex-husband, but this debt has been a dark cloud that has weighed on me for years,” she said. . “If I can get it under control, I could save aggressively for retirement.”
If the legislation is approved and signed into law, borrowers like Klein could split their loans based on the initial proportion they contributed. Since her student loans were approximately 58% of the original obligation, she would only be liable for that amount.
Under the bill, the two new federal direct loans would have the same interest rates as the joint consolidation loan. Each borrower could also transfer eligible payments made on the joint loan to the Civil Service Loan Forgiveness Program, which clears civil servants’ balances after 10 years of payments and service.
That 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 spousal consolidation last year when she tried to take advantage of a temporary loan forgiveness program extension.
Gladu had heard of people with loans from the former Federal Family Education Loan Program consolidating their debt to take advantage of a waiver temporarily expanding access to the Civil Service Loan Forgiveness Program. But she learned that she could not re-consolidate her joint loan to do the same.
“Being able to separate loans would mean I could ‘apply for the Public Service Loan Forgiveness Program’ or even the other recently announced Biden pardon,” said Gladu, who has worked in the public sector for more than 20 years. . “Not having that debt would be a big help as my husband and I get older.”