House approves Spouse Student Debt Splitting Bill

The House of Representatives passed legislation on Wednesday to allow couples who have pooled their student loans while he was married to split the debt, sending the measure to President Biden and bringing some borrowers closer to qualifying for debt relief.

In the 16 years since Congress ended spousal consolidations, borrowers have struggled for a way to foreclose their loans. The short-lived federal program made couples legally liable for each other’s educational debt in exchange for a one-time payment and a lower interest rate. But that made it impossible to pay off the debt, even in the face of domestic violence or divorce. It has also trapped hundreds of people in loans ineligible for debt relief initiatives, including Biden’s recent loan cancellation plan.

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 that would allow borrowers to instantly split their debt into two loans that would 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 The loan, approved by the legislature, allows borrowers to split their loans based on the initial portion 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 debts through the spousal consolidation program, according to federal data obtained by the Student Borrower Protection Center. Many of the loans have been repaid over time, but about 770 loans remain, according to federal data.

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