Sen. Mark R. Warner (D-Va.) and Rep. David E. Price (DN.C.) have introduced the bill three times since 2017. While they have garnered bipartisan support over the years, some Republicans were concerned about allowing the Education Department to tear up a contract based on the word of one spouse without any legal documents to support their claims of abuse. or negligence.
“We do have some opposition, but this is basically a bipartisan, bicameral bill and it’s satisfying to get it resolved on that basis,” Price said Friday. “This is kind of an object lesson in how hard it is to do things that seem pretty obvious, and this one always seemed obvious to me.”
Price and Warner broached the issue several years ago after separate meetings with constituents desperate to untangle student loans from their former partners. Warner said he was contacted by a mother of two in McLean, Virginia, whose abusive ex-husband refused to pay his portion of their joint loan, leaving her at risk of wage garnishment as she struggled to keep up with 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 with no recourse. “We heard about cases of domestic violence that not only made reconciliation impossible but also joint responsibility for these obligations,” Price said. “The consequences were serious, people’s credit was ruined and wages were garnished.”
More than 14,700 people combined their debt through the marital consolidation program between 1993 and 2006, according to federal data obtained by the Student Borrower Protection Center. The couples agreed to be equally responsible for each other’s educational debt in exchange for a lump sum payment and a lower interest rate.
The shortcomings of the program became apparent when borrowers realized there was no way to discharge joint debt, even in the event of domestic violence or divorce. Congress ended spousal consolidations in 2006, but did not provide a way for people to opt out of the program. While many of the loans have been paid off over time, there are still about 770 loans left, according to federal data.
“We’re not enough 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, NC, who added, “anyone can see how crazy this is the situation.” She has had trouble paying off a marital loan since said her husband left 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 did not make payments or provide child support. Klein postponed her loan payments while she tried to keep the family afloat. The interest accrued and brought her balance to more than $205,000 to date.
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“It was a blessing to get out of the relationship and not have my children 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 handle it, I could aggressively save for retirement.”
If the legislation is passed and enacted, borrowers like Klein could separate their loans based on the initial proportion they brought. Since her education loans represented approximately 58 percent of the original obligation, she would be responsible for that amount.
Under the bill, the two new federal direct loans would carry the same interest rates as the joint consolidation loan. Each borrower could also transfer eligible payments made on the joint loan into the Public Service Loan Forgiveness program, which wipes out public servants’ balances after 10 years of payments and service.
That last perk is especially appealing to Michelle Gladu, a social worker in Syracuse, NY, with $50,000 in student debt. Gladu, 55, discovered the limitations of marital consolidation last year when she tried to take advantage of a temporary expansion of the loan forgiveness program.
Gladu had heard of people with loans from the defunct Federal Family Education Loan program consolidating their debt to take advantage of a waiver that temporarily expanded access to the Public Service Loan Forgiveness program. But she he learned he couldn’t reconsolidate his joint loan to do the same thing.
“Being able to unbundle the loans would mean you could “apply for the Public Service Loan Forgiveness program” or even the other forgiveness that Biden recently announced,” said Gladu, who has worked in the public sector for more than 20 years. “Not having this debt would be a huge help as my husband and I get older.”