Wednesday’s 232-193 vote comes three months after the Senate passed the Joint Consolidation Loan Separation Act, introduced by Sen. Mark R. Warner (D-Va.) and Rep. David E. Price (DN.C.).
House Republicans have raised objections to giving the Department of Education more authority over federal loans held by private entities because the bill would turn the debt into separate direct loans held by the federal agency. They also argued that the Senate bill failed to protect both borrowers and could take more than a year to implement.
Representative Virginia Foxx (NC), the top Republican on the House Education Committee, listed her concerns about the bill in the House on Tuesday, calling it “well-intentioned” but “flawed.”
She introduced the alternative legislation this would allow borrowers to immediately split their debt into two loans which would remain in the hands of private entities. Borrowers could then opt to join the direct lending program to become eligible for debt relief. A motion to review Foxx’s bill narrowly failed on Wednesday.
The act of separation approved by lawmakers allows borrowers to split their loans based on the initial proportion of the debt they brought. 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.
“I am thrilled to see the passage of this common-sense bill that will bring immense relief to borrowers who are victims of abusive or uncommunicative spouses,” Price said Wednesday. “These borrowers have been trapped, with no legal options available, 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 broached the issue several years ago after meetings with voters desperate to disentangle their student loans from those of their former partners.
Warner said Wednesday he looked forward to pitching him in front of Biden as soon as possible.
“For too long, individuals have been tied to abusive or insensitive ex-partners through joint student loans,” Warner said. “This legislation provides financial freedom to those who have spent decades unfairly held accountable for their former partner’s debt.”
Between 1993 and 2006, more than 14,700 people combined their debts through the spousal consolidation program, according to federal data obtained by the Student Borrower Protection Center. Many loans have been paid off over time, but there are still about 770 loans left, according to federal data.
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