Joint Consolidation Separation Act: What Divorced Couples With School Loans Need To Know
US lawmakers are considering legislation that would allow borrowers who share student loan debt with spouses or ex-spouses to separate those loans. However, the bill must first be passed by the House.
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Earlier this summer, the Senate approved the bill, known as the Joint Consolidation Separation Act. If approved by the House and signed by President Joe Biden, it would close a loophole that dates back to the 1990s. The loophole is tied to congressional legislation that allowed married couples to consolidate their student loans to get rates lower interest, NPR reported. Although this program ended in 2006, Congress never passed legislation allowing couples to separate loans.
This means that couples with student loans are still chained to each other, even after their divorce. Closing the loophole not only means divorced couples can finally separate debt, but also some borrowers could become eligible for the federal Civil Service Loan Forgiveness Program, which forgives student loans for teachers and others. who have spent a number of years as a civilian. servants.
Additionally, the bill would allow borrowers to choose which spouse is responsible for the student loan if they choose not to pay their respective debt separately, the California Business Journal reported. In some cases, the bill would provide significant relief to borrowers who are struggling to pay their bills.
As the House decides whether to approve the bill, federal student loan borrowers are preparing to resume payments after a two-year pause that was put in place during the first months of the COVID-19 pandemic. 19. The pause is expected to end on August 31, 2022, with payments expected to resume a day later.
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Biden is expected to make an announcement on whether to further extend the pause or implement another relief package for federal borrowers. On Monday, CNN reported that White House officials are willing to forgive up to $10,000 in student debt per borrower, based on annual income. CNN quoted multiple sources as saying the Biden plan would offer the $10,000 rebate to people who earn less than $125,000 a year.
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