Millions of federal student loan borrowers will soon see up to $20,000 cut from their debt balances — but a small group who consolidated their debt decades ago are out of luck. In 2006, Congress shut down the marital joint loan consolidation program, which allowed married couples to combine their student debt balances with the idea that a single monthly payment with one interest rate would be more affordable. However, under current law, splitting these loans is prohibited, meaning that if a couple separates – or even in the case of domestic violence – both borrowers must continue to repay the debt together. This is especially prohibitive after President Joe Biden’s recent announcement of up to $20,000 in student loan forgiveness for federal borrowers making less than $125,000 a year. Only borrowers with federal loans are eligible for the one-time broad relief. While borrowers with some private federal loans — such as those in the FFEL program — can consolidate their balances into direct student loans to access debt forgiveness, borrowers with spousal loans cannot separate their loans and therefore are excluded from biden loan forgiveness. Federal borrowers have until December 2023 to apply for Biden’s loan forgiveness through a form to be released in early October, so it’s up to Congress to pass a law before then that would allow those loans to be separated for 776 borrowers you still have them. Virginia Sen. Mark Warner sponsored the Joint Consolidation Loan Separation Act of 2021, which would allow borrowers to separate their marital loans. It passed the Senate in June and is now in the House awaiting a final vote. But it’s not just the long deadline for student loan forgiveness that weighs on these borrowers—those who are also public employees are in an even bigger crunch to sort out their loans. Last year, the Department of Education announced reforms to the Public Service Loan Forgiveness (PSLF) program, which aims to forgive student debt for government and nonprofit workers after ten years of qualifying payments. The reforms included a temporary waiver through Oct. 31, 2022 that would allow any past payments to count toward forgiveness progress, including those previously considered ineligible — but to qualify, the loan type must be a direct federal loan. Since marital loan borrowers cannot separate their loans to consolidate them, they currently cannot take advantage of the PSLF waiver that expires in less than two months. Insider previously spoke with Russell Case, a borrower who consolidated his loans with his wife, but was unaware that doing so would prevent him from receiving PSLF relief. “I understand that people have to pay off their debt. I take that part,” Case said. “But if the government promises debt forgiveness for public servants after ten years and we find out after the fact that our loans don’t qualify, that’s my biggest problem.”
