Several years ago, the Department of Education offered married couples a chance to consolidate their student loans. Promises of lower interest rates and one payment instead of two drew more than 14,000 borrowers into the program.
As with many federal government initiatives, it would end up being short-lived, expiring in 2006. While those already grandfathered into the program continued to benefit, challenges arose with spouses involved in divorce proceedings.
Those in charge at the time of the defunct program did not consider the need to re-separate the debts when marriages end. Two years ago, joint consolidation borrowers received a bit of relief when they were allowed to pause their federal student loan payments. However, that option disappeared two months ago.
Divorce-driven financial abuse
Many borrowers also did not account for spurned spouses who chose to withhold payments, placing the burden on their ex. Domestic violence relief organizations claim that economic sabotage is all too common in abusive relationships, both during and after marriage.
Last month, a five-year quest by U.S. Senator Mark R. Warner ended when the Senate passed the Joint Consolidation Loan Separation Act. Should the House of Representatives vote in favor as well, ex-spouses can no longer deliberately opt-out of paying their student loan debts. Being unresponsive or abusive will not end their responsibility for their share of the consolidated student loan.
Borrowers will have to submit an application to the Department of Education to divide one federal direct loan into two. The remaining amount of the unpaid loan and interest would be the responsibility of both applicants. Interest rates would remain the same.
