Joint Spousal Consolidation Loans: The Education Department has released a new application that could be life-changing for some people who want to get their student loans forgiven. This new program fixes problems with a program from the past called spousal consolidation loans or joint federal consolidation loans, which were available before 2006.
At first, this program seemed like a good idea because it let married people combine their separate federal student loans into one federal consolidation loan. But it caused a lot of problems, especially for people who later tried to get their federal student loans forgiven or got divorced, because it was hard to separate or manage the new debt on their own.
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The department has finally published an official application, two years after Congress approved the separation of these loans.
New Student Loan Application Gives Overlooked Borrowers A Shot At Loan Forgiveness https://t.co/3WfzF69a0Y pic.twitter.com/5wte5V5pNP
— Forbes (@Forbes) October 30, 2024
The goal of the joint spousal consolidation loan program was to make it easier for married borrowers to repay their student loans. The idea was to make it easier for a married couple to manage their student loan payments by combining their balances into one. The catch is that it was impossible to untangle the loans. Therefore, the couple was still responsible for the full loan balance even if they divorced. This implied that the other party would still be responsible if one chose not to pay.
Student loan forgiveness has been made easier.
If that wasn’t enough, any income-driven repayment plan required monthly payments to be determined by the combined income of the two ex-spouses. Even if they divorced and remarried, this remained true.
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In the words of one borrower, “It was like being tied to someone I was no longer connected to. It felt suffocating.” Another borrower shared, “I felt trapped and it was scary to think that I could be held responsible for someone else’s debt, especially if I was trying to escape an abusive situation.”
Married borrowers who previously encountered these difficulties can now rest easy because of the new application. Finally, they can pursue student loan forgiveness and separate their loans without being constrained by their marital status.
For many borrowers who have been finding it difficult to handle the complexities of student loan repayment, this is a significant victory. It’s a positive step toward giving everyone looking for relief from their student loan debt fair and affordable options.