The Senate just approved a proposal that could help student loan borrowers. Here’s what we know.
If you have a student loan — especially one that’s pooled with a spouse — you might want to listen!
The Senate just approved a proposal related to spousal consolidation of student loans.
This proposal will allow borrowers who are in glutted student loan debt with a spouse — or ex-spouses — to separate those loans.
For some lucky people, this can mean your student loan debt disappearing entirely under a federal loan forgiveness program.
Oh how I wish I was in this situation. I don’t want to tell you how much student loans my husband and I owe.
This proposal now has to be voted on in the House of Representatives and then approved by President Biden.
But this small law would fill a loophole dating back to the ’90s that allowed married people to consolidate their student loans at a lower interest rate.
Unfortunately, married couples can no longer consolidate their student loans
No, married couples can no longer consolidate their loans. This program was discontinued in 2006, but those held together by their student loans had no way to segregate those loans.
20 odd years later, those loans are still pooled—even in the event of a divorce.
But this proposal would change all that.
Happy dance for all the divorced couples who have had to deal with the unfortunate situation of having their loans merged forever.
Now if you contributed 70% of the student debt, you are responsible for 70% – thousands of people have faced obligations, sometimes from a domestic abuser, that could amount to tens of thousands of dollars.
Senator Mark Warner
Another benefit of this proposal is that “public servants” would be eligible to apply for the Public Service Loan Forgiveness (PSLF) scheme.
To benefit, an individual must work in a qualifying field: US federal employee, state employee, local or tribal government employee, or employee of a nonprofit organization.
If two spouses’ loans were pooled and only one of those individuals had a qualifying job, they were not eligible for PSLF.
However, once the loans are segregated, the qualified employee may be able to take advantage of the PSLF.
BEETEEDUBS: The current PSLF waiver expires this October. Walk. Go to the website and see if you qualify.