Student-loan borrowers who combined their debts with a current or former spouse just took a 'huge step' toward relief, Democratic senator says

• A program shuttered in 2006 allowed married couples to combine their student debt balances.
• But law prohibits separating the loans, and bars borrowers from a loan forgiveness program.

Student-loan borrowers looking to separating their debt from a current or former spouse just got one step closer to that relief.

After 13 years of operation, Congress shuttered the spousal joint consolidation loan program in 2006. It was created to allow married couples to combine their student debt balances with the idea that one monthly payment, with one interest rate, would be more affordable. But law prohibits the separation of those loans, meaning if the couple divorces, or even in the case of domestic violence, the borrowers have to continue paying off the debt together.

That's why Virginia Sen. Mark Warner sponsored the Joint Consolidation Loan Separation Act of 2021, which would allow borrowers to separate those spousal loans, and the bill passed the Senate on Wednesday and now heads to the House for full passage.

"This is a huge step for all those burdened by these loans," Warner wrote on Twitter.

—Mark Warner (@MarkWarner) June 16, 2022

Another issue these borrowers face is being barred from student-loan forgiveness. The Public Service Loan Forgiveness (PSLF) program forgives student debt for public servants, like teachers and nonprofit workers, after ten years of qualifying payments. In order to qualify, the borrower must have a federal direct loan — so even if a public servant with a spousal loan meets the criteria for PSLF, they are unable to apply because they cannot separate the loan into a direct loan.

"I understand people need to pay back their debt. I get that part," Russell Case, a public servant with a spousal loan, previously told Insider. "But if the government promises debt forgiveness for public servants after ten years, and we find out after the fact our loans don't qualify, that's my biggest problem."

There's a sense of urgency for Warner's bill to pass, given that the Education Department's PSLF waiver, which allows any past federal loan payment to qualify for the program, expires on October 31.

Just 776 borrowers with spousal loans are still in repayment, according to data provided by the Student Borrower Protection Center, but Rep. David Price — the sponsor of the House version of Warner's bill — previously told Insider this type of debt can be "crippling."

"My colleagues and I were pleased to reintroduce this common-sense, bipartisan legislation, and are hopefully we can soon move the bill towards its long-overdue passage into law," he said.