President Joe Biden this week signed a bill that lets student-loan borrowers with spousal loans separate their balances and receive federal debt relief.
Congress ended the spousal joint consolidation loan program, which allowed couples to combine loan repayments into one payment and one interest rate, in 2006.
After the program ended, those couples who consolidated their loans could not separate them.
Because the loans were combined and by law could not be separated, borrowers could not take advantage of such programs as the Public Service Loan Forgiveness program.
The loans stayed combined and couples became legally responsible for each other’s debt even if they separated or divorced.
“They will be immediately able to apply for the severance of their loan,” said Rep. David Price, D-N.C., who sponsored the legislation.
“The critical thing is that this bill also allows a disadvantaged spouse to apply,” Price added. “If their spouse is unresponsive, abusive, or economically irresponsible, the spouse can apply for the severance of the loan, where his or her portion of it is assigned.”
Republican Sens. Marco Rubio, Florida, and John Cornyn, Texas, supported the bill.
To take advantage of the new law, borrowers must apply through the Department of Education. While in most cases, both parties must approve the separation, if one party can show they have experienced domestic violence or economic abuse, or they have an unresponsive partner, they can apply themselves, according to the bill.
Biden announced the plan to forgive student loan debt in August that would cancel $10,000 worth of federal student loan debt for those with federally backed student loans, and $20,000 worth of student loan debt for those who received Pell Grants.
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