If you have a student loan — especially one consolidated with a spouse — you might want to listen up!
The Senate just approved a proposal, and it’s related to spousal consolidation of student loans.
This proposal will allow borrowers stuck in sticky student loan debt with a spouse — or ex-spouse — to separate those loans.
For some lucky people, it may mean your student loan debt disappears completely as part of a federal loan-forgiveness program.
Oh, how I wish it were me in that situation. I don’t want to even tell you how much my husband and I owe in student loans.
Now, this proposal still has to be voted on by the House, and then approved by President Biden.
But, this little piece of legislation would close up a loophole from the 90s that allowed married people to consolidate their student loans for a lower interest rate.
Unfortunately, Married Couples Can’t Consolidate Their Student Loans Anymore
No, married couples can’t consolidate their loans anymore. This program was shut down in 2006, but those stuck together by their student loans have not had a way to unseparate these loans.
20 some odd years later, these loans are still joined together — even in the case of 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 forever joined.
Now, if you contributed 70% of the student debt, you will be responsible for 70% — Thousands of people were stuck with 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) program.
To take advantage of this, a person has to be working in a qualifying field: U.S. federal employee, state employee, local, or tribal government employee, or not-for-profit organization employee.
If two spouses had their loans merged together, and only one of those people had a qualifying job, they were not eligible for PSLF.
But, once the loans get separated, the employee who qualifies may be able to take advantage of the PSLF.
BEETEEDUBS: The current PSLF waiver runs out in October of this year. Go. Go to the website and see if you qualify.