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Photo by Adobe Stock, illustration by Bankrate
Last week, Congress passed a historic bill that would allow those with spousal consolidation loans to split the loan between spouses. You may be eligible for government student loan forgiveness and resolve many issues related to the program. Here’s what you need to know about student loan trends this week and how it might affect you.
1 Current trends within student loans for the week of September 26, 2022
1. Hundreds of borrowers with spousal consolidation loans may be eligible for loan separation
Prior to 2006, married student loan borrowers could combine their federal student loans into one direct consolidation loan (often called a joint consolidation loan or spouse consolidation loan). However, since the program ended in 2006, there is no way for borrowers to reverse the process. This includes borrowers who are separated and in financially detrimental situations, such as a former spouse refusing to pay part of their monthly payments.
Back in June, the Senate approved the Joint Consolidated Loan Separation Act. This calls for the ability to split the Joint Consolidated Loan into two separate Federal Direct Loans. The remaining debt is split between the two borrowers according to the percentage each borrower initially contributed. Last week, the House also passed a bill.
Now that Congress and the Senate have approved the bill, it is up to President Biden’s signature to formally pass it.
Impact on student loans
If formally signed into law, the Joint Consolidation Loan Separation Act could affect borrowers in a number of ways. One is to ensure that borrowers in adverse circumstances are not held responsible for their spouse’s debts. This means that you only have to pay for what you originally borrowed (and accrued interest). Because of this, he may have continued to pay his spouse’s share.
Borrowers who split their loans could also qualify for Biden’s student loan forgiveness measures, which would give them more flexibility with programs like civil service loan forgiveness and income-driven repayments. Both limit the extent to which joint consolidation loan borrowers can participate.
important point
Congress passed the Joint Alimony Loan Separation Act, which allows borrowers to split spousal consolidation loans. President Biden plans to sign the bill into law.
Here’s how to prepare
Whether you’re new to student loans or new to paying them off, it’s wise to stay informed about how student loan interest rates change. 2022 could see more opportunities for cheaper loans and loan forgiveness. For the latest trends, keep an eye on the Bankrate Student Loan News Hub.
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