Price Introduces Bipartisan, Bicameral Legislation to Provide Borrowers Relief from Joint Consolidation Loans
Washington – Last night, Congressman David E. Price (D-NC) and Congressman Bradley Byrne (R-AL) introduced the Joint Consolidation Loan Separation Act alongside Senators Mark R. Warner (D-VA), Orrin Hatch (R-UT), Elizabeth Warren (D-MA), and Marco Rubio (R-FL).
From January 1, 1993 until June 30, 2006, the U.S. Department of Education issued joint consolidation loans to married couples. Both borrowers agreed at the time to be jointly liable for repayment, which proved problematic in the event of divorce. Congress eliminated the program effective July 1, 2006 but did not provide a means of severing existing loans, even in the event of domestic violence, economic abuse, or an unresponsive partner. As a result, there are borrowers nationwide who remain liable for this consolidated debt without legal options for relief.
The Joint Consolidation Loan Separation (JCLs) Act would allow both borrowers to submit a joint application to the Department of Education (ED) to split their joint consolidated loan into two separate federal direct loans. It would also allow one borrower to submit a separate application if they are experiencing domestic or economic abuse or are unable to reasonably reach the other borrower. The joint consolidated loan remainder will be split proportionally and borrowers will be able to transfer eligible past payments towards income-based repayment programs or the Public Service Loan Forgiveness Program.
“This bill is a direct response to my constituent’s experience with a damaging joint consolidation loan. This carefully crafted bill will provide relief to borrowers who are victims of abusive or uncommunicative spouses and allow them to sever their joint financial responsibility. Congressional action to fix this problem is long overdue,” said Congressman Price.
"This is an example of an unintended consequence that Congress must address. I'm pleased we are able to come together in a bipartisan manner with my House and Senate colleagues to put forward a solution. This commonsense legislation offers a simple fix that provides relief to some Americans caught in a difficult situation,” said Congressman Byrne.
“When survivors escape abuse, they should be able to start over without the debts of their abusers. We applaud this bill for creating a solution for those survivors who consolidated loans either in good faith or under duress and are now rebuilding their lives,” said Monica McLaughlin, Director of Public Policy at the National Network to End Domestic Violence.
“For far too long, many student loan borrowers have been stuck in joint consolidation loans, and this bill ensures that struggling borrowers, including survivors of domestic and economic abuse, who previously consolidated their student loan debts, have the opportunity to regain their financial footing. We applaud the sponsors of this bill for their efforts. This bill would benefit many vulnerable student loan borrowers, and we are proud to support it,” said National Consumer Law Center Attorney Joanna Darcus.
“Many survivors of intimate partner violence in North Carolina find themselves burdened with their abuser’s debt after escaping their abusive partner. The North Carolina Coalition Against Domestic Violence applauds that our state representative, David Price, is sponsoring this bill so that survivors may be truly free to rebuild their lives,” said Dana Mangum, Executive Director of the North Carolina Coalition Against Domestic Violence.
“The Action Alliance is pleased to support these efforts to provide victims of domestic and economic abuse with student loan relief. This bill will make a difference for the people who need it, and we hope Congress will move swiftly to enact it,” said Kristine Hall, Policy Director at the Virginia Sexual and Domestic Violence Action Alliance.
More information about the Joint Consolidation Loan Separation Act is available here.