Congress has passed a bill that would make divorced borrowers eligible for student <a class=loan forgiveness. The bill now goes to President Biden for his signature. (AP Photo/Susan Walsh)” title=”Congress has passed a bill that would make divorced borrowers eligible for student loan forgiveness. The bill now goes to President Biden for his signature. (AP Photo/Susan Walsh)” loading=”lazy”/>

Congress has passed a bill that would make divorced borrowers eligible for student loan forgiveness. The bill now goes to President Biden for his signature. (AP Photo/Susan Walsh)

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More borrowers may soon be eligible for student loan forgiveness.

Congress passed a bill on Wednesday, September 21 that would separate joint consolidation loans. The Joint Consolidation Loan Separation Act passed the Senate in June and is now heading to President Joe Biden for approval.

The Biden administration has expressed support for the bill and is expected to sign it.

If the bill passes, divorced couples will be able to request that their jointly consolidated loan be split into two separate loans, according to the White House. Jointly consolidated loans are not eligible for Biden’s student loan forgiveness plan, so splitting loans would open up forgiveness to more people.

Here’s what you need to know if you have a joint consolidation loan.

Joint Consolidation Loans

Until 2006, married couples could apply for a joint consolidation loan, also known as a spousal consolidation loan, which made both people responsible for the collective debt, according to the Student Borrower Protection Center. Although Congress eliminated these types of loans in 2006, borrowers had no way to disentangle their loans, even in the event of domestic or economic violence or if their ex-partner was unresponsive.

The new legislation offers these borrowers the possibility of finally separating their loans.

Under the Joint Consolidation Loan Separation Act, borrowers who have already received a joint consolidated loan for their federal student loan debt may submit a joint application to the Department of Education to split the shared loan into two separate loans, the bill says.

The loans will be split proportionally based on the size of the initial loans, according to the White House.

People who have experienced domestic or economic abuse at the hands of the other borrower or those who are unable to reach their other borrower can still submit a request and qualify for separation, the bill says. In these cases, if a separate loan is granted to the borrower who requested it, the other borrower becomes responsible for the balance of the consolidated loan.

Receive loan forgiveness

Joint consolidation loans are not eligible for Biden’s student loan forgiveness plan. If the loans are separated, they will become federal direct consolidation loans, the bill says.

Direct loans are eligible for Biden’s one-time student loan forgiveness, according to the federal student aid office.

Borrowers earning less than $125,000 a year will see up to $10,000 of their debt forgiven. Pell Grant recipients will see up to $20,000 in rebate. For households, the income required to qualify for the rebate is less than $250,000 per year.

Applications for debt relief are expected to open in early October, but the Department of Education has yet to announce the date, a spokesperson told McClatchy News.

Borrowers will be able to apply for forgiveness until December 31, 2023.

Moira Ritter covers real-time news for McClatchy. She graduated from Georgetown University where she studied government, journalism and German. Previously, she reported for CNN Business.

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