Fixing an Injustice for Spouses Who Took Out Student Debt

With unanimous support, the U.S. Senate just passed a bill to fix one of many injustices in the student loan system.

Until 2006, The Department of Education allowed spouses to consolidate their federal loans together under a “Spousal Consolidation Loan.” These loans were so problematic that the program was scrapped, but many questions remained unanswered. Savi has current users, for example, where both spouses are non-profit employees who should qualify for Public Service Loan Forgiveness. Unfortunately, their Spousal Consolidation Loans are not technically eligible for PSLF, AND they are not eligible to consolidate those loans into a Direct Loan (which would be eligible for PSLF). So without a policy change, these borrowers are out of luck.

Or imagine what happens when spouses get divorced or in cases of domestic violence. Currently there is no way to separate out those loans. So, a woman who was the victim of domestic abuse and got a divorce may still be fully liable for the student debt of their ex. If they worked in the public sector, they would also lose options around Public Service Loan Forgiveness.

Sen. Mark Warner (D-VA) and Rep. David Price (D-NC) created a bill to allow those loans to be separated and consolidated into a direct loan, and it just passed the US Senate. There are over 14,000 of these Spousal Consolidation Loans remaining that represent over $800M in outstanding student loan debt. Sen. Warner has a great video explaining the issue.

It has been said before, but student loan debt truly is an equity issue, and too often the burden of our flawed system falls on the shoulder of women and people of color.

Savi and our partners work hard to make sure that when needed student loan policy change (like this bill) becomes law, that we educate every borrower and make sure they are able to take full advantage.