Joint Consolidation Loan Separation Act

Floor Speech

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Mr. Speaker, pursuant to House Resolution 1361, I call up the bill (S. 1098) to amend the Higher Education Act of 1965 to authorize borrowers to separate joint consolidation loans and ask for its immediate consideration.

The Clerk read the title of the bill.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. 1098.

Mr. Speaker, I am pleased to rise in support of the bipartisan, bicameral Joint Consolidation Loan Separation Act, led in the Senate by my colleague from Virginia, Senator Mark Warner, and led in the House by the gentleman from North Carolina (Mr. Price).

Student loans should provide a pathway to opportunity, not saddle borrowers with a lifetime of burdensome debt, especially if the loans don't even belong to them.

Regrettably, many borrowers' financial well-being has been made worse by student loans jointly held by their spouse or former spouse.

The Joint Consolidation Loan Separation Act would provide much-needed relief for individuals who previously consolidated their student loans with their spouse. Although Congress eliminated the joint consolidation loan program in 2006, it did not provide a way for borrowers to sever existing loans, even in the event of domestic violence, domestic abuse, or unresponsiveness from a former spouse after a divorce.

As a result, according to the most recent data from the Department of Education, there are at least 13,500 borrowers with federally held joint consolidation loans.

The Joint Consolidation Loan Separation Act would allow borrowers to submit an application to the Department of Education to split the joint consolidation loan into two separate Federal direct loans. The two new Federal direct loans would be split proportionally based on the original unpaid principal and have the same interest rates as the joint consolidation loan, ensuring borrowers are not saddled with a higher interest rate.

Importantly, the bill provides a pathway for an individual to apply to separate a loan from a spouse, a current spouse or former spouse, including in the event of an absentee or unresponsive spouse, for an act of violence or economic abuse.

Mr. Speaker, we can all agree that no borrower should be forced to pay a debt that isn't theirs, especially the debt of an abusive former spouse.

Mr. Speaker, I urge my colleagues to support this legislation, and I reserve the balance of my time.

Mr. PRICE of North Carolina. Mr. Speaker, I am happy to rise in support of S. 1098, the Joint Consolidation Loan Separation Act.

I am the author of the House version of this bill and have introduced it every Congress since the 115th, always with a Republican cosponsor.

I would like to start my remarks today by thanking the Members, past and present, who have helped bring us to the floor today.

I thank our former colleague Bradley Byrne of Alabama for his cosponsorship of the first iteration of this bill. I thank Congresswoman Haley Stevens and other current bipartisan cosponsors; Senators Mark Warner, Marco Rubio, and John Cornyn, who recently steered this bill to passage in the Senate; and my colleague from North Carolina, Senator Richard Burr, who expedited the review of this bill by his committee.

This bill passed the Senate by unanimous consent on June 15 of this year.

I also thank my good friend Chairman Bobby Scott and his staff. They have vetted this bill and worked over this bill very carefully. He is an outstanding leader of the committee, and he has been a longstanding supporter of this bill. He included it, in fact, in various versions of the Higher Education Act.

I also thank the staff, entrepreneurial staff, who picked up on this problem from casework years ago and devised a legislative solution. That would be Kate Roetzer and Nora Blalock of my staff initially, Janssen White and Elizabeth Adkins more recently, and other personal and committee staff, House and Senate.

Thanks, too, to the advocates, people affected by this problem, who have come to our offices and our town meetings and relentlessly advocated for relief. A number of these advocates are our guests in the gallery today.

The Joint Consolidation Loan Separation Act, or JCL for short, is simple in its intent but significant in its impact on thousands of student loan borrowers who have waited for relief for far too long.

From 1993 to 2006, the U.S. Department of Education issued joint consolidation loans to married couples where both borrowers agreed at the time to be jointly liable for repayment. As you might expect, this proved problematic if that couple ever needed or wanted to separate the loans.

Congress wisely eliminated this program in 2006 but with one critical oversight: Congress did not provide a means of severing the existing loans, even in the event of domestic abuse, economic abuse, or an unresponsive partner. There was, in other words, no grandfather clause.

As a result, there are borrowers nationwide who remain financially liable for their absconded or abusive or uncommunicative spouse's portion of their consolidated debt with no legal options for relief.

The bill before us would allow such borrowers to submit an application to the Department of Education to split the joint consolidated loan into two separate Federal direct loans. The joint loan remainder would be split proportionately based on the percentage that each borrower originally brought into the loan.

It was an unfortunate mistake not to grandfather in the severing of these loans with the 2006 cancellation of the program, so this bill is a long overdue, commonsense correction. Congress does occasionally make mistakes; in case we hadn't noticed.

Let me just illustrate to you what the solution means for the lives of borrowers.

I first became aware of this issue in 2014, 8 years ago, through constituent casework. My constituent consolidated his $25,000 loan with his ex-wife's $75,000 loan. After their divorce, the Department continued to collect on the combined loan from both parties, even though my constituent had paid off his portion of the loan. That is just one of the many examples that cover the spectrum of unpleasant situations with this shared debt.

Let's assume that one partner attended community college and the other an expensive private school, and their loan amounts are vastly different. When they consolidated their loans, they both agreed to be jointly liable for repayment. But say the partner who attended private school became unresponsive and stopped paying into the loan. That left the partner who attended community college saddled with their total debt, along with the partner's private school education cost.

We have also heard horror stories of couples who have survived abusive relationships but continue to remain tied to their partners through the loan. Former partners have exerted financial abuse by refusing to copay with their exes. In other instances, individuals are unable to get in contact with the copartner of their loan and are similarly left to shoulder the debt all by themselves.

These borrowers have seen their wages garnished and their credit scores ruined to the point where they cannot assist their own children in taking care of Federal student loans. This has become a generational impact.

These loan holders are often in punishing situations with no hope in sight for action to fix this mistake unless we pass the bill before us today.

This bill has been thoroughly vetted by the Department of Education, the House Committee on Education and Labor, and numerous checkpoints in the Senate. It passed by unanimous consent in the Senate a few short months ago. We have made accommodations all along the way, including Republican changes that I did not prefer, for the sake of getting the bill to the floor in both Chambers. With tomorrow's vote, it will go directly to the President's desk.

This is a bipartisan, bicameral piece of legislation. I believe it is the end product of a fair process that has withstood the rigors of legislative scrutiny. As far as legislative impact goes, this one is simple but profound in its impact on borrowers.

The Joint Consolidation Loan Separation Act presents a rare opportunity for Congress to right a wrong, to correct an omission in its own legislative process. I urge that we do so. The bill offers a fair and equitable relief to borrowers who have suffered great hardship, and I urge my colleagues to vote ``yes.''

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Mr. Speaker, prior to yielding time, I yield myself 1 minute just to remind those on the other side of the aisle, who have lectured this side of the aisle on fiscal responsibility, that every Democratic Presidential administration since Kennedy left office with a better deficit situation than they inherited--every one, without exception. And every Republican since Nixon, every administration left office with a worse deficit situation than they inherited, without exception. President Trump was well on his way to fulfilling that trend before the pandemic.

But hypocrisy is not much of an issue. I just wanted to remind people who is fiscally responsible and who isn't.

Stevens), a distinguished member of the Committee on Education and Labor and an original cosponsor of this legislation.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Mr. Speaker, would the Speaker advise how much time is remaining on both sides.

BREAK IN TRANSCRIPT

Mr. SCOTT of Virginia. Jackson Lee).

Ms. JACKSON LEE. Mr. Speaker, I thank the chairman of the full committee, Mr. Scott, for continuing to find ways to collaborate with his members and others to ensure that we respond to the crux of opportunity in America, and that is education.

I am so grateful to be able to stand and support S. 1098 and to take this brief moment to thank my fellow alum, David Price, for being persistent in this legislation and serving the American people over the years that he has done. I had a chance to get a second bite of the apple. David was here and then came back. I have enjoyed every moment of his commitment to opportunities for Americans over the years, including housing and transportation and homeland security, and I certainly want to say to him that the American people are better for his service to this Nation. I thank him so very much.

I am grateful to finally be able to say, Chairman Scott, to a constituent who I saw over the weekend that called the number of the bill--most times, constituents don't know bill numbers. They said: ``I need you to support S. 1098.'' Obviously, this is something so many of us have been looking to because we have heard this from our constituents.

I am very grateful that this legislation now allows a married couple who has previously consolidated their Federal student loans, because we were allowed to do that--many people thought that was a good thing to do, to submit a joint application to the Department of Education to sever their loan, allowing each former spouse their proportional responsibility. Each former spouse would still be obligated for a share of the loan, but their share of responsibility would be benchmarked to the proportion of the debt that they brought into the consolidated loan. Without loan severance, if a spouse refused to pay their share, the other spouse remains responsible for full payment.

This is important legislation as it relates to divorce and domestic violence or economic abuse. Bearing the risk of the full responsibility for a consolidated loan after divorce can dramatically restrain a spouse from moving on with their life, from supporting their children, from getting a house, from feeling safe.

The Joint Consolidation Loan Separation Act also addresses the especially volatile situation of former relationships in which an individual was subjected to domestic or, as I said, economic abuse.

As a sponsor of the Violence Against Women Act that became law in March of last year, I am especially concerned about women who have experienced physical, mental, sexual, emotional, even psychological abuse at the hands of a spouse or partner. S. 1098 allows them to separate from toxic relationships, get away from the economic abuse, and retain or maintain their credit so that they can go forward. This can also apply to a male who may be suffering from the same situation.

Two married borrowers of Federal student loans could combine their debt into a single loan, but we can also come back now to ensure that they can separate it. This is an important step forward.

Ms. JACKSON LEE. Mr. Speaker, we enthusiastically add this to the component of making sure, under the Violence Against Women Act, that there is an expanded understanding of what happens when one spouse abuses another or the idea of economic abuse.

Just as an example, when one spouse is not being timely, is not being responsive, for whatever reason is not able to be found, then the credit of the remaining spouse being dutiful is completely, if I might use the term, mutilated.

I am eager to ensure that this bill is passed. I certainly acknowledge the Senator from the State of Texas, Senator Cornyn. We have worked together on other matters.

I will let everybody know this bill is bipartisan, and I will let everyone know that what we will be doing is ensuring that people can restore their lives. They can stand up again and be able to pay their debt.

As I finish, I am stunned by people who don't want to see us move forward for people to pay their debt. They can pay their debt. Let us all support S. 1098.

Mr. Speaker, I rise in support of S. 1098, the Joint Consolidation Loan Separation Act allowing a jointly-held loan debt to be separated.

This legislation would allow a married couple, who had previously consolidation their federal student loan debts, to submit a joint application to the Department of Education to sever their loan, allotting to each former spouse their proportional responsibility.

While each former spouse would still be obligated for a share of the loan, their share of responsibility would be benchmarked to the proportion of debt that they brought into the consolidated loan. Without loan severance, if a spouse refuses to pay their share of the loan, the other spouse remains responsible for full payment.

This is very important legislation because it is a key to independence following a divorce. Without being able to sever their loan obligation after divorce, people are forced to continue interacting with their former spouse.

Bearing the risk of full responsibility for a consolidated loan after divorce can dramatically restrain a spouse from moving on with their life, both financially and emotionally, as they are forced to maintain communication with someone from whom they no longer want to be closely associated.

The Joint Consolidation Loan Separation Act also addresses the especially volatile situation of former relationships in which an individual was subjected to domestic or economic abuse from the other individual.

As the sponsor of the Violence Against Women Act Reauthorization Act that became law in March of this year, I am especially concerned about women who have experienced physical, mental, sexual, emotional, or psychological abuse at the hands of a spouse or partner.

Thus, it is especially important that S. 1098 make it easy for women who have suffered from abuse to sever their loans, to help them sever their toxic relationships.

Indeed, S. 1098 allows one borrower to submit a separate application in the event that the individual has experienced domestic or economic abuse from the other individual borrower or is unable to reasonably access the loan information of the other borrower.

In the case of this occurring, the other non-applying individual borrower shall become solely liable for the remaining balance of the joint consolidation loan.

Joint consolidation loans were first created for the good of Americans to combat growing default rates.

Two married borrowers of federal student loans could combine their debt into a single loan.

While the legislation was intended to proactively accommodate these life situations, joint consolidation forms came with no guidance from the Department of Education for cases of domestic or economic abuse.

A divorce decree could not remove one spouse from the debt, nor could have any other agreement as both people were now legally responsible for the combined debt.

If an ex-spouse refused to pay their share of the monthly payment, the other spouse would have to make the entire payment themselves.

If a former couple wanted to make their student loan payments under a payment plan, both spouses would need to pay the loan under the same plan and provide their financial information.

If one of them failed to do so, they would both be denied access to the payment plan.

Because of all these loopholes, Congress eliminated access to joint consolidation loan applications in 2006.

However, it did not provide a way to separate responsibility for existing loans, even in cases of domestic violence, economic abuse, or an unresponsive partner.

With the Joint Consolidation Loan Separation Act, we can now provide a way out for those facing domestic violence or economic abuse, as victims in this position face challenges beyond their own control.

As reported by the CDC, about 1 in 4 women and nearly 1 in 10 men have experienced physical or sexual violence by an intimate partner during their lifetime.

According to the National Coalition Against Domestic Violence, between 94 and 99 percent of domestic violence survivors have also experienced economic abuse, which includes coerced debt and withholding access to money.

There are currently 776 borrowers with spousal consolidation loans, according to the Student Borrower Protection Center.

It is our responsibility to do right for these borrowers who fell victim to the consequences of previous legislation.

As the sponsor of H.R. 1620, the Violence Against Women Act Reauthorization Act, I proudly support S. 1098's efforts to provide options for victims of violence, especially for women who are at a significantly higher risk.

Mr. Speaker, while the Joint Consolidation Loan Separation Act does not solve the student loan debt crisis, it takes another sensible step to help borrowers separate with loans that do not belong to them. This legislation also comes at a critical time when many borrowers seek relief under President Biden's recently announced loan cancellation program.

Unfortunately, not all borrowers with joint consolidation loans are currently eligible for relief, even if they meet all other criteria.

Simply put, by advancing the Joint Consolidation Loan Separation Act, we are providing borrowers with additional avenues of loan relief, ensuring survivors of domestic or economic abuse are not responsible for their spouse's or former spouse's debt.

Again, I thank Senator Warner of Virginia and the gentleman from North Carolina (Mr. Price) for their leadership on this legislation.

Mr. Speaker, I ask my colleagues to support the legislation, and I yield back the balance of my time.

BREAK IN TRANSCRIPT

Source