Santa Maria, California
I am a public high school English teacher in California. The federal student loans that my ex-wife and I consolidated together in 1999 using the federal direct student loan joint consolidation program, which ended in 2006, has been a financial nightmare because there is no way to un-consolidate my student loan from my ex-wife’s student loan.
The promissory note from my federal direct joint consolidation student loan with my ex wife listed our individual student loans and then combined them into one loan which totaled $58,620 in 1999. I am listed as the ‘Spouse’ and my ex-wife is listed as the ‘Borrower.’ My loans added the following amounts to the joint consolidation: $2633 and $137. My ex-wife was responsible for the entire remaining balance of $55,823.36 that she decided to jointly consolidate and I foolishly agreed. To be clear I was responsible for just under 5%. After many years of interest accruing along with insubstantial payment amounts being made and my ex-wife repeatedly deferring the loan, the current balance is approximately $180,000. Though we divorced in 2005, and the divorce documents listed her as responsible for the student loan debt, I am unable to be removed from this joint consolidation loan until congress and legislation changes this to allow separation of the jointly consolidated loan back into the original percentages. It should be noted also, that after we divorced, initially my ex-wife was able to make individual decisions about the deferments without my input, however NOW all decisions for the ‘joint loan’ require both myself and my ex-wife to ‘agree’ and both apply for any repayment plan decisions.
I am now remarried with two children. I have come to the conclusion that my wife and I have no choice but to file our taxes ‘married separate’ because my ex-wife and I are forever considered (under the eyes of the federal education department) one family with this spousal joint consolidation student loan. Therefore my ex-wife’s income, her spouse’s income, my income, along with my wife’s income will all be considered one family income when determining monthly payments under the income based repayment plan-if we apply for this each year-unless my wife and I file our taxes ‘married separate.’ Obviously filing married separate means that we pay more in taxes which is an unfortunate and unfair burden on my family and my children that my tax advisor repeatedly discourages. My ex-wife and I have applied for the income based repayment plan throughout the course of the years, which is another small nightmare because we have to ‘agree’ on what ‘we’ are deciding to apply for based on our ‘one family’ (in the eyes of the federal education department) income levels. It should be noted that I live in CA and my ex-wife lives in NY. It’s a big mess. Additionally, when I have called the current loan servicer throughout the years, the ineptitude of the responses leaves a person more frustrated and confused than prior to the conversation. The loan servicers for the federal education department have changed frequently throughout the years, but the ineptitude of the agents for the services has not changed. I finally realized that the only way to get anywhere was to automatically request a supervisor at every contact because NO ONE in the loan service office EVER knows what a spousal joint consolidation loan is. It is maddening.
The reason that the senate and house bills were originally introduced into Congress and has repeatedly been reintroduced is that it is the right thing to do to allow people to finally separate federal joint consolidation student loans based on percentages they originally brought into the joint consolidation. In my case, if this bill passes this would mean that I would therefore be responsible for approximately 5% of the current balance on the loan because I brought approximately 5% to the original joint consolidation in 1999.
The U.S. Department of Education offered these jointly consolidated loans as an option from 1993-2006, but they realized these were a terrible idea and stopped making them by 2007. However, the federal government never offered a resolution for those of us who are stuck in them with ex-spouses.
To add further confusion to this matter, those of us who are in joint consolidation federal student loans with our ex-spouse are NOT eligible for loan forgiveness programs such as public service loan forgiveness because after numerous conversations with the various loan servicers over the years, including the two most recent servicers Nelnet and Vermont Student Assistance Corp-VSAC, what I have been told is that only “my portion” of the original loan will be forgiven ($2700) however I will STILL BE RESPONSIBLE for the entire amount that is owed by my ex-wife. So that means with the total currently owed on the loan $180,000; I could fill out the application for public service loan forgiveness and though I will qualify since I have taught in public education for 10 years and could use this to be forgiven $2700, I would still be responsible for the rest of the loan ($180,000-$2700=$177,000) to pay off. That is baffling and incredibly unfair. Not to mention the confusion and frustration regarding how this pertains to the current public service loan forgiveness waivers that are in place until October 2022.
Advice from two attorneys over the years has been that legislation change is the only way to any resolution. I have previously contacted the author of the original bill- Congressman David E. Price in North Carolina and spoken with his representative, Nora Blalock. I have been informed that the best course of action is to work with my Senators and Congress Representatives to request that they co-sponsor the joint consolidation loan separation act house and senate bills.
In addition to Congressman David E. Price (D-NC), I have added my name to the list of people in these joint consolidation loans that is being monitored by Senator Mark Warner (D-VA). I have met with my senators and representatives that represent CA. Based on my meeting with the office of Representative Salud O. Carbajal (D-CA), he agreed to co-sponsor the house bill. At this time, Senator Alex Padilla’s office has agreed to support the bill, though does not show as a co-sponsor yet. Also I have met with the office of Dianne Feinstein though no movement has yet taken place from her office.
I am extremely hopeful that this bill can be passed to finally allow separation of joint consolidation student loans. I would absolutely be happy to meet with anyone to go over this information to help provide clarity on anything to help this pass and to share the information in my original joint consolidation student loan promissory note to be completely transparent.