JCL Separation Act (S. 1098)

Summary

Creates a way for married or formerly married couples to split a combined student loan into two separate loans, one for each person.

What problem does this solve?

Couples who combined their student loans were stuck paying the debt together, even after divorce or in cases of domestic abuse. This law creates a way for them to split the loan, so each person is only responsible for their share of the original debt.

What does this law do?

Authorizes separation of joint consolidation loans

Allows a married or formerly married couple to apply to split a joint consolidation loan into two separate Federal Direct Consolidation Loans.

Permits separate applications for victims of abuse

Lets one person apply to separate the loan by themselves if they have experienced domestic violence, economic abuse, or cannot contact the other borrower.

Determines new individual loan amounts

Calculates each new loan amount based on the percentage of the original debt each borrower was responsible for, or as specified in a divorce decree.

Extends eligibility to borrowers in default

Allows couples to separate their joint loan even if they have fallen behind on payments and the loan is in default.

Assigns liability to the non-applying borrower

Makes the non-applying individual solely responsible for the remaining balance of the joint loan when their former partner separates their share.

Who does this affect?

Individuals with joint consolidation student loans
Victims of domestic or economic abuse with joint loans

What is the real world impact?

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Addresses a specific financial hardship

Helps people trapped in joint loans due to divorce or abuse by letting them split the debt, making each person responsible for only their part.

When does this start?

This law becomes effective on October 11, 2022.