The JCLSA provides two distinct pathways for applying for loan separation:
This route requires cooperation from both borrowers. Here’s what you need to know:
Both parties need to submit a complete application and promissory note specifically for loan separation.
The process of splitting the joint loan and creating new individual Direct Consolidation Loans only proceeds once both parties have submitted their completed applications.
This alternative route allows a single borrower to apply independently. Here’s how it works:
One borrower can apply to separate their share of the debt into a Direct Consolidation Loan.
The other borrower remains responsible for their share of the original joint consolidation loan.
This option is available under specific circumstances, such as instances of domestic violence, economic abuse, or if the other borrower is unreachable.
Keep in mind that these procedures are complex, and full implementation is expected by late 2024.
In the meantime, borrowers can express their intent to apply for loan separation by contacting the Federal Student Aid Ombudsman Group.
Could You Get Loan Forgiveness?
The JCLSA allows borrowers to receive a one-time Income-Driven Repayment account adjustment. Also, it credits any earned progress toward Public Service Loan Forgiveness forgiveness, provided they meet all other PSLF requirements.
Once the separation process is completed, these benefits will be applied retroactively.
Furthermore, the Department of Education has stored a record of joint consolidation loan borrowers interested in the Limited PSLF Waiver.
The department will contact these borrowers separately, and their PSLF-eligible payment counts will be retroactively adjusted after completing the necessary steps to separate their loans.