Since the federal government wouldn’t allow them to separate their loan debt, many couples tried to separate the balances themselves via their divorce decree. But those decrees are ineffective. No matter what the former spouses agree to in their divorce, their student loan servicer will refuse to remove a spouse from the consolidation loan. Removing a spouse from the loan is not allowed under federal law.
The inability to remove a former spouse from the loan is a huge problem if one spouse has a court order instructing them to refinance the debt in their name alone. Their ex-spouse may try to hold them in contempt of court if their name isn’t removed from the loan.
But the spouse that’s ordered to refinance the debt usually lacks options to comply. The U.S. Department of Education won’t allow them to consolidate the loan into their name. Meanwhile, refinancing with a private lender requires the spouse to be credit-worthy. Suppose they have a poor credit score, negative marks on their credit report, or insufficient income. In that case, student loan refinancing won’t be an option.
The only thing the spouse can do is to make the payments on the consolidated loan. But if they need a repayment option based on their income, deferment, or forbearance, they need their ex-spouse’s help in making that request.
It’s an impossible situation!
Learn More: Student Loans & Divorce: All Your Questions, Answered