What is a Joint/Spousal Consolidation Loan?
Joint/Spousal Consolidation Loans were issued to married individuals so that they could combine their individual loans into a single consolidation loan. Borrowers who combined their loans agreed to be jointly and severally liable for the joint debt.
Why are these loans being separated?
Joint/Spousal Consolidation Loans were technically discontinued in the early 2000s. Generally, borrowers with this loan type have struggled to pursue Public Service Loan Forgiveness (PSLF) due to the loan type requirements needed for pursuing PSLF.
How can these loans be separated?
The Education Department (ED) announced that there will be two phases to separate Joint/Spousal Consolidation Loans. The first phase is to submit the separation application and promissory note to have your individual loans re-consolidated into a new Direct Consolidation Loan. The second phase will be when the loans are actually separated and a new loan is created. As of December 31, 2024, the separation of loans has begun.
Where can I find the separation application and promissory note?
The combined separation application and Direct Consolidation Loan promissory note can be found here for all Direct and FFEL Joint Consolidation Loan borrowers as a downloadable paper application. There is no online application.
Who will process the application and promissory note?
The Consolidation Originator manages the Consolidation Loan origination process for the Education Department (ED).
What can I expect to happen in Phase 1?
Once you apply, the Consolidation Originator will process and validate your application within 10 days. The Consolidation Originator will verify that the form is complete, all pages are included, and the application is signed and dated. If incomplete, the Consolidation Originator will follow up with you.
The application will be held by the Consolidation Originator until the separation occurs in Phase 2.
What can I expect to happen in Phase 2?
The Consolidation Originator will separate the borrower's Joint/Spousal Consolidation Loans and re-consolidate them into individual Direct Consolidation Loans. If any documentation is missing, the Consolidation Originator will follow up with you.
If you requested to have your loans placed in forbearance while waiting for Phase 2 to begin, you were automatically removed from forbearance on April 1, 2025, unless you submitted your separation application by April 1, 2025.
Are there different ways to apply for separation depending on the relationship between co-borrowers?
Yes, there are two options: a joint application and a separate application.
How does the joint application process occur?
Each co-borrower will submit a separate application to the Consolidation Originator. Once the separation and re-consolidation are complete, the co-borrowers will no longer have a Joint/Spousal Consolidation Loan debt obligation.
How is the separate application process implemented?
You can apply without your co-borrower if you certify on the application that you:
- have experienced domestic violence by the other co-borrower;
- have experienced economic abuse from the other co-borrower;
- are unable to reasonably access the other co-borrower's loan information.
The Education Department (ED) may also allow separate applications if it determines that it would be in the best financial interest of the federal government.
What happens to the other co-borrower on a separate application who did not apply?
The loan holder will notify the remaining borrower of their sole responsibility for the remaining balance of the Joint/Spousal Consolidation Loan as well as their ability to complete the application themselves. If the other co-borrower doesn't complete an application, the original loan holder will continue the appropriate servicing of the Joint/Spousal Consolidation Loan.
How does the One-Time IDR Adjustment apply to me?
If you have a Joint/Spousal Consolidation Loan and you want to benefit from the Adjustment, you must apply to separate your loan by June 30, 2025.
If you have Direct Joint/Spousal Consolidation Loans and meet all other PSLF requirements, you have been credited with any earned progress toward PSLF.
If you have FFEL Joint/Spousal Consolidation Loans, the adjustment has been applied but you must separate your loan and have it consolidated into a new Direct Consolidation Loan to be eligible for PSLF.
Any applications submitted on or after July 1, 2025, will receive a weighted average of PSLF-eligible or IDR-eligible payments that were applied to the Joint/Spousal Consolidation Loan. If you have a FFEL Joint/Spousal Consolidation Loan, you will only receive a weighted average of certain payments credited towards IDR forgiveness. There will be no credit for PSLF.
Payments from the Adjustment won’t be credited until after June 30, 2025.
How does the Limited PSLF Waiver apply to me?
The Education Department (ED) has stored a record of borrowers who took steps to take advantage of the Limited PSLF Waiver. These borrowers must apply to separate their loan by June 30, 2025, and the benefit will be applied after the payment count adjustment occurs.