How to Separate Your Joint Spousal Consolidation Loan: Application Guide

Quick Facts

• If you have a joint spousal consolidation loan, you can now apply to separate your loans through a new process.
• Starting October 1, 2024, the application is available, but it must be sent by mail.
• Once your federal student loans are separated, you’ll each be responsible for your own portion of the debt. You may also qualify for loan forgiveness or income-driven repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. plans after the separation.

Overview

These loans tied married couples to the same student debt, even after divorce or if the spouse’s student loans were involved.

For years, borrowers with these joint loans had no recourse to separate their debts. Until recently, that hope felt like an empty promise—there was no legal pathway to separate the loans.

Finally, as of September 30, 2024, Phase I of the loan separation process has begun, giving borrowers the opportunity to submit applications and start untangling these complicated debts. This is just the first step in a multi-phase process, with further steps expected in the coming months.

By the end of this guide, you will learn the process and understand the necessary steps to separate your loans successfully.

How To Separate Your Joint Consolidation Loans

1. Submit the Application

You must fill out the Combined Application to Separate a Joint Consolidation Loan and Direct Consolidation Loan Promissory Note. This is available in paper form and must be mailed to the correct servicer.

• Eligibility: Borrowers must meet certain eligibility requirements before submitting their applications based on the form.
• Application Process: Once submitted, the Consolidation Originator will review and validate the information provided before the loans are officially separated.

The application must include all necessary documentation, such as protections for situations involving cosigners or domestic violence.

2. Loan Division Based on Borrower Contributions

Your federal loan will be split based on how much each of you originally borrowed.

For example, if you were responsible for 60% of the original loan, you must repay 60% of the separate loan. Your loan terms or interest rate will remain the same after separating the loans.

3. Scenarios for Loan Separation

If both of you apply together, the student loan debt will be split into individual direct consolidation loans. You and your spouse (or former spouse) will each handle your part of the debt separately.

If only one person applies (because of reasons like domestic violence, economic abuse, or not having access to loan details), the student loan repayment responsibilities will be split. The other person will still be responsible for their part.

In these cases, you will need to provide documents that explain the situation.

4. Access to Loan Forgiveness Programs and Repayment Plans

After your loans are separated, you can choose to combine your part of the debt into a new loan for a lower interest rate. This can make you eligible for different repayment and student loan forgiveness programs, like Income-Driven Repayment plans ( SAVE, IBRIncome-Based Repayment (IBR)A federal income-driven repayment plan that caps monthly payments at 10% or 15% of discretionary income, depending on when the loans were taken out. Remaining debt is forgiven after 20 or 25 years of qualifying payments., ICRIncome-Contingent Repayment (ICR)The oldest federal income-driven repayment plan, with payments generally set at 20% of discretionary income or a fixed 12-year amount, whichever is lower. It is the only IDR plan available to Parent PLUS borrowers after consolidation.) or Public Service Loan Forgiveness (PSLFPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer.).

These plans can give you lower monthly payments based on your income.

How to Submit the Application and What Documents You Need

1. Check and Copy Your Application

Carefully review your Application/Promissory NotePromissory NoteThe legal contract a borrower signs to receive a loan. It sets out the amount borrowed, the interest rate, repayment terms, and the borrower's obligations to the lender. to ensure that all information is correct. Make a copy of pages 6 to 16 for your records. This will be your reference if you need to verify any details during the separation process.

Related: How to Get a Copy of a Student Loan Promissory Note

2. Mail the Application

Send the original pages 6 to 16, along with any required documents, to your student loan servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education. at the correct address:

• AidvantageAidvantageA federal student loan servicer operated by Maximus that manages Direct Loan accounts on behalf of the U.S. Department of Education, including many accounts previously serviced by Navient.: ATTN: EDU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans. Loan Consolidation, PO BOX 300005, Greenville, TX 75403-3005
• EdFinancialEdFinancialA federal student loan servicer that manages Direct Loan accounts on behalf of the U.S. Department of Education.: C/O Aidvantage, PO BOX 300008, Greenville, TX 75403-3008
• MOHELAMOHELAThe Missouri Higher Education Loan Authority, a federal student loan servicer that currently handles accounts for borrowers in Public Service Loan Forgiveness and other federal loan portfolios.: C/O Aidvantage, PO BOX 300006, Greenville, TX 75403-3006

3. Required Documents

• Repayment Plan Selection: If you are choosing a repayment plan such as Standard, Graduated, or Extended, include the Repayment options form.
• Income-Driven Repayment Plans: If you are selecting an income-driven repayment plan, include the Income-Driven Repayment Plan Request form (SAVESAVE Plan (SAVE)The Saving on a Valuable Education Plan, a federal income-driven repayment plan introduced in 2023 to replace REPAYE. Its implementation has been subject to ongoing litigation, and enrolled borrowers have faced court-ordered forbearance periods., IBR, ICR).
• Legal Documentation: If you are applying based on a legal situation such as a divorce, be sure to include any court orders, divorce decrees, or settlement agreements that validate your claim to separate your loans, including private lender documentation if relevant.

4. Processing Your Application

Once your application is received, the Department of Education will begin the evaluation. If they require additional documents or information, they will contact you directly. This is a detailed review to ensure that all criteria are met for the loan separation process.

5. Keep Making Payments

Until you receive written confirmation that your loan has been successfully separated, you must continue paying for your current joint loan.

Missing payments during this period could result in penalties, late fees, or even loan defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports., which can severely affect your credit score.

What Happens After You Apply

Once your application has been reviewed and approved by the Consolidation Originator, the joint loan will be officially separated, and each borrower’s portion of the loan will be re-consolidated into a new Direct Consolidation Loan. Here’s what to expect:

• Confirmation of Separation: You will receive written confirmation outlining the details of the separation and how much of the remaining balance each borrower is responsible for.
• Forbearance Option: While you’re waiting for the process to finish, you can ask for forbearance if you can’t make payments. This means you can pause your payments for a while, but keep in mind that interest will still build up during this time.

Related: SAVE Plan Forbearance

Where to Get Help

If you need help with the application or have questions about the process, you can:

• Contact Federal Student AidFederal Student Aid (FSA)The office within the U.S. Department of Education that manages federal grants, work-study, and student loans. It runs the FAFSA, the StudentAid.gov website, and oversees the federal loan servicers.: Call 1-800-433-3243 to speak with a representative. Keep in mind that the process is still new, and while they can provide general guidance, some details may still be evolving.
• Check for Updates: Visit the Department of Education’s Joint Consolidation Loan Separation News and Updates page for the latest information or reach out to the Student Loan Ombudsman for further assistance.
• Join Peer Support Groups: Communities like the r/studentloans subreddit or the Spousal Consolidation Do Us Part Facebook group provide spaces where borrowers share experiences and advice about this process.

Bottom Line

Aside from the peer groups mentioned earlier, if you’re looking for more personalized support, schedule a consultation with one of our student loan experts today! Get tailored advice and make sure you’re on the right path to managing your personal finances effectively.