Nearly 30 years ago, a federal law allowed married couples to consolidate their federal student loan debt through a short-term US Department of Education (ED) program. Couples who participated in the now-defunct program, which ran from 1993 to 2006, became jointly and severally liable for reimbursement. Yet today, domestic violence survivors who participated in the program may still have to pay their abusers’ loans. A proposed bill in Congress could change that.
“When people think of domestic violence, they often think of physical violence, primarily because the dangers to physical safety are very real,” said Monica McLaughlin, director of public policy at the National Network to End Domestic Violence (NNEDV ), a nonprofit organization that advocates to stop domestic violence. “But one of the ways to ensure control over a survivor is through economic abuse.”
Over 14,000 borrowers have participated in the ED program. But untangling consolidated loans can be especially difficult for victims of domestic violence when the other borrower is their abuser. Domestic violence advocates and experts point out that consolidated debt can be a form of economic abuse. Financial abuse occurs in about 99% of domestic violence cases, according to a study from the Center for Financial Security at the University of Wisconsin-Madison.
“A colleague of mine would say survivors were showing up at shelters with just the clothes on their backs, but now they’re showing up with the clothes on their backs and crippling debt with low credit scores,” McLaughlin said. “That is often the case. And it can devastate the rest of their lives.
She pointed out that an average of three women a day are killed by a current or former intimate partner across the country. The National Survey of Intimate Partners and Sexual Violence, developed by the Centers for Disease Control (CDC), also found, based on 2010 data, that people facing food or housing insecurity are more vulnerable to abuse. McLaughlin highlighted the links between physical violence and economic insecurity.
Angela Littwin, Ronald D. Krist Professor of Law at the University of Texas at Austin Law School, studies consumer debt and domestic violence with Dr. Adrienne Adams, assistant professor of ecological/community psychology at Michigan State University. She explained that economic abuse can take two forms: financial restriction (ie prohibition from working) and financial exploitation.
“The behavior of consolidated student loans would amount to economic exploitation to make you responsible for a debt that is not yours,” Littwin said. “Partners can do this through coercive control. And bankruptcy is not even an issue because student loans are very difficult to repay in bankruptcy.
But in April 2021, members of Congress introduced a bipartisan bill to help borrowers break consolidated federal student loans in cases of domestic violence or divorce. Representative David Price of North Carolina was one of the members of Congress to introduce the bill, called the Joint Consolidation Loan Separation Act.
“The Joint Consolidation Loan Separation Act was created in direct response to my constituent’s experience with a damaging joint consolidation loan,” Price said in an email to Miscellaneous. “Unfortunately, borrowers nationwide remain liable to their potentially abusive or uncommunicative former partner’s share of their consolidated debt. In the absence of legal options for relief, as in the case of my constituent, this Debt can be crippling. My colleagues and I were thrilled to reintroduce this common-sense, bipartisan legislation — congressional action to address this issue is long overdue.”
If passed, the bill would allow two borrowers to submit a joint application to ED to unravel the consolidated loan into two separate loans. It would also allow a borrower to submit a separate application if they face domestic or economic abuse from the other borrower. Similarly, the bill would allow a borrower to file a request if the person cannot reasonably reach or access the other borrower’s loan information.
“There’s not a huge universe of people who were part of this program, but it illustrates what’s happening in so many other economic areas of domestic violence survivors’ lives,” McLaughlin said. “You think about all the ways you intertwine your life with another person’s life in an intimate relationship, and untangling yourself is very difficult.”
Rebecca Kelliher can be contacted at [email protected]