Joint Consolidation Loan Separation Act: Apply, Split, PSLF Credit

To separate a joint consolidation student loan, you file the Department of Education’s Combined Application to Separate a Joint Consolidation Loan and Direct Consolidation Loan Promissory Note, either jointly with your co-borrower or on your own under limited grounds. Once processed, the original joint loan closes and each borrower receives a new individual Direct Consolidation Loan sized to their share of the balance. The Department began accepting applications on December 31, 2024, under the Joint Consolidation Loan Separation Act signed on October 11, 2022.¹

Who Can Use This Process

The loan has to be a joint consolidation loan made through the Federal Family Education Loan (FFEL) program or the Direct Loan program before that option ended on July 1, 2006, and it has to still be an active federal loan.² Private student loans that a couple consolidated together are not covered, even if the underlying loans started out federal before a private refinance. Congress ended new joint consolidations in 2006 but left existing borrowers with no way out; this law is the mechanism.³

Three Ways to Apply

How you apply depends on whether your co-borrower will participate and whether a court has already assigned specific shares of the debt.

Joint Application

If both of you agree to separate the loan, each co-borrower fills out and submits their own Application/Promissory Note. The Department will not process the split until both forms are in.¹ When both are received, the joint loan is divided proportionally by original contribution and two new individual Direct Consolidation Loans are created.

Separate Application

You can apply on your own if you certify one of two things: that you experienced domestic violence or economic abuse from the co-borrower, as defined under the Violence Against Women Act, or that you cannot reasonably reach the co-borrower or access their loan information.² Your portion converts to a new Direct Consolidation Loan and the co-borrower stays responsible for the joint loan at a reduced balance reflecting their share. They receive notice of the separation and can apply later to convert their own remainder into an individual loan.

Court Order or Settlement

A divorce decree, court order, or signed settlement agreement can also drive the split. Both co-borrowers still submit separate Application/Promissory Notes and each attaches a copy of the same court document. The order has to state the portion of the current outstanding balance each borrower must repay. Language that simply assigns “the student loans” to one spouse without a specific dollar amount or percentage of the current balance will not work.² A court order must be signed by a judge; a settlement agreement must be signed and dated by both co-borrowers.

What Goes on the Form and How to Submit It

The Combined Application to Separate a Joint Consolidation Loan and Direct Consolidation Loan Promissory Note is available on StudentAid.gov. It does double work: it is both your request to separate the joint loan and the promissory note for your new individual Direct Consolidation Loan.²

You will need full legal names, Social Security numbers, dates of birth, and permanent mailing addresses for both borrowers so the servicer can locate the joint loan in its records. If you are applying separately based on abuse, include the certification language provided in the form. Every applicant signs under penalty of perjury, which carries extra weight on a separate application because the Department acts on your certification alone.

Pull your most recent billing statement before you file and check the current balance and interest rate against the form. If you still have records of the loans that originally went into the joint consolidation, those help confirm each borrower’s proportional share. Bad information is the most common reason applications stall.

You can submit the completed form by email to the consolidation originator at the address printed on the form, or by mail to one of the physical addresses in the instructions.¹ If you mail it, use certified mail so you have proof of delivery.

How the Balance Gets Divided

Unless a court order sets specific shares, the servicer divides the current balance in the same proportion each borrower originally contributed to the joint consolidation. Unpaid principal, accrued interest, and any outstanding fees all follow those proportions.³

An example: if you contributed $40,000 and your co-borrower contributed $10,000 originally, you carry 80 percent and they carry 20 percent of whatever remains. On a current balance of $60,000, your new loan is $48,000 and theirs is $12,000. Once the split is final, the joint loan closes and each new individual loan stands on its own. Your co-borrower’s income, credit behavior, and payment choices no longer touch you.

The Interest Rate on Your New Loan

Your new individual Direct Consolidation Loan has a fixed rate equal to the rate on the joint loan the day before the new loan is created. If the joint loan had a variable rate, whatever that variable rate happens to be at that moment becomes your permanent fixed rate.² Enrolling in automatic monthly payments takes 0.25 percent off.

What Happens After You Submit

You have 10 days after the application is received to cancel the separation.⁴ After that, the servicer starts the payoff process for the joint loan. If your form is missing information, you get 30 days to supply it or the application can be cancelled.

Processing takes time. The Department has said timelines vary with the complexity of the loan records and the volume of applications received.¹ During processing, the servicer may place the joint loan in administrative forbearance. Interest still accrues, but it does not capitalize onto the principal.⁵ Capitalized interest compounds on itself; uncapitalized interest waits to be paid without inflating the base that future interest is calculated on.

Payment Credit Toward PSLF and IDR Forgiveness

This is where the date you applied matters most. Borrowers who submitted the Application/Promissory Note by June 30, 2025 qualified for the one-time IDR payment count adjustment, which credited additional qualifying payments toward both income-driven repayment forgiveness and Public Service Loan Forgiveness.⁶

Applied by June 30, 2025

You get the full benefit of the adjustment. For PSLF, the Department credits your new loan with qualifying payments from the joint loan’s history for months you worked for an eligible employer. Once the adjustment posts, use the PSLF Help Tool or file a PSLF Form to verify your employment for those months.⁴ Updated PSLF payment counts for separated joint consolidation loans are expected to display by spring 2026.¹

Applied After June 30, 2025

You still get credit, but less of it. For a joint Direct Consolidation Loan, you receive a weighted average of the PSLF-eligible or IDR-eligible payments applied to the joint loan. Only payments that met the criteria for PSLF or IDR forgiveness at the time they were made count.¹

For an FFEL joint consolidation loan, the picture is worse after the deadline. No payments will be credited toward PSLF on your new Direct Consolidation Loan, and only a weighted average of certain payments counts toward IDR forgiveness.¹

How IDR Credit Is Calculated on the New Loan

For separating a joint Direct Consolidation Loan, payments on the joint loan count toward IDR forgiveness on the new individual loan if they would have qualified on any Direct Loan, and months of economic hardship deferment on the joint loan also count. For separating an FFEL joint loan, only payments made on or after July 1, 2009 under certain repayment plans qualify, along with months of economic hardship deferment after that date.²

Which Repayment Plans You Can Choose

After separation, your new individual Direct Consolidation Loan qualifies for income-driven repayment plans, but current options depend on federal litigation. As of early 2026, a court order has blocked the SAVE Plan and parts of other IDR plan formulas. Eligible borrowers can currently enroll in Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn.⁷

Borrowers whose new Direct Consolidation Loan is created on or after July 1, 2026 will face limited options for enrolling in an IDR plan.⁷ If your separation has not finalized yet, that date could shape which plans are still open to you. Watch the announcements page on StudentAid.gov for updates.

What Separation Does to Your Credit Report

When the joint loan closes and the new individual loan opens, a new tradeline appears. Key data carries over: the original account open date, your payment history, account status, and date of last payment.⁴ You should not lose credit for years of on-time payments, and the age of the account reflects the original loan, not the separation.

The joint loan will be reported as paid through consolidation. Your new balance will be smaller than the former joint balance because it only reflects your share, which can help your debt-to-income ratio when you apply for a mortgage or other credit.

Discharge Programs You Can Now Access Individually

Your new individual Direct Consolidation Loan qualifies for the full range of federal discharge programs: total and permanent disability discharge, death discharge, bankruptcy discharge, closed school discharge, false certification discharge, identity theft discharge, unpaid refund discharge, and borrower defense to repayment discharge.² Each applies only to your portion. A total and permanent disability discharge, for instance, wipes out your loan without touching your co-borrower’s separate obligation. Before this law, a borrower who became permanently disabled still could not discharge their share of a joint consolidation loan because the co-borrower’s portion was legally inseparable.

1
Federal Student Aid. Joint Consolidation Loan Separation News
2
Federal Student Aid. Combined Application to Separate a Joint Consolidation Loan and Direct Consolidation Loan Promissory Note
3
House Committee on Education and the Workforce. Joint Consolidation Loan Separation Act Fact Sheet
4
Federal Student Aid. Joint Consolidation Loan Separation Guidance for Commercial FFEL – Phase II
5
Federal Student Aid. Joint Consolidation Loan Separation Act – Forbearance Guidance
6
Federal Student Aid. IDR Account Adjustment
7
Federal Student Aid. IDR Court Actions