Home » Repayment » Repayment Plans » Meet the Absolute Worst Federal Student Loan: FFEL Joint Consolidation

Meet the Absolute Worst Federal Student Loan: FFEL Joint Consolidation

FFEL Joint Consolidation loans for spouses have limited options for repayment and forgiveness. They also become a nightmare in a divorce.

Written By: Michael P. Lux, Esq.

Last Updated:

Affiliate Disclosure and Integrity Pledge

Great News Everyone! Congress recently passed legislation to allow borrowers to separate joint consolidation loans!

This article will be left up as originally written to serve as a resource and record of the loans that many borrowers struggled with, but the good news for borrowers with spousal loans is that separation is now possible.

All student loans are a pain. Some student loans have special rules that make repayment more complex and more expensive. Parent PLUS loans are notoriously complicated. However, one federal loan reigns supreme as the worst possible loan: FFEL Joint Consolidation.

The joint consolidation loans were created with good intentions. In an effort to combat growing default rates, in 1993, Congress started allowing borrowers to consolidate student loans with their spouses.

Fortunately for borrowers, this mess of a program was discontinued. However, many borrowers are still stuck with the devastating consequences of FFEL Joint Consolidation Loans.

What Makes FFEL Joint Consolidation Loans so Bad?

There are two fundamental issues with FFEL Joint Consolidation Loans.

One Student Loan for Two Borrowers

The first problem is that the debt is combined with your spouse. These loans are often called FFEL Spousal Consolidation Loans for this reason. Combining debt with your spouse might seem reasonable, but the devastating consequences of a divorce heavily outweigh any slight advantages.

The root problem for former couples is that the joint consolidation loan survives even if the marriage does not. A divorce decree cannot remove one spouse from the debt, nor can any other agreement. As far as the Department of Education is concerned, both people are legally responsible for the debt.

This issue becomes especially problematic for couples that have an ugly divorce or in circumstances where one spouse refuses to make payments. The Department of Education offers no help to borrowers dealing with a vindictive or deadbeat ex.

Limited Options to Eliminate Debt

The other big issue with FFEL Joint Consolidation Loans is that options for repayment and forgiveness are limited.

Spousal loans often slip through the cracks when the government creates new programs to help borrowers. For example, the recent PSLF expansion excludes borrowers with FFEL Joint Consolidation Loans.

Making matters worse is the fact that there are not that many FFEL Joint Consolidation borrowers. When a problem doesn’t impact a large number of Americans, Congress is less likely to take action to fix it.

The end result is that FFEL Joint Consolidation borrowers continue to get ignored, and borrowers face devastating outcomes.

FFEL Joint Consolidation Repayment Plans

Over the last decade, the federal government created several different repayment plans to help borrowers manage their debt. These plans are Pay As You Earn (PAYE), Revised Pay As You Earn (REPAYE), and IBR for New Borrowers. Unfortuantely, FFEL Joint Consolidation loans are not eligible for any of these plans.

Borrowers with individual FFEL loans have the option of consolidating their loans into a federal direct loan. Those who use this path can sign up for the REPAYE plan and get considerably lower monthly payments.

Unfortuantely, borrowers with FFEL Joint Consolidation Loans cannot consolidate into a direct loan. The Department of Education will not consolidate FFEL joint loans.

Thus, the best repayment plan for couples with FFEL joint consolidation loans is Income-Based Repayment (IBR). Enrollment for couples can be a bit complicated because both borrowers must request the same income-driven repayment plan. If your spouse or ex makes a mistake on the form or refuses to fill one out, payments default to the standard repayment plan.

FFEL Joint Consolidation Forgiveness

Borrowers with FFEL Joint Consolidation loans face a long path to student loan forgiveness.

For starters, Public Service Loan Forgiveness is not an option. Borrowers with individual FFEL loans can usually consolidate into a direct loan to qualify for PSLF. However, because borrowers cannot consolidate FFEL Joint loans into a direct loan, borrowers cannot gain eligibility for PSLF.

Thus, the most realistic path for most FFEL couple loans is Income-Based Repayment Forgiveness. After making 25 years’ worth of IBR payments, the remaining balance gets forgiven.

Sherpa Tip: I’ve heard of a few cases where borrowers with joint consolidation loans were able to successfully consolidate into a federal direct joint consolidation loan.

Even though the Department of Education makes it clear that consolidating joint loans into a direct loan isn’t permitted, it could still be worth a try.

Separating FFEL Spousal Loans

If FFEL Joint Consolidation loans are such a headache, the obvious solution is to separate the loans.

Unfortunately, this option is not currently available.

If there is one bit of good news for FFEL Joint Consolidation couples, it is the fact that there is bipartisan support for allowing couples to separate their student loans.

The Joint Consolidation Loan Separation Act hasn’t been passed in Congress yet. However, this is an issue where a few phone calls and emails could influence Congress to make something happen.

About the Author

Student loan expert Michael Lux is a licensed attorney and the founder of The Student Loan Sherpa. He has helped borrowers navigate life with student debt since 2013.

Insight from Michael has been featured in US News & World Report, Forbes, The Wall Street Journal, and numerous other online and print publications.

Michael is available for speaking engagements and to respond to press inquiries.

21 thoughts on “Meet the Absolute Worst Federal Student Loan: FFEL Joint Consolidation”

  1. Thanks, Michael. I am keeping my fingers crossed…but I often get the feeling that they–whoever “they” are–have little incentive to get anything done. I am skeptical–and who can blame me?–as my husband and I began borrowing for our “kids” in 2002…borrowed a total of about $50K for all three, in the form of Parent Plus loans, one of which is the Joint Consolidation. We had to borrow through the year 2011.
    We’ve paid back about $92K, and now owe $130K. This system is rotten to the core. Mistakes in a few of our loans…no fixing, though–ever. I had one servicer say to me, “What you are saying IS consistent with what I am seeing–MAYBE. Hard to tell…” in regard to the consolidation loan that did not pay off one of the loans IN it. We were FORCED to sign a repayment agreement (I know how ridiculous that sounds) with one servicer when we had fallen into default on one loan. We were simply trying to stand our ground on a mistake they made–AES applied all of our payments to another AES loan with the same account #–which is how they did all of their loans. We knew they did this–yet they defaulted the loan–even while I was on the phone with them every single day, trying to work it out. THEN they demanded we agree to a “24.65%” collection cost added into the loan balance. You think I’m kidding? I am not. These guys are WORSE than the Mafia! Loan sharks WISH they had the carte blanche, anything goes rules the student lending industry has been awarded. NO one will help–even when I give them documents. I submitted documents to FSA and after weeks of waiting for ANY action, they “closed” the case, having not done one single thing. SO incompetent. Our issues are so big and twisted and numerous, I can’t even focus on ALL of them at any one time…I end up depressed and crying and anxious when I try to tackle the problems, so I break them down into little plans of attack: PSLF application; IDR plans; Direct Loan Consolidation; Reconsideration Request; letters to my senators/member of congress…yet so far, I have no results for my efforts. All anyone does is offer EMPTY lip service–at best. Pure hatred and hostility from the “other side” of the aisle. My husband will be 70 this year; I am not too far behind. We’ve been conned…lied to…cheated…robbed…extorted…you name it…for over 20 years.

  2. This is b.s..

    We’re not stupid people. When we consolidated in the early 2000s, consolidation seemed like a good way to reduce interest. We locked in a “low” 6% interest rate, and started making payments.

    Then the economy tanked and the fed left rates around 0-2% for a decade. Paid tens of thousands in extra interest that could have been avoided without the consolidation.

    THEN along came public service forgiveness. My wife would be eligible to have her 25k principle/interest forgiven. I am not. We knew this when PSLF came out years ago… but really got our hopes up when the Biden adminstration started opening up PSLF to make it easier to qualify.

    But you cant split or PSLF consolidated loans. And you can’t conolidate to nondirect loans. What the heck!

    Left behind again.

    • Dave,

      The Joint Consolidation loans are awful. At the time, the decision was totally justifiable, but each time they changed the rules, you and people like you got left further behind.

      The last couple of years, we have seen a lot of “fixes” to correct major student loan issues. I’m hopeful that these loans will get addressed soon.

      • WHEN we will be able to do this???? I need to consolidate my share of our joint/spousal consolidation as I am trying for PSLF. I’ve been working in a 501c3 for 12 years–though a few of those years I worked only part time. I have no idea what my “count” toward PSLF is (I have a pretty good idea, though) an NO ONE–not my servicer nor the EdDept is willing to help. This is urgent. The window for consolidating is closing again. I submitted my PSLF forms a year ago, however.

      • That is a great question Jane. On one hand, I know the Department of Education is quite overwhelmed now, but this legislation passed a while ago, and there hasn’t been an announcement. Many people are in situations similar to yours.

        I’m going to do a bit of investigating this morning, and I’ll reach out to a few contacts to see if I can get an update.

      • Hi Jane,

        It looks like we may see some good news on this front. There seems to be some movement within the Department of Education on this issue of late, and the best guess is that we will see a separation application become available this spring.

  3. We were told by NelNet that the only way to get out of default and have a payment we could afford was to go into a Forbearance state while we consolidated our loans. So, we did; as a result, they added $46,000 in fees & interest to our loans. Then, we realized they put everything in my husband’s name with me as a Co-signer, not a co-borrower, even though all but $5,000 were my loans. They refused to speak to me about the loan because my name wasn’t on it. We believe they did this because I had spoken to them about a medical hardship, so they knew I was really sick. Now, after teaching for 30 years & taking a Disability Retirement, we still owe $83,000. This is almost 3 times what we borrowed, & we’ve paid back 204% so far. My husband is a public service worker too. NelNet told us to sell our cars and house if we couldn’t make the payments. Since they took my name off the loan as a co-borrower, it seems like we should be able to consolidate into a Direct Loan. Your thoughts?

    • Hi Janet,

      First of all, that sounds awful, I’m sorry that you two have had to deal with so many servicer issues.

      I think your idea for direct consolidation is a good one. If you are no longer on the loan, then it isn’t a joint loan and should be able to be consolidated. It is worth trying, the worst they can tell you is no.

      • no this is how the servicers classify us as co signors; even though both spouses hold equal stake in the joint consolidation loan. For decades, they would only speak to my husband on the phone, calling me a co signor. Somehow miraculously we’ve recently had all of our joint consolidation ffel student loan debt cancelled. We graduated college in 1991, borrowed 20,000, repaid 40,000 and our balance stood at 77,000. We defaulted during covid and our loans reverted back to Dept. Of Ed. FSA sent us notice in Sept. that we qualified either through paying for 2 decades or PSLF (firefighter husband). Nelnet sent us notice last week of our zero balance and it just came off of our credit report. We are still in disbelief, but Biden’s programs are working. Unfortunately, Dept. Of Ed. is dragging its feet with separating Joint Spousal Consolidation Loans and coming up with a process for it. They should just zero out all of those balances. I still don’t know how we obtained forgiveness with not having our loans separated first, but we took a chance when Biden offered FFEL loan holders some relief during the pandemic but only if they were defaulted. We were close to default so we just let it happen. I don’t recommend that, but we felt that we had no other choice…

      • That sounds like a long and difficult journey. I’m happy to hear that things worked out for you in the end. Hopefully that will be the case for other joint consolidation borrowers in the near future. Thanks for sharing your story!

  4. One of the most frustrating things we dealt with was when I became eligible for social security disability. I began inquiring around 2011 about a discharge for my loans due to total and permanent disability. At first, Navient said it would not be possible. They said both of us would have to be total and permanently disabled. I fought and fought back with them, over many, many phone calls. Eventually by 2015 it was approved and separated by loan so that my specific individual loans would be discharged, but the loan terms remained the same, both of us would be responsible for my spouse’s portion. If they had done a literal separation of the loans and removed my name from the loan, my husband would have been able to use PSLF to have his forgiven because of many years of active duty in the Navy. We have gotten a lot of grief and repeated misinformation through the years with Sallie Mae and Navient. We were told up until 2018 that he would be able to have his portion forgiven, only to find out that it would not be. He owes more than his original loans were just as many other people do. While I am grateful my portion has been forgiven, I remain frustrated because he has been in the military for over 20 years now, and he should be able to get credit for that service.

  5. If you are in this situation, please join our FaceBook group: Spousal Consolication.Do Us Part!

    This group seeks to assemble and organize spousal/joint consolidation debtors in order to collectively provide support, explore various avenues for loan relief specific to spousal consolidation, solicit and influence legislative support for the Joint Consolidation Loan Separation Act, find and ally with various student loan advocacies and to collectively take action towards the separation of our joint/spousal consolidation loans in order to take advantage of federal student loan forgiveness programs and benefits, and finally liberate divorcees and victims of domestic abuse from their former spouses. It is open to married and divorced debtors with federal Direct Loans (DL) or Federal Family Education Loan Program (FFELP) Sousal/Joint Consolidation Loans. Members can expect this group to be action oriented and can expect to be involved in regular teleconference meetings, focus groups, information collection and surveys and various other activities that serve to fulfill the group mission.


Leave a Comment