Student loan defaults have been a significant, little-discussed barrier to prison education. But today the Education Department announced a fix
that will bring all defaulted loans into good standing, a move that could significantly increase access to college-in-prison programs over the next few years.
Anyone who has defaulted on a loan is ineligible for federal financial aid such as Pell Grants – the current way that most people in prison pay for college. Making payments, and bringing loans back into good standing, pose a burden for many borrowers, but people in prison, especially those who don’t have family support on the outside, are often unable to do something as simple as pick up the phone to call their loan servicer or set up a repayment plan online.
The department’s announcement specified that people in prison will, like other borrowers, qualify for a “fresh start” when the student loan payment pause, which has been in effect since March 2020
, ends in August.
The “fresh start” policy will bring all eligible defaulted loans into good standing. All borrowers, including those in prison, will have: the default record removed from their credit history, their eligibility for federal student aid restored, and loan collection efforts stopped. They will also be able to consolidate their loans and enter into a repayment plan.
Fixing the student loan default problem was necessary “if the goal of restoring Pell Grants to people in prison was to expand college access,” said Bradley Custer, senior policy analyst for higher education at the Center for American Progress, a nonprofit group.
Details on when “fresh start” will be implemented, and how it will be communicated to people in prison, were not included in the department’s announcement.
“What we need now,” Custer said, “is a transparent plan from the department on how they will help these borrowers to stay out of delinquency and default after they are restored to good standing.”
The “fresh start” was part of the department’s larger announcement of 73 new Second Chance Pell sites,
bringing the total to 200. President Barack Obama launched the Second Chance Pell program in 2016 as the first step toward reinstating Pell Grants for incarcerated students. Pell Grants, which are available to low-income students, were eliminated for the prison population as part of the 1994 crime bill. In 2020, Congress lifted that 26-year ban, with full reinstatement of the aid for people in prison currently slated for July 2023.
+ Read my story about people like Amanda Newman who have struggled to bring their loans back into good standing from prison. The amount of debt that had kept her out of college? $93.05.