A new report
from the Student Borrower Protection Center
and the National Consumer Law Center
examines the intersection of mass incarceration and the student debt crisis.
“A little considered, but still ruinous collateral consequence of detention or imprisonment is an incarcerated borrower’s spiral into delinquency and default on their federal student loans,” the authors wrote.
While the Education Department does not track incarcerated borrowers, experts estimate that hundreds of thousands of individuals have entered prison already carrying student loan debt, the report says. Incarcerated borrowers face challenges making monthly payments, communicating with loan servicers, and finding out timely information about debt relief options that might benefit them.
As Ryan Moser and I have previously reported
, student loan default is one of the major barriers currently preventing people in prison from accessing Pell Grants. In April, the Education Department announced a “fresh start”
that will bring all defaulted loans, including those belonging to incarcerated borrowers, into good standing. But three months later, the department has yet to share any details of the new program, including when it will go into effect and how they plan to communicate changes to people in prison.
The new report looks at the collateral consequences of student loan default and delinquency on incarcerated borrowers beyond Pell eligibility, including its impact on reentry.
“Incarceration-related student debt not only hurts the borrower’s credit, making it even more difficult to secure housing, jobs and transportation after release, it also increases their debt and puts them at risk of wage garnishment and benefit offset upon release–right at the moment when they may be most financially insecure,” the authors wrote.
An incarcerated student highlighted in the report said that they were never told they could apply for student debt relief programs during their 10-plus year sentence.
“I watched the interest get capitalized and fees accrue while I remained helpless,” they said. “[I]t is an incredible burden to be faced with as soon as you step out of a long-term incarceration.”
The report outlines several recommendations that would improve student loan outcomes for incarcerated borrowers, including canceling student loans for borrowers serving sentences of more than five years and publishing clear information about how current servicing practices and policies affect incarcerated borrowers.
The report argues that the unique needs of incarcerated borrowers should be considered during the Biden administration’s current overhaul of the student loan system. “Providing targeted support to incarcerated borrowers will ensure that these important initiatives have a real chance at success and advancing racial justice goals,” the authors wrote. “Failing to do so could otherwise undermine these initiatives.”