Incarcerated student loan borrowers get more options to pay their debts
- The Ministry of Education has announced a plan to help student borrowers in prison who are behind on payments.
- Specifically, it ensures that they will get back in good standing before re-entering the refund.
- The department also expanded a Pell Grant program to continue the education of incarcerated Americans.
Incarcerated student borrowers who are in arrears may soon get some relief.
On Tuesday, President Joe Biden’s Education Department announced an expansion of the Second Chance Pell Experience, which was first created in 2015 under former President Barack Obama to provide incarcerated people with the opportunity to participate in post-secondary education programs. The announcement expanded the program to 73 new colleges, meaning up to 200 institutions are now participating in the program.
Additionally, Tuesday’s announcement also included good news for those incarcerated with student debt. Those who were in arrears or in default will be included in the ministry’s latest announcement aimed at getting all borrowers into default before they have to re-enter repayment, which is now scheduled for September 1. . It will also allow these people to consolidate their loans to help them out of long-term default, “an option available to everyone and cut off for incarcerated people for too long,” the press release said.
“Access to high-quality post-secondary education is essential for people incarcerated, but for too long people incarcerated have been left behind,” said US Secretary of Education Miguel Cardona. “The expansion of Second Chance Pell and these new default pathways are essential steps for those incarcerated to access educational opportunities that will give them a second chance to build a future for themselves.”
According to the National Consumer Law Center, there are a series of guidelines to advance educational opportunities for incarcerated people. Those not eligible for Second Chance Pell often have to pay tuition out of pocket, and for those who entered jail after incurring student debt and defaulting on loans, repayment options depend on the length of the prison sentence.
For example, if a borrower is to be in jail for more than nine months but less than ten years, the government is required to stop active collections until the first release date, and the department said it would write the loans for those in prison for more than ten years. But if the borrowers are not in default, the ministry will continue to collect payments.
Ensuring that defaulting student loan borrowers receive relief has been an issue for the Department of Education and lawmakers. Along with Biden extending the student loan payment pause until August 31, he also announced a plan to give more than 7 million defaulting borrowers a fresh start and get them back into good standing. But he didn’t include a specific plan for how that will be done, and Massachusetts Sen. Elizabeth Warren and some of her fellow Democrats asked for an update on Monday.
They wrote that removing defaulting borrowers would mean that “millions of people will not be immediately subjected to wage garnishment, withholding of tax refunds and aggressive collection practices that threaten to jeopardize their economic security”.