Loans and grants

Consumer group sues Education Department to get data on incarcerated student loan borrowers

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Dive Brief:

  • A consumer advocacy group is suing the U.S. Department of Education, accusing the agency of ignoring a request it made for records on incarcerated student loan borrowers. 
  • The Student Borrower Protection Center, or SBPC, said in a lawsuit filed Tuesday that though the Education Department worked with the organization when it first asked for the records in November 2021, it has since gone silent. 
  • The group wants to know how many student loan borrowers have had their debts erased under a department policy that allows individuals who are incarcerated for a decade or more to have their defaulted loans eliminated. 

Dive Insight:

For three decades, incarcerated students haven’t been allowed to tap into federal Pell Grants, a primary form of financial aid for low- and moderate-income borrowers. But that will change come July, when new rules take effect giving them access to the grants.

Incarcerated individuals can get tripped up if they come into the criminal justice system with loan debt. These borrowers “are likely to slip into default with devastating consequences even beyond Pell Grant ineligibility,” the SPBC said in a report released Tuesday.

For that report, it studied 300 students enrolled at East Coast correctional facilities and found 57 who owed student loans. All of them were in default, SPBC said.

The group is seeking to learn more on the issue. In late 2021, it asked the Education Department for all documents from the last decade “related to the number of borrowers who have applied for and secured discharge because of incarceration lasting ten years or more,” according to the SPBC. 

If a borrower is incarcerated for a decade or more and defaults on their loans, then the Education Department considers the debt uncollectible, according to the Office for Federal Student Aid. 

The Education Department confirmed to the group in January 2022 that it had forwarded its records request to the relevant departments, the lawsuit states. The Education Department said at the time it could not give a date by which it would complete the request. 

The SPBC has heard nothing from the department since, it alleges. It followed up with the agency in June 2022, the lawsuit states. 

It wants the Education Department to turn over the information, as well as pay for legal fees.

The Education Department did not provide a comment by publication time Tuesday.

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