Loans and grants

Student Loan Cancellation to Save Incarcerated People From Mass Defaults

A nonprofit organization has sued the Department of Education, alleging that records containing critical data and policies related to incarcerated student loan borrowers have been withheld since 2021.

The lawsuit filed by the Student Borrower Protection Center (SBPC) comes on the heels of the nonprofit’s new report, finding that 100 percent of 57 incarcerated individuals part of a data study are currently in default—due to barriers in accessing Pell Grants, and the holdup of student debt relief that is currently being deliberated by the U.S. Supreme Court. Although the data subset is relatively minute, they believe the numbers are higher across the entire United States.

President Joe Biden‘s plan, which his administration has attempted to enact to appease a campaign promise, would forgive up to $10,000 in federal student loan debt for borrowers if they make less than $125,000 individually or $250,000 as a family.

Pell Grant recipients would get an additional $10,000 in debt forgiven—all totaling millions of potentially affected individuals, including over 16 million people who have already been approved for debt relief out of 26 million who had applied in the four weeks that the application was previously available.

People gather during a protest in support of student debt cancellation as the Supreme Court begins oral arguments outside of the Supreme Court of the United States in Washington, D.C., on February 28, 2023. A nonprofit has sued the Department of Education, claiming records have been withheld regarding student loan borrowing options for incarcerated individuals.Sarah Silbiger/The Washington Post/Getty

Republicans and Democrats recently introduced their own dueling proposals with drastically different approaches to curbing the costs of higher education and providing relief for debt borrowers.

The last two June dates on the Court’s calendar were June 15 and 16, though a conference is scheduled for June 22, when additional opinions could be released.

‘A lot of barriers’

The SBPC suit, filed Tuesday in Washington, D.C., District Court, dates back to a Freedom of Information (FOIA) request initially made November 29, 2021, aimed to understand the Department of Education’s guidance and policies involving incarcerated borrowers that they say “is critical for understanding the size and scope of the student debt crisis facing incarcerated borrowers.”

But the department has allegedly neglected to turn over any documents and has not provided any explanation for nearly a year and a half of “radio silence,” SBPC claims.

The plaintiff wants the court to determine that the Department of Education violated FOIA; to order it to make a determination regarding the records’ requests and to make them available “at no cost and without delay”; and to provide a justification for any withholding.

“We’ve been asking for these documents for well over a year now, and we haven’t received them,” Persis Yu, SBPC deputy executive director and managing counsel, told Newsweek via phone. “The Freedom of Information Act is pretty clear. We’re entitled to these records.”

A report published by the nonprofit earlier this month built on previous research conducted in partnership with incarcerated student advocates and educators, analyzing student loan borrowers enrolled in Higher Education in Prison (HEP) programs operating within a number of correctional facilities on the East Coast.

After compiling data on more than 300 students enrolled at a number of correctional facilities in that part of the country, SBPC found that 57 of those individuals owe federal student loans and discovered that every one of them is in default.

The investigation found that 94 percent of those 57 people would see their debts totally erased under the Biden plan.

“The fact that student loan borrowers exist within the prison context is often something that people find surprising for some reason,” Yu said. “There are a lot of barriers in the student lending system. We have this Byzantine bureaucracy that is incredibly challenging for any student loan borrower to navigate, but then when you think about barriers that folks who are incarcerated face—navigating that system goes from being very hard to virtually impossible.”

Yu acknowledges the data subset isn’t vast, adding that it’s a result of general disarray in the student loan borrowing realm and information not openly shared among institutions, officials and the borrowers themselves.

In prisons, for example, not all incarcerated individuals have internet access to analyze their repayment plans—and inmates can’t make 30- or 60-minute 1-800 phone calls to request information if necessary.

Other findings from the report include:

  • More than 90 percent of the borrowers in this case study owe less than $20,000, so they could theoretically have their debts wiped clean based on the proposed Biden plan.
  • Every one of these borrowers were in default on their federal student loans, compared to only about 20 percent of all U.S. student loan borrowers based on pre-COVID statistics.
  • Without student loan cancellation, most incarcerated borrowers will be “locked” out of higher education and the improved post-release outcomes it brings.

SBPC says that is due to Prison Education Programs—post-secondary learning opportunities offered to incarcerated people via partnerships between prisons or jails and nearby colleges, with offerings that range from non-credit courses to full degree-granting programs—being reliant upon federal student aid. They “will likely turn away Pell Grant-ineligible individuals who are unable to fund their own educations.”

On July 1, the Department of Education is expected to implement the expansion of 73 sites and up to 200 programs as part of a broader reinstatement of access to Pell Grants for incarcerated students. That was originally announced in April 2022.

“This is an amazing opportunity for incarcerated folks to get an education,” Yu said. “It helps lower recidivism rates when folks exit, and generally is related to better reentry into society when folks leave. One of the barriers is that folks can’t access Pell Grants when they’re in default on their student loans.”

She added: “Borrowers who are incarcerated have relatively small amounts of debt that’s keeping them from getting their programs, and this program which is sitting in front of the Supreme Court could potentially solve that problem for a lot of folks. This is incredibly important information.”

Newsweek reached out via email to the Department of Education.

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