Photo caption: Clockwise from top left: Dick Durbin (D-IL), Elizabeth Warren (D-MA), John Fetterman (D-PA), Alex Padilla (D-CA), Raphael Warnock (D-GA), and Cory Booker (D-NJ)
Lawmakers emphasize the disproportionate effects student loan debt has on incarcerated individuals
U.S. Senate Majority Whip Dick Durbin (D-IL), Chair of the Senate Judiciary Committee, alongside U.S. Senators Elizabeth Warren (D-MA), John Fetterman (D-PA), Cory Booker (D-NJ), Raphael Warnock (D-GA), and Alex Padilla (D-CA), today sent a letter to Secretary of Education Miguel Cardona urging him to take steps to provide assistance to incarcerated individuals burdened by student loan debt. Incarcerated borrowers face extraordinary barriers to managing and repaying student loans, and these barriers have countless effects that adversely impact incarcerated individuals’ ability to successfully reenter society. In the letter, Durbin and his colleagues detail how the Department of Education can support incarcerated individuals as they navigate student loan payments.
“We write to urge the Department of Education (Department) to take steps to improve student loan outcomes for incarcerated borrowers given the Department’s commitment to providing relief to student borrowers and supporting educational opportunities for incarcerated individuals,” wrote the lawmakers.
Noted in the letter, the student debt and incarceration systems historically have had devastating and disproportionate impacts on communities of color and low-income communities. While incarcerated borrowers often need additional support to navigate student loan repayment, these individuals are left with little ability to earn income to repay their debt.
“While poor student loan servicer communication has been an issue for all borrowers, a report by the Student Borrower Protection Center (SBPC) and National Consumer Law Center found that incarcerated borrowers face unique servicing issues. For example, these individuals earn low or no income. According to the American Civil Liberties Union and the University of Chicago Law School’s Global Human Rights Clinic, people in prison earn $0.13 to $0.52 per hour on average, making it nearly impossible to afford monthly loan payments,” wrote the Senators.
In addition to financial constraints, incarcerated borrowers encounter various logistical difficulties when attempting to communicate with student loan servicing companies, including costly rates for making phone calls, limited timeframes for calls, prohibitions on reaching toll-free numbers, and the requirement of pre-approved phone numbers. Additionally, incarcerated borrowers lack regular internet access and the necessary computer resources typically required for managing student loan repayment, which can harm an incarcerated borrower’s ability to reenter society.
“Those who are unable to repay their student loans may watch their loan balance balloon as interest accrues. In many cases, incarcerated borrowers default, which hurts their credit scores and makes securing housing, employment, and transportation even more difficult after release,” the Senators continued.
Continuing their letter, the lawmakers urged the Department to take up their proposal to cross-reference federal student loan borrowers with databases containing incarceration information. This initiative would allow the Department to offer tailored assistance and support to incarcerated borrowers.
“We encourage the Department to use this data to enroll those borrowers automatically into an [Income Driven Repayment (IDR)] plan with a zero-dollar monthly payment, relieve borrowers of recertifying their IDR eligibility while they are incarcerated, and keep these borrowers enrolled in IDR with zero-dollar payments for a year after their release. We also urge the Department to count all of borrowers’ IDR payments while they are incarcerated toward cancellation after 20 years of IDR payments. Further, we encourage the Department to allow incarcerated borrowers seeking relief from a defaulted loan to make zero-dollar monthly payments during their nine-month rehabilitation period,” the lawmakers wrote.
The lawmakers further urged the Department to provide easily-accessible information to incarcerated individuals and prison administrators about student loan servicing resources.
“We encourage the Department to launch a public, easily accessible Frequently Asked Questions webpage focused on resolving common student loan servicing concerns faced by incarcerated borrowers and detailing the full range of student loan relief options available to them… Finally, the Department should educate jail and prison administrators on student loan servicing policies that impact incarcerated borrowers to ensure effective implementation,” wrote the lawmakers.
Emphasizing that the Department has a responsibility to take proactive steps toward alleviating the burdens faced by incarcerated borrowers, the lawmakers concluded their letter by calling on the Department to swiftly consider their proposal.
“It is within the Department’s authority to remove many barriers that incarcerated borrowers face. We appreciate your timely attention to this matter,” the lawmakers concluded.
Full text of the letter is available here and below:
July 26, 2023
Dear Secretary Cardona:
We write to urge the Department of Education (Department) to take steps to improve student loan outcomes for incarcerated borrowers given the Department’s commitment to providing relief to student borrowers and supporting educational opportunities for incarcerated individuals. We applaud the Department’s recent actions to update the Income-Driven Repayment (IDR) regulations and eliminate the negative effects of default through the Fresh Start initiative. We also support the Department’s reimplementation of Pell Grant eligibility for incarcerated students, which could impact an estimated 760,000 individuals participating in prison education programs.
The student debt and incarceration systems have devastating impacts on communities of color and low-income communities, and their harms are amplified and worsened when compounded by each other. While poor student loan servicer communication has been an issue for all borrowers, a report by the Student Borrower Protection Center (SBPC) and National Consumer Law Center found that incarcerated borrowers face unique servicing issues. For example, these individuals earn low or no income. According to the American Civil Liberties Union and the University of Chicago Law School’s Global Human Rights Clinic, people in prison earn $0.13 to $0.52 per hour on average, making it nearly impossible to afford monthly loan payments.
Incarcerated borrowers also face financial and logistical restrictions when contacting student loan servicing companies, such as expensive rates to place phone calls, short time limits for calls, bans on making calls to toll-free numbers, and lists of pre-approved phone numbers. Incarcerated borrowers also lack the regular internet and computer access required for most student loan servicing. Those who are unable to repay their student loans may watch their loan balance balloon as interest accrues. In many cases, incarcerated borrowers default, which hurts their credit scores and makes securing housing, employment, and transportation even more difficult after release. Another report by SBPC found that in a case study, 100 percent of borrowers participating in the Higher Education in Prison program had defaulted on their federal student loans, compared to only 18 percent of all student loan borrowers before the COVID-19 pandemic. These challenges further harm incarcerated borrowers’ post-release finances by increasing their debt and putting them at risk of wage garnishment and benefit offset.
The Department can work to improve outcomes for incarcerated borrowers by cross-referencing federal student loan borrowers with databases that compile incarceration information to provide targeted assistance to these borrowers. Since incarcerated borrowers face distinctive challenges, we encourage the Department to use this data to enroll those borrowers automatically into an IDR plan with a zero-dollar monthly payment, relieve borrowers of recertifying their IDR eligibility while they are incarcerated, and keep these borrowers enrolled in IDR with zero-dollar payments for a year after their release. We also urge the Department to count all of borrowers’ IDR payments while they are incarcerated toward cancellation after 20 years of IDR payments. Further, we encourage the Department to allow incarcerated borrowers seeking relief from a defaulted loan to make zero-dollar monthly payments during their nine-month rehabilitation period.
Public information about student loan servicing for incarcerated borrowers currently is limited. We encourage the Department to launch a public, easily accessible Frequently Asked Questions webpage focused on resolving common student loan servicing concerns faced by incarcerated borrowers and detailing the full range of student loan relief options available to them. We also urge the Department and its loan servicers to include a non-toll-free phone number on their websites for incarcerated borrowers to call with servicing questions. Further, we urge the Department to work with its contractors to ensure these numbers are included on facilities’ lists of pre-approved phone numbers. Finally, the Department should educate jail and prison administrators on student loan servicing policies that impact incarcerated borrowers to ensure effective implementation.
It is within the Department’s authority to remove many barriers that incarcerated borrowers face. We appreciate your timely attention to this matter.
Sincerely,
cc: The Honorable Merrick Garland, Attorney General, Department of Justice
