Millions Could Soon Benefit from Student Debt Relief Policies, but What If They’re in Prison?

Hannah Eddy Communications Manager, Unlocking Potential
Dec 06, 2022

Jed Brewster had big dreams when he enrolled at a community college near Boise, Idaho. He had hoped to one day be a speechwriter and work on political campaigns. Thanks to the help of student loans, he was able to begin pursuing a degree in criminal justice.

But Brewster’s dreams were put on hold. In 2010, he was convicted of a crime and sent to serve his sentence at the Idaho Correctional Institution in Orofino. Knowing he would be unable to continue making payments on his student loans, and that failure to pay could impact future educational opportunities, he contacted his school. Brewster was assured that his payments would be put on hold until his release, but this was not the case. Instead, Brewster’s loans entered default, leaving him unable to qualify for federal student aid when he had the opportunity to resume his education.

Brewster is one of likely hundreds of thousands of people who have entered prison with student loan debt. Until this year, there was no systemic solution to tackle the problem of debt and loan default for people like him. But two recent executive actions by the Biden administration seek to broadly address the issue of defaulted loans and student debt before the federal student loan payment pause initiated at the start of the COVID-19 pandemic ends.

In August, President Biden announced that people with federal student loans and an income of less than $125,000 ($250,000 for married couples) are eligible for up to $10,000 in loan forgiveness, and up to $20,000 if they are, or have ever been, Pell Grant recipients. The administration also released guidance concerning Fresh Start, an opportunity available until December 2023 that enables students who have defaulted on their loans to qualify for federal student aid and/or reenter repayment in good standing.

Across the United States, an estimated 45 million borrowers hold $1.6 trillion in federal student loan debt, and a recent report estimates that as many as a quarter million of them are currently incarcerated. Though both Biden administration initiatives will aid hundreds of thousands of these borrowers, the benefits for people who are currently or formerly incarcerated are especially significant. Together, these policies mark an important step toward making college more accessible for system-impacted people, like Jed Brewster.

For students who are not in prison but who have defaulted on their student loans, the process of bringing loans back into good standing is not overly complicated. They contact their loan servicer and set up a payment plan; once they bring their loans into good standing, they can enroll in school. When they again enter a repayment period, they may qualify for an income-driven repayment plan. Under one of these plans, borrowers may qualify for reduced or zero-dollar payments based on their financial circumstances. By using these payment plans, borrowers may eventually pay off their loans or have their remaining debt forgiven, depending on which plan is chosen.

For people in prison, however, payment continuity and loan management are extremely difficult. Limited income and the pervasive logistical challenges of communicating with student loan servicing companies from behind bars make defaulting on loans a common problem, and one that is much harder to fix while incarcerated. And the impact can be felt immediately. Incarcerated people whose loans are in default are prohibited from receiving federal aid, meaning that even if there is college programming available in their prison, they may not be able to enroll until they bring their loans into good standing.

This was where Brewster found himself when he learned that Lewis-Clark State College (LCSC), a top pick of his when he’d applied to college in high school, had been included in the Second Chance Pell (SCP) Experimental Sites Initiative, a federal pilot program that provides need-based Pell Grants to incarcerated people at select colleges. Fortunately for Brewster, the announcement that LCSC would join SCP arrived at the same time the Biden administration announced Fresh Start. When Brewster called a debt resolution center to inquire about the standing of his loans, the representative he spoke with informed him that he may be able to benefit from the new initiative.

“Navigating the Fresh Start program was relatively simple,” said Brewster. Essentially, he only needed to complete a Free Application for Federal Student Aid (FAFSA) and submit it to LCSC before he was able to enroll for the Fall 2022 semester. He’s now working toward a bachelor's degree in general studies. “I want to help people while I build a better life for myself and my family,” he said.

Access to postsecondary education in and after prison reduces the odds of recidivism and increases graduates’ employment and earning potential upon release. However, the period immediately after release is a precarious time for people leaving prison. Debt from student loans taken out prior to incarceration, particularly if the borrower has defaulted, can add up quickly and hurt borrowers’ credit, making it more difficult for them to secure housing, jobs, and transportation after release.

The Biden administration’s student loan forgiveness plan will help ease this burden for many system-impacted students and graduates. To benefit, students must complete a short online or paper form testifying that their income meets the guidelines. At the time of this publication, lawsuits have temporarily halted student loan forgiveness and the Department of Education has closed its student loan forgiveness portal (the application period was originally supposed to run through December 31, 2023). To support student borrowers while the Supreme Court reviews the lawsuit, the Biden administration has extended the pause on student loan repayment, interest, and collections until June 30, 2023 (or earlier if the Supreme Court issues a decision before June 30). While we are hopeful the student loan forgiveness plan will ultimately prevail, what will happen to borrowers next year and after, should the Biden administration win the legal fight to reinstate the policy, remains in question.

“[If] the financial roadblock from a person’s path [is removed], they will be more likely to pursue a college education,” said Brewster.

Both student loan forgiveness and Fresh Start are one-time opportunities available to those who can apply by the 2023 deadline. But without real policy change, borrowers entering prison after 2023 will continue to default on their loans, finding themselves locked out of postsecondary education because they have become ineligible for federal financial aid. This is especially important as the United States prepares to reinstate Pell Grant eligibility for all people in prison in July 2023. The move will likely result in more colleges teaching in prisons and more people leaving prison with college degrees. Students and communities across the country stand to benefit from this monumental policy change, but long-term specialized solutions to incarceration-related loan defaults and student debt are crucial.

Policies like Fresh Start and loan forgiveness can help lift the financial roadblocks to postsecondary education in prison and pave the path for successful reentry for thousands of people, like Brewster, this year, but greater access will be vital. We need to ensure that everyone in prison with student debt can apply for relief. Only then will we be able to advocate for more permanent solutions.

“Access to college in prison has been a surreal experience,” said Brewster. “I go to a classroom where an actual professor comes in and gives me the same education that I would get if I were on a college campus. With the degrees that I earn, I hope to acquire a job that will sustain me while I give back to the community.”