Study: Biden’s Student Loan Cancellation Would Erase All Debt for Majority of Incarcerated Borrowers

By Maria Carrasco, NASFAA Staff Reporter

A new study from the Student Borrower Protection Center (SBPC) found that if President Joe Biden’s student loan cancellation is implemented, a majority of incarcerated borrowers would have the entirety of their student loan debt forgiven. 

The study, released on Tuesday, draws on data representing more than 300 students enrolled at a number of correctional facilities on the East Coast. However, SBPC notes that it specifically examined loan data for 57 students who owe federal student loans. 

Specifically, 94% of those 57 incarcerated borrowers would see their debts completely forgiven if Biden’s student loan cancellation plan is implemented. Of those borrowers, all of whom were in default, 35%  have less than $2,000 in student loans and 25% have between $2,000 and $4,999 in student loans. 

As a result, SBPC argues that lifting incarcerated borrowers out of default through Biden’s cancellation plan would eliminate the vast majority of federal student loan debt attributable to incarcerated borrowers. The organization even calls on the Department of Education (ED) to cancel all student debt owed by incarcerated borrowers, saying ED is not limited to the “statutory mechanisms” of Biden’s cancellation plan and that ED’s secretary has the authority to do so. 

Beyond that, SBPC argues that canceling the student loan debt of incarcerated borrowers will not only benefit them, but also those who work with them. That includes the administrative burden that volunteers, legal aids, and others have working to help incarcerated populations. 

And in just less than 10 days, Pell Grants will be widely available to eligible incarcerated students who were previously restricted from accessing grants due to a federal ban implemented in 1994. SBPC states that if action isn’t taken to forgive incarcerated borrowers’ debt, many will be “locked out” of higher education because prison education programs will be “reliant upon federal student aid and will likely turn away Pell Grant-ineligible individuals who are unable to fund their own educations.”  

“Incarcerated student loan borrowers remain locked out of higher education as they enter the criminal legal system already in federal student loan debt and, thus, are likely to slip into default with devastating consequences even beyond Pell Grant ineligibility,” the study states. 

With this study, SBPC also announced its lawsuit against ED on Tuesday, to produce documents relating to its policy of “writing off” defaulted federal student loans of incarcerated borrowers as “uncollectible” for periods of 10 years or more. In its press release of this lawsuit, SBPC states that ED illegally withheld “critical data and policies” on its treatment of incarcerated borrowers.

“Formerly incarcerated individuals routinely face discrimination in searches for employment and housing due to their criminal records, and student debt is compounding these problems,” said SBPC Counsel Amber Saddler, in a statement. “Cancelling the debt of incarcerated student loan borrowers is a matter of racial and economic justice — it is good for incarcerated borrowers, and it is good for our communities at large. The Administration must uphold its commitment to supporting incarcerated individuals by eliminating barriers to higher education in prison and ending the cycle of student loan default by automatically and systematically applying cancellation to incarcerated borrowers’ accounts.”


Publication Date: 6/22/2023

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