ED Revises Loan Consolidation Guidance for Incarcerated Borrowers 

By Hugh T. Ferguson, NASFAA Senior Staff Reporter

The Department of Education (ED), in a recently revised notice, announced it will allow incarcerated individuals who are not currently students to consolidate their student loans.

The department said the guidance will help incarcerated borrowers manage and repay their loans by allowing these individuals to access income-driven repayment options. According to ED’s interpretation of its authority under the Higher Education Act of 1965, as amended (HEA), incarcerated individuals, but not incarcerated students, are allowed to consolidate their loans. The guidance became effective on April 16, 2024.

The administration also reminded incarcerated borrowers that they can still sign up for the operation “Fresh Start” program through September 30, 2024, which is another pathway for borrowers to exit default. However, this program is only temporary so borrowers will need to sign up through their servicer in order to receive the benefits of returning to a current repayment status.

“Prior to today’s announcement, borrowers who are incarcerated with loans other than Direct Loans had limited options to get out of default,” the White House wrote in a statement. “Now, these borrowers will have an easier path to get out of default—stopping harmful credit reporting and improving future financial prospects—and return to repayment status during their incarceration.”

Learn more in NASFAA’s Prison Education Program Web Center.


Publication Date: 4/18/2024

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