- The Education Department announced a plan to help student-loan borrowers in prison who are behind on payments.
- Specifically, it ensures they'll return to good standing before re-entering repayment.
- The department also expanded a Pell grant program to further education for incarcerated Americans.
Incarcerated student-loan borrowers who are behind on payments might soon be getting some relief.
On Tuesday, President Joe Biden's Education Department announced an expansion of the Second Chance Pell Experiment, which was first established in 2015 under former President Barack Obama to provide people in prison the opportunity to participate in postsecondary education programs. The announcement expanded the program to 73 new colleges, meaning up to 200 institutions are now participating in the program.
Additionally, Tuesday's announcement also included some good news for those incarcerated with student debt. Those who were behind on payments, or in default, will be included in the department's latest announcement to return all defaulted borrowers to good standing before they would have to reenter repayment, which is now planned for September 1. It will also allow those individuals to consolidate their loans to help them exit long-term default, "an option available to everyone else and cut off for too long for incarcerated individuals," the press release said.
"Access to high-quality postsecondary education is essential to incarcerated individuals, but for far too long, people in prison were left out," said U.S. Secretary of Education Miguel Cardona. "The expansion of Second Chance Pell and these new pathways out of default are critical steps for incarcerated individuals to be able to access educational opportunities that will provide second chances to build a future."
According to the National Consumer Law Center, there are a range of guidelines to advance education opportunities for incarcerated individuals. Those who are not eligible for Second Chance Pell often have to pay tuition out of pocket, and for those who entered prison after taking on student debt and default on the loans, repayment options depend on the length of the prison sentence.
For example, if a borrower is set to be in prison for more than nine months but less than ten years, the government is required to stop active collections until the earliest release date, and the department has said it will write of the loans for those in prison for more than ten years. But if borrowers are not in default, the department will continue collecting payments.
Ensuring defaulted student-loan borrowers experience relief has been an issue for both the Education Department and lawmakers. Along with Biden's extension of the student-loan payment pause through August 31, he also announced a plan to give over 7 million borrowers in default a fresh start and return them to good standing. But he did not include a specific plan for how that will be carried out, and Massachusetts Sen. Elizabeth Warren and some of her Democratic colleagues asked for an update on Monday.
They wrote that removing borrowers from default will mean that "millions will not be immediately subject to wage garnishment, tax refund withholding, and aggressive collections practices that threaten to undermine their economic security."