Report provides snapshot of borrowers behind bars

A majority of student loan borrowers who are incarcerated have likely defaulted on their loans and would benefit from President Biden’s debt-relief plan, a new report from the Student Borrower Protection Center argues.

“Without student loan cancellation, most incarcerated borrowers will be locked out of higher education and the improved post-release outcomes it brings,” the report says.

All of the 57 borrowers in the center’s case study of more than 300 incarcerated students had defaulted on their loans while more than 90 percent of them had balances of less than $20,000. Borrowers in default won’t be eligible for the Pell Grant when it becomes available to incarcerated students this summer.

The center sued the department Tuesday to force the agency to respond to a Freedom of Information Act request seeking more information on incarcerated borrowers.

“This information is critical for understanding the size and scope of the student debt crisis facing incarcerated borrowers,” the center said in a news release.

The Student Borrower Protection Center urged the Education Department to cancel all student debt owed by borrowers who are incarcerated. That would be in line with the department’s authority and the agency’s current practice of writing off debts as uncollectible for borrowers who are in default and serving sentences of 10 or more years, according to the report.

“The obstacles are insurmountable for incarcerated borrowers to avoid the worst pitfalls of the student loan system,” Persis Yu, SBPC deputy executive director and managing counsel, said in a statement. “This snapshot is a rude awakening for the Department. This first-ever look at borrowers behind bars shows that any solution other than canceling this debt will only continue this cruel system.”