Ibrahim Gardner
Being incarcerated does not automatically pause your student loan bills, and interest will continue to pile up. However, there are several options available to prisoners to help manage their student loans and avoid default. These include income-driven repayment plans, deferment, forbearance, and loan cancellation or forgiveness programs. In some cases, prisoners may be able to get their loans written off if they have at least 10 or more years remaining on their sentence. Additionally, prisoners can take steps to ensure that their loans do not go into default, such as adding an authorized agent to their accounts and enrolling in an IDR plan.
| Characteristics | Values |
|---|---|
| Student loan debt relief options for prisoners | Income-driven repayment plans, deferment, forbearance, loan cancellation or forgiveness programs, Second Chance Pell Experiment |
| Student loan debt repayment plans | Monthly payments as low as $0 for borrowers with no or very little income |
| Student loan debt default | Prisoners should avoid defaulting on their student loans as it can damage their credit and make it harder to manage finances after their release |
| Student loan debt write-off | The government will write off defaulted federal student loans for borrowers who have at least 10 years remaining on their sentence |
| Student loan debt relief eligibility | Prisoners must apply for relief and provide documentation of their incarceration |
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What You'll Learn
Prisoners can apply for student loan write-offs
While being incarcerated does not automatically pause your student loan bills, prisoners can apply for student loan write-offs. This is not the same as loan cancellation. When the government writes off a debt, it means that they will stop trying to collect because they don't believe collection is possible. The debt is still considered due.
Prisoners seeking to write off their defaulted federal student loan debt must mail the following information to the U.S. Department of Education:
- The letter must be on the prison's letterhead
- It must be signed by a prison official
- It should include the incarcerated borrower's name, date of birth, Social Security number, date of incarceration, and expected release date
- It should also include the name, address, and phone number of the incarcerated borrower's loan servicer(s)
- The borrower's loan account number(s)
- The name and location of the prison where the borrower is incarcerated
Borrowers must apply for a write-off while incarcerated and have at least 10 or more years before they can be released. Incarcerated borrowers who are not behind on their loans may be able to enter a repayment plan where their monthly bills will be set based on their income. For borrowers with no or very little income, the monthly payment amount on these plans can be as low as $0.
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Student loan payments can be paused while in prison
While being incarcerated does not automatically pause your student loan bills, there are options to help manage your student loans and avoid default while in prison.
Firstly, if you will be incarcerated for nine months or less, you can ask the government to pause collections while you are in prison. You will need to send a letter to the Department of Education with proof of how long you are expected to be incarcerated. This letter must be completed on the penal institution's letterhead and signed by a prison official. It is important to note that even if your application is approved, your loans are not canceled and will still remain in default.
Secondly, if you have no or very little income while incarcerated, you may be able to enter an income-driven repayment plan where your monthly payments are set based on your income. In some cases, your monthly payment amount can be as low as $0. Enrolling in an income-driven repayment plan also allows you to earn credit toward having your loan balance canceled after a certain number of years of payments and may reduce the amount of interest you are charged.
Thirdly, if you have federal student loans in default, you may be able to get a Fresh Start from the Department of Education. This program will put your loans back into good standing and allow you to sign up for income-driven repayment plans, forbearance, or deferment.
Finally, if you have at least 10 or more years left before you can be released from prison, you may be eligible to have your defaulted federally-held student loans written off. To apply for a write-off, you must mail a request on the prison's letterhead and signed by a prison official to the U.S. Department of Education. It is important to note that this write-off will make you ineligible for federal financial aid programs.
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Prisoners can enter income-driven repayment plans
Prisoners can take several steps to manage their student loan debt while incarcerated. One option is to enter an income-driven repayment plan (IDR), which sets monthly payments based on income. This can be as low as $0 per month for those with no or very little income, and it allows prisoners to earn credit toward loan balance cancellation and reduce interest charges. Prisoners can enrol in an IDR plan at https://studentaid.gov/idr/.
Prisoners should also be aware that their student loan servicers will report delinquent student loan payments to credit bureaus after 90 days. After 270 days of non-payment, federal loans enter default, and the entire loan amount becomes due. Therefore, it is essential to act quickly and enrol in an IDR plan or take other actions to manage their debt.
Prisoners can add an authorised agent to their accounts to help manage their student loans. They should also be aware that they may be eligible to pause or stop collections on their federal student loans while incarcerated, especially if they will be incarcerated for an extended period. To do so, they must apply by sending a letter to the Department of Education with proof of their incarceration and expected release date.
Additionally, borrowers with at least ten years remaining on their sentence can apply to have their defaulted federal student loans written off by the Department of Education. However, this makes them ineligible for federal financial aid programs.
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Prisoners can consolidate their loans to exit long-term default
Prisoners with student loan debt have several options to manage their debt while incarcerated. One option is to add an authorised agent to their student loan accounts and enrol in an income-driven repayment (IDR) plan. Under an IDR plan, monthly payments can be as low as $0, and they count towards loan forgiveness. Prisoners can also avoid defaulting on their loans, as defaulting damages credit and makes it harder to manage finances after release.
For federal student loans, the Department of Education will write off defaulted loans for borrowers who have at least 10 years remaining on their sentence. This write-off makes borrowers ineligible for federal financial aid programs, but eligibility can be restored later by making repayment arrangements.
Prisoners can also consolidate their loans to exit long-term default. Debt consolidation involves taking out a new loan to pay off existing debts, allowing borrowers to combine multiple debt payments into one and secure a better interest rate. This option gives borrowers more control over the size of their monthly payments.
It is important to note that debtors cannot be arrested or imprisoned for unpaid debts. However, failure to pay taxes or child support can result in imprisonment. Additionally, lenders may sue borrowers who fail to make payments, and if borrowers ignore court orders, they can be found in contempt of court, potentially leading to arrest.
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Prisoners can apply for loan cancellation or forgiveness programs
Prisoners with student loan debt have several options to manage their debt and avoid default while incarcerated. One option is to enroll in an income-driven repayment (IDR) plan, where monthly payments are based on income and can be as low as $0 per month. Enrolling in an IDR plan also allows prisoners to earn credit toward loan forgiveness, which typically takes 20 to 25 years to achieve.
Prisoners can also apply for loan cancellation or forgiveness programs. For example, the Public Service Loan Forgiveness (PSLF) program may be an option for those who qualify. Additionally, prisoners with federal student loans who will be incarcerated for 10 years or more can apply to have their defaulted loans written off by the government, although this will make them ineligible for federal financial aid programs. In some cases, borrowers may be able to restore their eligibility by making repayment arrangements.
Prisoners can also consider seeking relief from collections on their federal student loans. If incarcerated for more than 9 months but less than 10 years, prisoners can request that the government stop collections until their earliest possible release date. Additionally, prisoners with defaulted federal loans may be able to get a "Fresh Start" from the Department of Education, which allows them to sign up for income-driven repayment plans and restore eligibility for certain grants and aid programs.
It is important to note that prisoners should take proactive steps to manage their student loan debt, as incarceration does not automatically pause loan bills. Adding an authorized agent to loan accounts and staying informed about repayment options can help prisoners protect their credit and financial standing.
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Frequently asked questions
Yes, prisoners do have to pay student loan debt. However, they may be eligible for relief or loan forgiveness programs.
The Second Chance Pell Experiment is a program that provides people in prison the opportunity to participate in postsecondary education programs.
To apply for a student loan write-off, borrowers must have at least 10 or more years left before they can be released. They must mail a request on the prison's letterhead and signed by a prison official to the U.S. Department of Education.
An IDR, or income-driven repayment, plan sets monthly payments based on income. For borrowers with no or very little income, the monthly payment amount can be as low as $0 per month.
If you don't pay your student loans while in prison, your loan may enter default. This can damage your credit and make it harder to get back on your feet financially after your release.
