Report Finds 100% of Incarcerated Borrowers in Default, Limiting their Access to Pell Grants

On July 1^st, incarcerated Americans will re-gain access to Pell grants for the first time in nearly 30 years. Reformers have hailed the change as a critical step towards enabling people in prison to experience the myriad benefits of higher education.

But a new report has revealed that an important segment of this population may be largely left out: those who already have student loans.

The finding comes from a study by the Student Borrower Protection Center (SBPC), a nonprofit dedicated to reducing student debt. SBPC took data from over 300 incarcerated students in correctional facilities on the East Coast, 57 of whom owed federal student loans. What it found was shocking, if not surprising: every single one of these students had defaulted on their loans. These students are therefore not eligible for Pell grants, making it exceedingly difficult for them to access higher education.

“The vast majority of prison education programs are dependent on Pell funding,” said Amber Saddler, counsel at the SBPC. “If you’re in default, this new opportunity for prison education is closed to you.”

Amber Saddler, counsel at the SBPCSaddler said that the 100% default rate was to be expected for incarcerated borrowers. People in prison are often unable to make money or earn less than a dollar an hour. They also often lack access to the internet and printers and are prevented from dialing toll-free numbers, like those for loan servicers, from the inside.

Keeping student loans in good standing is often a challenge for people who aren’t incarcerated, Saddler pointed out. It involves navigating confusing entities like the Department of Education and loan servicers, which have a reputation for miscommunication, and which can often take hours to reach on the phone.

“All of those things in the carceral context are insurmountable,” said Saddler.