Student Aid Eligibility Restrictions
You are generally not eligible for federal student grants or loans if you are incarcerated in a federal or state institution. A program called Second Chance Pell is an exception to this general rule. Started during the Obama Administration, program administrators chose 67 colleges and universities to offer Pell grants to incarcerated students. It is geared toward prisoners likely to be released within five years or so.
Those who are not eligible for this program but hope to pursue college educations can pay tuition out of pocket or seek funding through state correctional departments. Private foundations such as the Lumina Foundation have also funded programs to expand higher education opportunities for prisoners.
Most student aid restrictions are removed after release. In fact, you may apply for aid before you’re released so your aid is processed in time for you to start school. However, if your incarceration was for a drug-related offense or if you are subject to an involuntary civil commitment for a sexual offense, your eligibility may be limited.
Pre-Incarceration Student Loan Debt
There is some relief available for incarcerated individuals with pre-incarceration student loan debt. If their loans are in default and in collections, what happens next depends on the period of incarceration.
If the borrower is to be incarcerated for a period exceeding 9 months but less than 10 years from submission of proof of incarceration, the government should recall those accounts and stop active collections until the expiration of the borrower’s earliest possible release date.
The government says it will write off the loans if the borrower is to be incarcerated for a period exceeding 10 years or more. The Department says that debts can be reinstated for borrowers whose loans have been written off as a result of prolonged incarceration if they subsequently wish to make repayment arrangements.
If the borrower is to be incarcerated for 9 months or less, the collection agency will suspend collection on the account and perform follow up after the anticipated parole or earliest release date.
If the loan is still current, the Department has said that it has no authority to cease servicing and collection activities for incarcerated borrowers. Depending on the specific circumstance Federal Student Aid servicers may apply broadly available benefits such as forbearances or income-driven repayment plans,
A borrower seeking to document the length of their incarceration must provide written verification through a letter completed on the penal institution’s letterhead and signed by a prison official. The letter must include the borrower’s name, social security number, date of birth, inmate number, and release date or date of eligibility for parole, whichever is sooner. The letter must also include the name, title, and phone number of the official verifying the provided information. Alternatively, this information can be provided via an e-mail from a prison official. The e-mail must be without adulteration and must clearly identify the name of the penal facility and the name and title of the sender.
Because there is little public information about the government’s servicing and collection practices for incarcerated borrowers, these policies may have changed. Although the most recent, complete version of the government private collection agency manual is from 2009, NCLC recently obtained through a FOIA request a more recent, redacted version from May 2016.