MEMORANDUM

November 3, 2023 

TO: Interested Parties

RE: [Negotiated Rulemaking 2023] Incarcerated Student Loan Borrowers 

OVERVIEW

As the U.S. Department of Education (the Department) and negotiators continue the negotiated 

rulemaking process around student debt relief, we urge the Department to consider an 

overlooked borrower population: incarcerated student borrowers. These borrowers likely fit 

under multiple categories that negotiators have discussed,1 but this memo focuses on borrowers 

who are eligible for relief under programs like income-driven repayment (IDR) but have not 

applied and borrowers experiencing hardship that is not otherwise addressed by the existing 

student loan system. 

BACKGROUND

The scale of the carceral student loan crisis is unknown because the Department does not record 

the number of borrowers who are incarcerated, and the carceral state is fragmented among 

federal, state, county, and local facilities. Advocates, economists, and researchers estimate there 

are likely 200,000-250,000 incarcerated individuals with student loans.2 The available empirical 

studies have found that the majority of these borrowers have low balances (under $10,000) and 

default at disproportionately high rates compared to their peers.3 

Without an intervention made by the Department, these borrowers are likely to continue to 

struggle to keep pace with even modest debt balances. It is increasingly clear that 

communications and income-earning options in prison are uniquely ill-suited to the timeconsuming and costly task of seeking and acting on information from student loan servicers.4

COMMUNICATION BARRIERS 

As the restart of student loan repayments has highlighted, the inability of borrowers to 

communicate with their student loan servicers and receive timely, accurate information can spell 

disaster. For borrowers facing incarceration, these problems are even more extreme since the 

imposed barriers limit their communication beyond prison walls. Here are some of the hardships 

1 https://www2.ed.gov/policy/highered/reg/hearulemaking/2023/session-2-borrower-hardship-issue-paper.pdf

2 https://spi-data.bjs.ojp.gov/dashboard; https://protectborrowers.org/wp-content/uploads/2022/07/Collection-at-AllCosts_Final.pdf.

3 https://protectborrowers.org/wp-content/uploads/2023/06/Incarcerated-Borrowers-Report-June-2023.pdf

4 https://www.opencampusmedia.org/2022/04/26/student-loan-defaults-are-a-big-barrier-to-prison-education-thegovernment-is-offering-new-help/
incarcerated borrowers may face while attempting to access relief under IDR plans or other 

programs:5

• During the COVID-19 pandemic, many facilities limited or eliminated access to 

computer labs. This has resulted in incarcerated borrowers having even less access to the 

Internet, and removing the ability to apply for IDR online. Even borrowers incarcerated 

in facilities with access to “inmate tablets” allowing limited access to a small number of 

pre-approved websites may find that no student loan servicer sites are pre-authorized. 

• Many facilities prohibit residents from making calls to toll-free or “1-800” phone 

numbers altogether, but servicers and the Department often offer no alternatives to 

contact them via the phone. 

• Many jails and prisons impose a range of access restrictions, including designated 

telephone hours, caps on call time, and inability to receive incoming calls. This prevents 

borrowers from waiting on hold or receiving a callback. Costs associated with telephone 

calls can be prohibitively high. A single 15-minute in-state phone call can cost more than 

five dollars in some correctional facilities and calls from local and county jails sometimes 

cost up to 50 cents per minute. 

• Some jurisdictions confiscate residents’ paper mail, leaving them with only photocopies 

of their incoming mail and privacy concerns. Other facilities deny residents access to 

letter correspondence entirely, instead limiting all incoming and outgoing postal mail to 

postcards, which makes applying for IDR via paper application impossible. 

• Many incarcerated borrowers lack or have no access to a financial advisor or counsel. 

Without the ability to discuss their financial options, many believe they have none at all. 

For far too long, these borrowers have been locked out of student debt relief like IDR due to 

barriers limiting the most basic communication with servicers. Redress for these borrowers must 

take these limitations into account and not rely on the borrower-initiated application processes 

that will inevitably continue to leave nearly all incarcerated individuals behind. 

FINANCIAL HARDSHIP BARRIERS 

In addition to being unable to apply for long-term relief, incarcerated borrowers should be 

eligible for cancellation because many will be unable to pay the full amount of their debts in a 

reasonable time. More than half of Americans who become incarcerated will likely spend their 

entire lives, in and out of prison, in poverty.6

Those who become incarcerated are much more likely to come from poor, segregated 

neighborhoods and low-income families. Data from the IRS reveals that three years before 

incarceration, about half of prime-age men are unemployed. The median earnings of those 

working were $6,250, and only 13 percent earned more than $15,000.7 All of these people would 

qualify for a $0 IDR plan. 

5 https://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf

6 Based on trends from 15 years of tax records. https://www.brookings.edu/wpcontent/uploads/2018/03/es_20180314_looneyincarceration_final.pdf 

7 https://www.brookings.edu/wp-content/uploads/2018/03/es_20180314_looneyincarceration_final.pdf, pg 1
In prison, borrowers have almost no income. Many states do allow work for pay, and the ones 

that allow this offer wages well below the standard minimum wage (see appendix).8 In the prison 

context, it is nearly guaranteed that close to 100 percent of incarcerated borrowers would qualify 

for a $0 IDR plan. 

After prison, median wages remain well below the cutoff for a $0 IDR payment. Only 55 percent 

of the formerly incarcerated have any reported earnings a year after exiting. Those working had 

median earnings of $10,090, while only 20 percent earned more than $15,000 that year.9 The US 

Department of Justice issued a report finding that 33 percent of those released from federal 

prison in 2010 found no employment at all over four years post-release.10 The criminal record 

further stacks the deck against these borrowers, as employers are nearly 50 percent less likely to 

call back an applicant with a criminal history.11 

The extreme prevalence of unemployment and poverty means that the federal government is 

unlikely to ever earn money on these loans. Yet the Department’s collection efforts leave already 

disadvantaged borrowers with damaged credit scores, garnished wages,12 and a much harsher 

return to society. 

CHANGES PROPOSED FOR THE RULEMAKING 

Forgive the debt of borrowers who have spent or will spend five cumulative years incarcerated 

Borrowers with cumulative sentences over five years are likely to suffer from the problems of 

life-long impoverishment, due in part to the inadequate servicing while incarcerated. 

Incarceration-related defaults cause significant financial harms upon reentry for these borrowers. 

Student loan defaults not only hurt the borrower's credit, making it even more difficult to secure 

housing and employment after release, but it also increases their debt and puts them at risk of 

wage garnishment—precisely when they are most financially unstable. They deserve 

retrospective forgiveness, both as an acknowledgment of the uncollectable nature of their debts 

and atonement for the harm caused by insufficient help avoiding default. 

The Department’s current 10-year write-off policy should be revisited based on new economic 

research focused on the financial hardships incarcerated individuals face both pre- and postincarceration. This research finds that employment and earnings among the reentering population 

are uniformly low, regardless of sentence length.13 A first-time incarceration spell, regardless of 

length, is correlated with lifetime earnings of a third to a half lower.14 In fact, a five year cut-off 

likely misses many incarcerated and formerly incarcerated borrowers who are never going to be 

able to repay their loans: the median prison spell, at least among state prisoners in 2018, was 2.7 

years.15 Borrowers who are incarcerated for five years or more are highly unlikely to be able to 

8 https://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf, pg 12

9 https://www.brookings.edu/wp-content/uploads/2018/03/es_20180314_looneyincarceration_final.pdf, pg 2

10 https://bjs.ojp.gov/content/pub/pdf/eprfp10.pdf 

11 https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3583356/

12 https://www.newamerica.org/education-policy/briefs/trapped-by-default/ 

13 https://www.nber.org/system/files/working_papers/w12003/w12003.pdf 

14 https://www.sciencedirect.com/science/article/abs/pii/S1094202523000327 

15 https://bjs.ojp.gov/content/pub/pdf/tssp18.pdf 
repay their student debt, and in many instances, it is likely that collection costs will exceed what 

little they are able to pay. 

The Department should be able to cancel some borrowers’ debt immediately thanks to 

administrative records, and it may need to set up data sharing agreements to catch remaining 

borrowers. Currently, borrowers who have remaining sentences over ten years can get their debt 

written-off, and borrowers with sentences over 9 months can get their debt marked 

“uncollectible,” for approximately the duration of their time in prison. Neither written-off nor 

uncollectable debt is cancelled. In fact, collections on “uncollectible” loans are turned back on 

just as (or before) the borrower returns to society.16 Recently, borrowers with written-off debt 

who enroll in Fresh Start have found that this so-called relief resulted in their collections being 

reopened.17 In short, the policy of writing off and pausing—rather than cancelling—this debt 

causes financial hardship just when incarcerated individuals are trying to get back on their feet. 

The written-off and uncollectable statuses are a formal recognition that debtors are unable to pay 

the full amount of their loans in a reasonable time, making them clearly eligible for loan 

cancellation through the Department’s authority to compromise and terminate debt collection 

waiver authority.18 Borrowers with written-off debt or debt marked uncollectable with a sentence 

of five or more years should receive full cancellation. The Department maintains records for 

borrowers it has identified are incarcerated, meaning that this forgiveness can be automatic.19 

Incarcerated borrowers who reach the five year threshold but did not receive a write-off or a 

demarcation of uncollectable debt also deserve retrospective forgiveness. We encourage the 

Department to use this negotiated rulemaking to clarify its authority to cancel the debt of 

borrowers who spend years incarcerated, regardless of their current access to this data on the 

entire incarcerated population. Once the authority is established, the Department can enter into 

data-sharing agreements to begin automatically canceling the debt of remaining eligible 

borrowers. Potential sources of information include data collected by the IRS for audit 

purposes,20 N-DEx,21 commercial datasets, and federal, state, and local agreements.22 

Align one-time retrospective forgiveness to the SAVE cancellation timeline 

The Department should go beyond a 25-year period when providing one-time retroactive 

forgiveness, and align the number of years required for this one-time forgiveness with the years 

required for forgiveness in the new Saving on a Valuable Education (SAVE) plan.23 This would 

16 https://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf, pg 16-17

17 https://fsapartners.ed.gov/sites/default/files/2023-09/FactSheetFreshStartforIncarceratedStudents.pdf 

18 31 § 902.2(a)

19 Borrowers incarcerated for more than nine months but less than 10 years are coded as “IncarcerationCollectable,” or “INC”; borrowers incarcerated for 10 years or more are coded “Incarceration-Write Off,” or 

“INW.”

20 https://www.brookings.edu/wp-content/uploads/2018/03/es_20180314_looneyincarceration_appendix_final.pdf 

21 https://www.ndex.fbi.gov/ 

22 https://protectborrowers.org/wp-content/uploads/2022/08/Collection-at-All-Costs_Final.pdf, pg 21 

23 https://studentaid.gov/announcements-events/save-plan 
ensure incarcerated borrowers who spent years in statuses ineligible for forgiveness—largely 

default—are provided the same protections as future borrowers.24 

Conduct a one-time count adjustment to count time in default towards forgiveness 

Borrowers who took out their loans too recently to receive the above one-time forgiveness 

should still receive credit for time in default. Incarcerated borrowers in default almost certainly 

would have qualified for a $0 IDR payment, had they been better served, but instead ended up in 

default. The Department should use this rulemaking to conduct a one-time count adjustment that 

counts time in default towards IDR forgiveness.25 

CONCLUSION

Collecting on incarcerated borrowers yields minimal returns for the Department but maximum 

harm for these vulnerable borrowers. Borrowers incarcerated in the past almost inevitably ended 

up in default—suffering greater harm to their credit scores, earning potential, and ability to 

return to school—due to poverty and inadequate student loan servicing. The negotiated 

rulemaking represents an opportunity to clear the slate for incarcerated borrowers who have long 

suffered from the failures of multiple systems. If you have any questions, please contact Satra D. 

Taylor, satra.taylor@younginvincibles.org. 

24 This policy would also help older borrowers. See recommendation 7. https://www.newamerica.org/educationpolicy/edcentral/policies-help-seniors-in-student-debt/ 25 An on-going count adjustment does not count time in default. https://studentaid.gov/announcements-events/idraccount-adjustment 
APPENDIX: Incarcerated Wages and IDR Payments

State Hourly Wage Weekly Wage Annual Earnings Monthly IDR Payment

Alabama $0.00 $0.00 $0.00 $0

Alaska $1.25 $50.00 $2,600.00 $0

Arizona $0.50 $20.00 $1,040.00 $0

Arkansas $0.00 $0.00 $0.00 $0

California $0.37 $14.00 $728.00 $0

Colorado $0.38 $15.20 $790.40 $0

Connecticut $1.00 $40.00 $2,080.00 $0

Delaware $2.00 $80.00 $4,160.00 $0

Florida $0.32 $12.50 $650.00 $0

Georgia $0.00 $0.00 $0.00 $0

Hawaii $0.25 $10.00 $520.00 $0

Idaho $0.90 $30.00 $1,560.00 $0

Illinois $0.89 $11.25 $585.00 $0

Indiana $0.25 $18.75 $975.00 $0

Iowa $0.68 $27.20 $1,414.40 $0

Kansas $0.16 $6.40 $332.80 $0

Kentucky $0.33 $13.20 $686.40 $0

Louisiana $1.00 $40.00 $2,080.00 $0

Maine $3.50 $140.00 $7,280.00 $0

Maryland $0.46 $18.40 $956.80 $0
Massachusetts $1.00 $40.00 $2,080.00 $0

Michigan $0.56 $22.40 $1,164.80 $0

Minnesota $2.00 $80.00 $4,160.00 $0

Mississippi $1.30 $52.00 $2,704.00 $0

Missouri $1.25 $7.50 $390.00 $0

Montana $1.25 $25.00 $1,300.00 $0

Nebraska $1.08 $23.60 $1,227.20 $0

Nevada $5.15 $206.00 $10,712.00 $0

New Hampshire $1.50 $10.00 $520.00 $0

New Jersey $2.00 $8.00 $416.00 $0

New Mexico $1.00 $40.00 $2,080.00 $0

New York $0.33 $9.90 $514.80 $0

North Carolina $0.38 $15.20 $790.40 $0

North Dakota $0.88 $35.20 $1,830.40 $0

Ohio $0.17 $6.00 $312.00 $0

Oklahoma $0.54 $6.77 $352.04 $0

Oregon $0.47 $20.50 $1,066.00 $0

Pennsylvania $1.00 $40.00 $2,080.00 $0

Rhode Island $0.86 $34.40 $1,788.80 $0

South Carolina $0.00 $0.00 $0.00 $0

South Dakota $0.38 $15.20 $790.40 $0

Tennessee $0.75 $30.00 $1,560.00 $0
Texas $0.00 $0.00 $0.00 $0

Utah $1.75 $70.00 $3,640.00 $0

Vermont $0.40 $16.00 $832.00 $0

Virginia $0.45 $18.00 $936.00 $0

Washington $0.36 $13.75 $715.00 $0

West Virginia $0.58 $20.25 $1,053.00 $0

Wisconsin $0.42 $16.80 $873.60 $0

Wyoming $1.00 $40.00 $2,080.00 $0

Federal Prison $0.40 $16.00 $832.00 $0

Average $0.63 $25.20 $1,310.40 $0

Sources: 

Hourly wage for incarcerated workers by state, calculated using highest pay for regular jobs: 

https://www.prisonpolicy.org/blog/2017/04/10/wages/

Number of hours in a work week and earnings caps for incarcerated workers by state: 

https://www.prisonpolicy.org/reports/wage_policies.html 

Federal poverty guidelines: https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines 

IDR formula and percent of protected income: https://studentaid.gov/manage-loans/repayment/plans/income-driven