Approximately 23 million student-loan borrowers have benefited from a moratorium policy, which temporarily enables them to withhold making monthly payments on their federal debt load. Relating to the onset of the coronavirus pandemic, the pause on loan repayments and interest accrual went into effect on March 13, 2020 and was extended once to the end of that year. President Biden then extended it until September 30, 2021. In August, the moratorium was extended until January 31, 2022. It pertains to all loans held by the U.S. Department of Education, including Stafford, Grad PLUS, and consolidation loans. Some loans that originated under the Federal Family Education Loan (FFEL) are not eligible, however, since they are owned by private lenders.
Prior to these pauses, many students as a result of being unemployed or working in low paying jobs have found it impossible to pay their educational debts. Prominent Democrats have recommended using executive power to cancel as much as $50,000 of this debt for each borrower, while President Biden has indicated that it would be fair to do so in the amount of $10,000. Many congressional Republicans are less eager to provide such levels of relief. Depending on an individual’s status, debt has a differential impact on borrowers. One group of students who owe money consists partly of individuals who left school prior to completing degree programs. They are least likely to derive income from employment that enables them to pay back their loans. Another group is made up of students who might have debt as high as hundreds of thousands of dollars, but as graduates of post baccalaureate degree programs in medicine, law, and business, they are in a much stronger position to earn high paying salaries upon completing school.
Addressing The Educational Needs Of The Incarcerated
Individuals who enter penal institutions are not in an especially advantageous position to return to society upon being released from incarceration with a set of job skills in high demand by the employment sector. Instead, a further life of crime may be the only realistic way of producing income. Congress instituted a ban on the use of federal Pell Grants by incarcerated students in the Violent Crime Control and Law Enforcement Act of 1994 (P.L. 103-322). According to The Education Trust, the number of education programs in prisons subsequently dropped from more than 350 in 1990 to only a dozen in 2005. The percentage of incarcerated individuals participating in postsecondary education programs also dropped from 14% in 1991 to 7% in 2004.
The situation improved to some degree in December 2020 when Congress passed the Free Application for Federal Student Aid (FAFSA) Simplification Act, which reinstated prisoners’ access to Pell Grants. A next step is for the U.S. Department of Education to reverse Pell Grant restrictions. Otherwise, attainment of a college degree for prisoners remains challenging. The Education Trust indicates that correctional education programs reduce the rate of recidivism by 43%, increase the rate of employment after release by 13%, and are associated with fewer violent incidents in participating prisons. These programs are considered to result in net savings to taxpayers and are significantly more cost-efficient than incarceration alone. They also represent an essential strategy for breaking the cycles of incarceration and poverty, and helping formerly incarcerated individuals reintegrate into society.
New Negotiated Rulemaking Committee Meeting
The U.S. Department of Education on August 6, 2021 announced it will publish a notice in the Federal Register establishing a negotiated rulemaking committee that will meet virtually beginning in October of this year to rewrite regulations for Public Service Loan forgiveness, income-contingent repayment plans, and borrower defense to repayment, among other issues. These regulations will help borrowers manage repayment or receive a discharge or forgiveness of their federal student loans. The committee also will establish regulations to implement Pell Grant eligibility for incarcerated individuals, which will be discussed in a subcommittee. In the notice, the Department requests nominations for negotiators and sub- committee members and sets dates for negotiation sessions.