How to Get Your Federal Student Loans Forgiven if You Go to Prison

Table of Contents

Question:

Dear Steve,

I’m in a halfway house nearing the end of my federal incarceration. I will have completed ten years and four months. I have been looking at info on having my student loans written off.

I’m working on getting the information I need, but can this still work? Was I supposed to do this at the beginning of my term? I didn’t work at UNICOR (had I known about what your article said, I would have), but I worked for eight years of my time in the prison.

I’ve already contacted the Bureau of Prisons, which is like talking to a series of brick walls that can refer you to one another. Some actually will give you information, but it is incorrect.

Do you have any tips on how to get this done? I’d appreciate the assistance. Thanks!

Nick

Answer:

Dear Nick,

Ah, UNICOR. This is the post you are referring to that I wrote on that. I still believe that if you had worked for UNICOR or another similar government agency your loans could be technically eligible for Public Service Loan Forgiveness.

You raised another point that I was not familiar with. So I went to research this on the National Consumer Law Center (NCLC) website.

Their site does say there is “some relief available for incarcerated individuals with pre-incarceration student loan debt.”

A bit of digging located a 2016 PCA Procedures Manual that is not redacted. That is the latest version I could locate. Since then, rules might have changed, but who knows since the manual is fairly guarded.

This gets murky even though the manual says explicitly that federal student loans can be “written off” if you are in prison for more than ten years.

Fine Print Matters

As you read the information below, I want you to pay attention to the fine print in the collection instructions. If we accept the instructions at face value, it does not appear to matter if someone is sentenced to prison for more than ten years.

Pay attention to the following statement, “If the borrower is to be incarcerated for a period exceeding ten (10) years or more from the time of submission.”

This appears to say the critical time for potential federal student loan forgiveness is measured from the time the collection company submits a forgiveness application via the incarceration forgiveness option and not how long someone was in prison.

It would take 270 days of missed payments for your federal student loans to default and hopefully be assigned to a private collection company instead of your regular servicer. Then they have to complete all the requirements to get the information to submit and have the acceptance of the submission approved, which is a mystery.

In your case, it looks like the ship has sailed on your forgiveness application if the critical event is collection company submission rather than the date of incarceration.

People sentenced to life have the best chance of success under this program. This is because they are eligible for forgiveness. So the people committing the most egregious crimes have a better opportunity to have their federal student loans forgiven.

What is Prison?

The guidance manual does not define precisely what is considered a prison. It could be a county, state, or federal facility, maybe. Other student loan features, eligibility, or programs say they only apply to federal prisons. It also does not say if prison time only counts when you are behind bars and not in a halfway house.

I’ve learned that just because a Federal Student Aid (FSA) document says something does not mean the practice is followed. That is what can make you right and wrong at the same time. I have zero confidence a collection agency will spend time tracking down all of this information without being shoved constantly by the debtor.

If you want to attempt to push the collection company handling your federal student loans to request a write-off, you can direct them to this post for additional information. Heck, quote from this information to help your cause.

Student Loan Incarceration Discharge Details

The PCA Manual does say Federal Student Aid can recall accounts from private collection agencies if they meet the following criteria.

“If the PCA determines that a borrower is incarcerated, the PCA must obtain verification from a prison official of the borrower’s incarceration and earliest possible release date.

Incarcerations that the PCA can recommend for account recall are divided into two categories based on the length of the borrower’s sentencing:

1. If the borrower is to be incarcerated for a period exceeding nine (9) months but less than 10 years from the time of submission.

o These would be recalled as Incarceration-Collectable (INC) and will be systematically returned to active collections at the expiration of the borrower’s earliest possible release date.

2. If the borrower is to be incarcerated for a period exceeding ten (10) years or more from the time of submission.

o These would be recalled as Incarceration-Write Off (INW) and will be systematically written off in the DMCS.

If the borrower is to be confined for 9 months or less, the PCA will suspend collection efforts on the account and perform follow-up after the borrower’s anticipated parole or earliest release date.

The information verifying incarceration must contain:

the borrower’s full name
full date of birth
earliest release date
the prison or institution facility address
the prison official’s name, title (or official website)
prison telephone number

The SSN or last 4 digits thereof is encouraged but not required, since most official websites will not provide the SSN.)

The PCA must submit incarceration documentation to FSA via eIMF (Electronic Internal Mail Forms) and update DMCS with the prison official’s name, title (or official website), name prison, prison telephone number and earliest release date.

Earliest release date – The earliest release date may be classified under different terms such as a parole hearing date. As long as the date is the earliest possible indication of when the prisoner may be released and uses language that supports release date information, the date should be acceptable. In the event that the earliest release date has passed and the only other date is the maximum sentence date, the PCA must obtain more clarifying/concrete information that indicates if there is a new updated early release date or confirms that the earliest release date is now the maximum sentence date.

Acceptable formats – PCA must provide verification of the earliest release date in one of the following three forms:

1. Written verification from a prison on the institution’s letterhead or the FSA incarceration verification letter completed by a prison official (see appendices).

2. The PCA does not have to obtain an FSA official signature on the FSA incarceration verification letter. If the prison requires official signature (rare), the PCA must submit an eIMF request with a copy of the letter. The PCA must not photocopy a letter with an FSA signature nor must not – type the name of an FSA employee in the signature block of a letter.

3. Copy of an email from the prison official verifying the borrower’s incarceration status.

4. The email without adulteration must clearly identify the name of the penal facility and the name and title of the sender.

5. Computer print-outs from a state/prison database.

6. The PCA must use this method only if the other methods are unavailable.

7. At a minimum the computer print-out must contain:

the borrower’s full name (at least first and last name)
If the borrower has a common names (i.e. John Smith, Mary Brown), the PCA must obtain documentation with additional personal identifiers, beyond name and DOB, such as SSN.
the borrower’s full date of birth (month/day/year)
the anticipated release date
the following certification statement:
“The above information was obtained from the INSERT STATE AND/OR PRISON SYSTEM database provided to INSERT SUBCONTRACTOR or CONTRACTOR NAME for verification purposes. The information provided is, to the best of our knowledge, true and accurate to the individual’s current incarceration status.”
PCA signature below the certification statement. If the PCA uses a subcontractor, there must be two signature blocks, one for the subcontractor and one for the PCA.
notarization by the PCA:

o subcontractor is not required to notarize the statement
o PCA may notarize the statement on a separate copy
o if the PCA is unable to notarize the statement, two signatures are required

Computer print-outs may come from an online source. If the minimum personal identifiers, full name and full DOB, don’t show on the print-out, the PCA must write on the print-out the personal identifying information used to obtain the record. However, if personal identifying information is not used to obtain the record and the online record is incomplete (i.e. no DOB only borrower age), then the PCA must obtain verification through another acceptable format.

Except for the PCA writing the personal identifying information use to obtain the record (see previous paragraph), the PCA must not alter the computer print-out and must not accept handwritten information as evidence to support the borrower’s identity or incarcerated status.

If identifying factors are incomplete or inconclusive, FSA will reject the account or request additional supporting information from the PCAs.

Submitting for Recall

When you have obtained the supporting documentation as proof of the length of time the borrower is incarcerated, you can request the account for recall by eIMF.

The accounts with an incarceration period greater than 10 years, INW can be submitted by eIMF individually, as explained in chapter 19, section 19.1 Administrative Resolutions
The accounts with an incarceration period greater than 9 months but less than 10 years, INC, can be submitted by el MF in a batch process once a week. A batch process is when you include all the accounts eligible for the INC recall that week together in 1 eIMF and FSA reviews a sample of those accounts to ensure they were submitted correctly. If they were submitted correctly all the accounts will be approved and processes. If there were any errors all of the accounts are rejected and would need to be resubmitted again once the issue has been fixed or removed. How to submit the batch:
o Mail the incarceration verification documents to the Greenville address for correspondence for workflow. The image will be routed to you for review. After you have approved the image in DMCS you can included it in the next roster of accounts for the batch process.

o Prepare an excel sheet as an attachment (see appendix C for example) for the INCs that you wish to have recalled that week. Provide the DMCS account numbers in column A of the excel sheet, the earliest release date in column B, and the date the incarceration verification documents are imaged into DMCS in column C.

o When creating the eIMF, use “Admin Resolution – INC Batch” for subject, use any borrower name and account number that is in the attachment and attach the Roster of accounts you want reviewed
When submitting the eIMF, the PCA must also update the borrower address with the prison address in DMCS, which must include the Prison Name, Prison Street/PO BOX Address, Inmate# if any, City, State, and Zip Code. If a borrower has provided the PCA with a “care of’ address for mail delivery, the PCA must use that address and notate that it is a “care of” address in the DMCS notepad.
When a PCA submits an eIMF notifying FSA that a borrower is incarcerated, the PCA must annotate the DMCS Historical Events window that an eIMF has been submitted along with the earliest release date provided by the penal facility. If a borrower is sentenced for life imprisonment, the PCA must indicate “Life” as the earliest release date.
Once you submit the eIMF for either type of recall you should monitor it, to make sure it was reviewed and completed timely and that the account has been recalled with the correct recall code. If the eIMF hasn’t been completed within 5 business days contact the person listed in contact list.

FSA Incarceration Letters – PCAs must use the generic incarceration letter to send to incarceration facilities (see appendices D & E). The PCA must place the language on FSA Letterhead. FSA has provided letters to aid the PCAs in obtaining acceptable incarceration documentation. The PCA must not use photocopied letters with the signature of an FSA staff member, and must not type the name of any FSA staff member on these letters.”

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What Written Off Appears to Mean

The PCA manual states federal student loans that meet the criteria and are submitted for Incarceration-Write Off (INW) will be written off.

The manual states that a written-off loan will generate a 1099 IRS notice, which indicates the loan is considered forgiven. However, it can get complicated.

Interestingly, the 2021 Department of Education guidance on federal student loans for people exiting incarceration does not mention possible forgiveness. That could be because it is too late for people exiting prison.

The big unknown here is figuring out if federal student loan forgiveness is possible, which it appears it is, but if it is probable, which I don’t have high hopes for given the hoops, hurdles, and fine print.

Sincerely,

You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.

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Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.