Biden-Harris Administration Opens New Path for Incarcerated Borrowers to Exit Default

This press release details how the U.S. Department of Education (Department) announced a new path for borrowers who are incarcerated to exit default through consolidation, providing them access to improve their credit and better repayment options than ever before. Borrowers who had student loans before becoming incarcerated can now consolidate their loans to get out of default, providing them with certain types of loans—including Perkins Loans and commercially held Federal Family Education Loan Program (FFEL) loans—to gain access to income-driven repayment (IDR) plans like the Saving on a Valuable Education (SAVE) Plan. Borrowers who are incarcerated can still sign up for Fresh Start until Sept. 30, 2024, as an additional option to exit default. Previously, this population of borrowers would have to rehabilitate their loans to get out of default rather than having the option to consolidate.