This is a common question we hear, “How am I suppose to pay my student loans while in prison?”. Going to prison does not release you from your obligation to paying back your student loans, therefore it’s very import to handle your student loans while your in prison, you don’t want to leave prison and find your student loans in default, your credit destroyed , and owing tens of thousands more with interest and penlites.
Things To Do Before You Go to Prison
1. Call your student loan provider and explain your situation and place your loans in deferment before you go to prison if you can. This will stop your student loans payments and interest for one year. This will give you a year before you have to reapply and to plan.
2. Give Power Of Attorney to someone you trust to handle all your student loans while your away. This will be easier for you since someone on the outside can actually call and talk with your student loan handler and submit all the paper work for you.
3. If you can’t give Power Of Attorney to someone, then print out all necessarily deferment, forbearance, or Income Based Repayment paper work, addresses, phone numbers, and give them to someone to mail to you once you are in prison. This is a very important step, once your inside if can be very hard to get the paper work since you will not be allowed internet access and if don’t know your student loan providers address or phone number you’ll have no way to contact them for help. Case Managers in prison are not always helpful and sometimes will refuse to locate these forms or addresses for you, this is why you should of plan ahead.
Government Backed Student Loans
If your loans are government backed such as:
- Direct Subsidized Loans
- Direct Unsubsidized Loans
- Direct PLUS Loans made to graduate or professional students
- Direct Consolidation Loans without underlying PLUS loans made to parents
- Subsidized Federal Stafford Loans
- Unsubsidized Federal Stafford Loans
If your loans are any of the above you have a few options.
First you will need to go to your prison case manager and request a proof of incarceration paperwork. This is a Federal Bureau of Prison letter stating you are incarcerated in a federal prison and how long your sentence is. Once you have this letter if will be easier to do the following:
1. Deferment your loans – This will allows you to temporarily postpone your student loan payments for a few years.
2. Forbearance – With forbearance you can stop making payments for up to 12 months, but interest will continue to accumulate.
3. The Income Based Repayment Program (IBR) is a popular program prisoners are starting to do. To qualify for IBR, you must prove financial hardship, and being incarcerated in prison with no income is enough proof to qualify.
If you have a family member on the outside who you have given power of attorney to, they can submit all the required paper work for one of above options and keep you from going into default. If your had the forms ready in advance and someone mailed them to you make copies of the originals so you can use the forms over and over again if you need it.
If you don’t have someone on the outside who can help, I recommend you talk to your case manager at the prison and ask for them to get the required forms off the internet so you can fill them out and mail them to your student loan provider along with the proof of incarceration paperwork. You will also be required to submit the paperwork every year to your student loan provider.
Private Student Loans
People in prison who have private loans have few options, you can do only the following:
1. Deferment your loans – This will allows you to temporarily postpone your student loan payments for a few years.
2. Forbearance – With forbearance you can stop making payments for up to 12 months, but interest will continue to accumulate.
You will still need the proof of incarceration paperwork from your case manager to apply for any of the above options. After you maxed out those options and you’re still in prison expect your loans to go into default and for penalties and interest to be added over the remainder of your sentence. Sallie Mae for example is very unsympathetic for people to people who owe them money while they are in prison. Various people have reported Sallie Mae conveniently loses paper work from prisoners since they know that there is very little they can do while they are incarcerated.