For many in the South, prison is a debt sentence.
Formerly incarcerated individuals in five Southern states owe a combined $4 billion in debt, severely hampering their ability to rejoin society while upping the chances of recidivism and reentry. Those are the findings of a recent report of Mississippi-based Hope Policy Institute, released Jan. 13.
“It is a staggering number,” said Calandra Davis, HPI policy analyst, who authored the paper. “That’s just [formerly incarcerated individuals] in five states, Alabama, Arkansas, Louisiana, Mississippi and Tennessee. It’s also just federal criminal justice debt, so it doesn’t include state and local criminal debt and that doesn’t include restitution, the money they will have to pay to their parole or probation officer.”
“Our criminal justice system intersects with economic justice as well. The way our prisons operate on a state, federal and local level with fines and fees, we make money off of the people that we incarcerate, in a nutshell.”
Davis said formerly incarcerated individuals’ sources of debt are largely the same as anyone else’s – garden variety mortgage, credit cards and in some cases student loans and medical expenses – but the obvious interruption of earnings while in jail allows that debt to multiply unimpeded.
“We know folks who are incarcerated are not making a living wage income and we know many of those who are incarcerated are coming from families and communities who are in persistent poverty,” Davis said. “While there might be a few folks who are able to be incarcerated and have the support of family to continue to pay bills most of them do not. So, bills tend to go into collections and add to their debt.”
According to the Prison Policy Initiative (PPI), there are about 5 million formerly incarcerated individuals in the United States across all levels of jurisdiction and 2 million people locked up at any given time. The report card for the five states contained in the HPI report, as it is for most Southern states, is particularly damning in terms of the number of people locked up per 100,000 residents. Nationally, Louisiana ranks third (1,052/100,000) and Mississippi fourth (1,039) behind the District of Columbia (1,153) and Oklahoma (1,079).
Arkansas (900) and Alabama (946) are joined by Georgia (970) as the only three states in the 900 range of incarcerated individuals per 100,000 people. A group of four other states, Tennessee (853), Texas (891), Florida (833) and Missouri (859), are the only states in the 800 range per 100,000 individuals, well exceeding the national average (698).
These prison populations assure the ranks of the formerly incarcerated in these states, a number hard to pin down, will remain high for years to come. At the same time, restrictions on these same ex-cons for employment, loans and financial aid only exacerbate the challenge of getting one’s life back on track, let alone addressing debt. In February, USA Today reported unemployment among formerly incarcerated individuals exceeded 27 percent, nearly five times that of the general population. And among subsets of that group the prospects are even worse with 35 percent of formerly incarcerated Black men and nearly half of Black female ex-cons out of work, per PPI.
Meanwhile, opportunities for improving one’s education are similarly perilous. Despite research that shows education at any level cuts recidivism by up to 43 percent, the Council of State Governments Justice Center reports more than 30 states block people with criminal records from applying for financial aid to attend school. This all but assures former offenders remain stuck in place, to the detriment of the nation which loses approximately $78 billion to $87 billion in annual gross domestic product because of the unemployment or underemployment of people in this category, per USA Today.
Davis said while the solutions and work-arounds to this issue are few, they do exist.
“For those recently reentering society, especially when it comes to economic opportunities, what they’re going to want is a relationship with a financial institution, so they’re going to look to open a bank account,” she said. “The barrier there is they might not have the proper ID. Folks are going to look for employment and ID will be necessary for that, too. Little Rock is a great example because they offer a municipal ID which folks can use to open a bank account or look for a job.”
Overall, however, radical change will be required to help people re-enter the workforce, refocus their lives and address their debt. Davis said one easy way to start is to improve financial literacy among individuals while still on the inside to help them make better decisions after release.
“Arkansas is one of the few states that has a usury cap rate, meaning they cap interest rates at 17 percent,” she said. “However, people leaving prison may still find an online lender based out of state that does not have such a cap and they fall victim to predatory lenders. The only way you would know to avoid those is if someone gave you that financial literacy.”
Currently, such educational programs are sporadic in the prison system, Davis said. Enhancing uniformity among reentry education would go a long way toward helping a former inmate navigate the outside world. To this end, she challenged banks and credit unions to get involved.
“Interviewing the formerly incarcerated, it became clear these people did not have relationships with their institutions,” Davis said. “Right now, I would say financial institutions are not stepping up, and one way they could do so immediately is to join in partnership with local reentry programs.”
“Not only do financial institutions need to be in partnership with reentry programs, they need to be in partnership with correctional facilities. I would hope more financial institutions would go beyond their four walls, get out into the community and form relationships with this population.”
Davis’ report also calls for other measures, including approving prison IDs for opening bank accounts, use of non-traditional credit in loan underwriting and for the creation of an entrepreneurial loan program specifically for this population group through the U.S. Small Business Administration. These advancements require a multi-faceted approach to the problem, she said, involving many community and governmental stakeholders.
“While we especially need financial institutions to step up and be ready to assist these people, my quick answer is we all need to be better,” she said. “In order to reform the criminal justice system, it is going to take all of us.”