Every year, over 600,000 people reenter society after incarceration. According to the U.S. Department of Justice, an estimated 83% will return within 9 years.

While some may believe the person is the problem, the reality is that these people make their decisions in a broader context – and that context, almost 93% of the time, involves financial stress and often financial literacy, says banker Tory Schalkle. This creates a treadmill, and unless something breaks the status quo, recidivism occurs.

The Impact Is Broadly Felt

According to a Cornell University study, half of all Americans say they have a close family member who was incarcerated. These parents, spouses, siblings, children, and others often feel the financial burden while their family member goes away. They may be on the hook for bills, face harassing phone calls from creditors, etc.

Why This Population Is Vulnerable

Incarcerated individuals are often financially illiterate and vulnerable. They are twice as likely to be unbanked without a credit card and living paycheck-to-paycheck. They are three times as likely to pawn belongings out of desperation until they run out of options and turn to crime.

Financial literacy and being plugged into the financial system is the key to reducing these behaviors, the financial duress they can create, and the treadmill that often ensues. Pennsylvania data, for instance, found that released prisoners with a bank account are almost half as likely to return as those without one.

Tory Schalkle of Firm Footing isn’t the only one recognizing this problem. A report by the Department of Economics and Criminal Justice at the University of Arkansas at Little Rock states, “Due to financial illiteracy, [formerly incarcerated people] have a tough time building the wealth needed to produce a stable future even if they have a steady job. As a result, they are unattached to the general society, vulnerable to economic crises, and [likely to return].”

Data obtained through the study found that there is a strong need for financial literacy training within this population. A study titled “Financial Literacy Curriculum: The Effect on Offender Money Management Skills,” by Lori Koeenig, published in the Journal of Correctional Education, found that “This study helps to reveal the glaring need for offender financial education… The focus on education in finance may be the key to reducing the prison population.”

What Might Be Done

Surprisingly, there’s no national financial literacy program for this population. So Tory Schalkle, a U.S. banker partnered with a state’s Department of Banking & Securities along with a local reentry nonprofit to create and pilot a financial literacy program tailored to that community.

How Well Does It Work?

There’s significant evidence to support these efforts. Those who receive educational courses have a 43% reduced odds of recidivism, according to a 2013 RAND report. Given recidivism rates, that translates to a roughly 13 percentage point reduction compared to those that don’t receive education, according to the report. Practically speaking, that means, teaching a class of 8 students prevents 1 from reoffending.

Doing that involves a combination of individualized coaching and needs-assessment, and a curriculum tailored to this population. It’s not easy, but maybe that’s exactly why it works.

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