Can a Prospect List be a Non Member?

I have a site that is nearing 1000 free members and am having trouble converting to paid membership. I will have to upgrade the payment for the site soon and just can't justify this. 
I see there is a Prospect List in the email settings. 
Is it possible to put these people on  a prospect list and remove them from Member status? 
I.e. only having paid members contribute to the monthly bill for Membermouse? 



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