Defaulting on Student Loans Can Make You Lose Your License

By Brittany Greve

Businessman and investor Mark Cuban has bought the domain http://www.collegedebt.com, to keep track of the current student loan debt in the United States. As it currently stands, student loans are at $1,550,517,988,260.60.

As debt levels rise, creditors are taking increasingly tough actions to chase people who fall behind on student loans. The main threat that students now face is states going after their professional licenses.

According to the New York Times, government agencies in 19 states can seize state-issued professional licenses from residents who default on their educational debts.

Three states, Montana, Iowa and Oklahoma, include driver’s licenses within the scope of licenses that may be suspended for a failure to repay federal student loans. Additionally, there are 14 states that can block the renewal of any professional license for borrowers who are in default on federal and/or state student loans, including New Jersey. Many of the state laws specify which occupations fall under this law, such as attorneys, barbers and cosmetologists, correctional officers, dentists, marriage counselors, pharmacists and social workers. They even name debt collectors as one of the occupations that can fall under this law.

Though this has just recently come to light, this law isn’t new. Some of these laws have been on the books since the 1990’s, according to Bloomberg News. Public records requests by The New York Times identified at least 5,400 cases in Tennessee alone in which licenses were taken away or put at risk of suspension in between 2013 and 2017. Hailey Lara (‘21) says that, “If you can’t go to work and it costs you more in taxi/bus fares to get there so you have even less money to pay them.”

Recently, legislators in Montana successfully passed a bill to revise the laws regarding defaulting on student loans. In the meantime, Iowa stopped enforcing the license revocation law, but not because the state objected to it. The only reason the law has not been enforced is that the responsibility for managing Iowa’s student loans was transferred to an agency in Wisconsin.

Those who oppose the practice argue that revoking someone’s driver’s license simply makes it harder for them to get to work, earn money and repay the loans. If professional occupational licenses are revoked, it can mean that the borrower loses their job. This creates a circle that seems impossible to escape since you must take out loans to get educated, and get a license, but if you cannot find a job after you get that license or it doesn’t pay enough for you to pay back your loans– they take your license away, which was the reason for going into debt. Larry Wells of Dallas is stuck in this circle and says, “If they can’t get a job because you’re taking their license away that they might need to pay off the loan, then what’s the point?”

Trevor Hurst (‘19) says that, “Failure to repay student loans does not void the professional capabilities of a worker. All this does is hinder a person’s abilities to earn. Also, taking away one’s ability to drive a car in a country such as the U.S. will only make a timely repayment less likely.”

When Montana Democratic State Rep. Moffie Funk learned that that was a potential consequence, she says she felt embarrassed. “You’re making criminals out of people who, for a multitude of reasons, have defaulted on their student loans,” she says. “It’s so punitive and so demeaning.”

But some policymakers want to retain consequences for defaulting, like Montana Republican State Sen. Dee Brown. “I think that this is one of the sticks that we can use over a kid who is not paying their student loans,” she says. “It’s a stick to get their attention. And what a better way than their driver’s license?”

The initiatives that are used in situations where someone owes back taxes or owes child support should be a template for how student debt should be handled. These types of initiatives include being denied a visa for foreign travel, or having the debtor acquire outstanding debt through wages and earnings. These steps may make more sense and be more effective than policies that simply take away opportunities that could help borrowers pay back their debts. These solutions should pave the way for students to not have to decide between whether to pay rent, buy food or make student loan payments.

 

Image courtesy of Student News Daily

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s