Savanna Hoffman
Student loan debt is a significant burden for many Americans, with millions struggling to repay their loans. In addition to the financial stress, the threat of losing one's professional license looms large for those who fall behind on their payments. In several states across the country, policies are in place to suspend, deny, or revoke occupational licenses from borrowers who default on their student loans. This affects a wide range of professions, from healthcare workers to lawyers, and even extends to driver's licenses in certain states. With a growing number of occupations requiring licenses, these punitive measures can have far-reaching consequences, impacting the livelihoods of those struggling with debt.
| Characteristics | Values |
|---|---|
| Number of states that can suspend your license | 13, 14, 19, 20, 22 |
| States that suspend driver's licenses | Montana, Iowa, Oklahoma, South Dakota, Tennessee |
| States that don't enforce the legislation | Iowa, Massachusetts, Hawaii |
| Occupations affected | Teachers, Lawyers, Accountants, Barbers, Cosmetologists, Dentists, Pharmacists, Social Workers, Massage Therapists, Firefighters, Psychologists, Real Estate Brokers |
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What You'll Learn
- Nurses, teachers, doctors, and lawyers are among those who can lose their professional licenses
- In some states, driver's licenses can be suspended
- Federal student loans have protections such as forbearance, deferment, and income-driven repayment
- Some states have moved to abolish license suspension
- The Protecting JOBs Act seeks to prevent states from denying licenses to those behind on loan payments
Nurses, teachers, doctors, and lawyers are among those who can lose their professional licenses
In the United States, student loan debt has risen to over $1.5 trillion, with more than 1 million people defaulting on their loans every year. In 1990, the federal government encouraged states to enact legislation that would deny professional licenses to defaulters, and 22 states followed this advice. Today, 13 states have laws that allow for the revocation of professional licenses due to unpaid student loan debt, although enforcement varies. These states include Louisiana, Tennessee, Texas, Iowa, Georgia, Massachusetts, and South Dakota, with the latter also suspending driver's licenses, making it difficult for people to get to work.
Other professions that can be affected by license revocation include firefighters, massage therapists, barbers, psychologists, real estate brokers, accountants, attorneys, cosmetologists, correctional officers, debt collectors, dentists, genetic counselors, insurance agents, locksmiths, marriage counselors, pharmacists, roofers, social workers, and veterinarians.
While some states have introduced legislation to repeal license revocation laws, others, like Tennessee, continue to aggressively enforce them. It is worth noting that the impact of these laws is challenging to determine, as many state agencies and licensing boards do not track the number of revoked licenses.
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In some states, driver's licenses can be suspended
In some states, drivers' licenses can be suspended if individuals default on their student loan payments. This is a punitive measure that can make it difficult for people to get to work and subsequently repay their debts. According to sources, 19 to 22 states have laws that allow for the suspension of drivers' licenses in such circumstances.
The states that have been specifically mentioned for suspending or revoking drivers' licenses in the event of unpaid student loans include Iowa, Montana, Oklahoma, South Dakota, and Tennessee. In Iowa, for instance, more than 900 drivers' licenses were temporarily suspended in 2012 due to unpaid student loans. Tennessee has been particularly aggressive in enforcing these laws, with over 5,400 people reported to state licensing agencies from 2002 to 2017, resulting in the suspension of 42 nurses' licenses in a single month.
In addition to drivers' licenses, other professional licenses that may be suspended include those for doctors, nurses, teachers, lawyers, social workers, barbers, cosmetologists, and transportation professionals. This has been observed in states like Florida, where about 900 healthcare workers were at risk of losing their licenses, and 42 nurses in Tennessee lost their licenses in a month.
The impact of these laws is significant, as they can prevent individuals from working in their chosen fields and hinder their ability to repay their student loans. There are legislative efforts, such as the Protecting JOBs Act, aimed at preventing states from suspending or revoking licenses solely based on student loan delinquency.
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Federal student loans have protections such as forbearance, deferment, and income-driven repayment
In the United States, student loan debt has been a significant issue, with many borrowers defaulting on their loans. To address this, several states have implemented measures to encourage repayment, including suspending licences for delinquent borrowers. However, federal student loans offer borrowers certain protections, such as forbearance, deferment, and income-driven repayment plans.
Forbearance allows borrowers to temporarily pause or reduce their loan payments for a specified period. This option is typically available to those facing financial hardship, during which time, interest may accrue on the loan. Deferment is similar in that it allows borrowers to temporarily stop making payments, but it is specifically for individuals who meet certain criteria, such as enrolling in school or active military duty. During deferment, interest may be paused or reduced, depending on the loan type.
Income-driven repayment plans are another option for borrowers struggling with federal student loan payments. These plans set the monthly payment amount based on the borrower's income and family size, ensuring that payments remain affordable. The U.S. Department of Education has also offered repayment plans such as Income-Based Repayment, Income-Contingent Repayment, and PAYE. Additionally, the department is working to simplify the process for enrolling in Income-Driven Repayment (IDR) plans and eliminate the need for annual income recertification.
While these protections provide federal student loan borrowers with some security, it's important to note that they may not be permanent solutions. Forbearance and deferment, for example, are typically temporary measures. Moreover, they may not be available for private student loans, and the specific options available can vary depending on the loan type and the borrower's circumstances. As such, it is always advisable to stay informed about one's loan details and repayment options and to seek advice from qualified professionals regarding personal finance issues.
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Some states have moved to abolish license suspension
Student loan debt is a significant burden for many Americans, with millions struggling to repay their loans. In the past, some states have revoked or suspended the state-issued licenses of defaulters, including professional licenses and driver's licenses. This has prevented people from working and, therefore, paying off their loans.
However, some states have moved to abolish license suspension laws. Alaska, Illinois, North Dakota, Virginia, and Washington have eliminated their default suspension laws for job licenses, and eight more are considering similar legislation. The Kentucky legislature has also passed a bill to prevent licensing agencies from suspending borrowers' professional credentials.
Iowa and Montana have considered bills to repeal laws that allow states to suspend the driver's licenses of student loan defaulters. Despite these efforts, some states continue to suspend licenses, with Tennessee reporting more than 5,400 people to the state's professional licensing agencies from 2002 to 2017.
The impact of these laws is significant, with researchers estimating that government-issued licenses cost Americans two million jobs annually and up to $184 billion in lost economic value. With the growing student loan crisis, some states are revisiting these statutes, recognizing the counterintuitive nature of license suspension, which hinders the ability of defaulters to repay their debts.
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The Protecting JOBs Act seeks to prevent states from denying licenses to those behind on loan payments
In the United States, state governments have the authority to suspend or revoke the licenses of individuals who default on their student loan payments. This can include both professional licenses and driver's licenses. As of 2018, at least 19 states had laws allowing for the suspension or revocation of licenses due to student loan defaults, with some states specifically targeting certain occupations. This has led to thousands of people losing their licenses and, consequently, their jobs.
To address this issue, Senators Marco Rubio and Elizabeth Warren reintroduced the Protecting Job Opportunities for Borrowers (Protecting JOBs) Act in 2021. This legislation aims to prevent states from suspending, revoking, or denying state-issued professional, teaching, or driver's licenses solely because a borrower falls behind on their federal student loan payments. The bill recognizes that threatening a borrower's livelihood by rescinding their professional license is detrimental to their ability to repay their loans and deprives them of dignified work.
The Protecting JOBs Act seeks to amend the Higher Education Act of 1965 by adding a section titled "Prohibition against suspension, revocation, or denial of state-issued professional licenses or penalties due to student default." This amendment explicitly prohibits states from taking such actions based solely on an individual's default or delinquency on specific types of loans, including federal student loans.
The bill also provides a timeline for implementation, granting states two years to comply with the new requirements. Furthermore, it empowers borrowers by providing legal recourse in cases of non-compliance. If a state violates the terms of the act, borrowers can file for prospective injunctive relief.
By introducing the Protecting JOBs Act, lawmakers aim to remove barriers for borrowers struggling with student loan debt and enable them to continue their repayment journey without the threat of losing their licenses and livelihoods. This bipartisan effort recognizes the challenges faced by Americans burdened by student loans and strives to create a more supportive environment for them to build better financial futures.
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Frequently asked questions
Yes, in some states, your license can be suspended if you fail to repay your student loans. This applies to both professional licenses and driver's licenses.
As of 2015, 22 states have laws that enable the suspension of state licenses for student loan defaulters. Some of these states include Florida, Tennessee, Louisiana, Texas, Iowa, Montana, and Oklahoma.
If you're having difficulty making payments, it's important to take action as soon as possible. Contact your loan servicer to discuss your options, such as forbearance, deferment, or income-driven repayment plans. You can also consider consolidating your loans or entering a loan rehabilitation program.
