Unpaid student loans are costing people jobs and licenses

Student loans have an unintended consequence if they aren’t repaid: Borrowers who default on their payments can lose their state-issued professional licenses.

That’s according to a CNBC report that found that in 19 states, government agencies can revoke student loan borrowers’ licenses if they don’t repay their debt. Also, in South Dakota, a borrower’s driver’s license can be suspended, making it nearly impossible for them to get to work.

The measures taken by the States are due to the increase in debt levels of student borrowers. As a result, they are taking more drastic measures to collect the money, including revoking state professional licenses. The report notes that the actions have impacted firefighters, nurses, teachers, lawyers, massage therapists, barbers, psychologists and real estate brokers. CNBC said it was difficult to determine how many people lost their licenses, but public records reviewed by The New York Times named at least 8,700 cases in which occurred.

Student loan debt has been skyrocketing for a few years now, currently representing the largest source of household debt, second only to mortgages. Defaults are high, with borrowers facing all sorts of lawsuits as lenders attempt to obtain unpaid money, including filing lawsuits, garnishing wages, putting liens on properties and seizing tax refunds.

According to CNBC, the state of Tennessee is one of the most aggressive states when it comes to revoking professional licenses due to unpaid student loans. From 2012 to 2017, officials reported more than 5,400 people to professional licensing agencies for unpaid debts. It’s unclear if people lost their licenses as a result.

“It’s an eye-catching object,” said Peter Abernathy, director of assistance and compliance for the Tennessee Student Assistance Corporation, a state-run commission charged with enforcing the law. “They promised the federal government that they would return those funds. This is the last resort to return them as payment.”


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