Can you lose your job if you fall behind on your student loans? In 19 states, government agencies can seize your state-issued professional licenses if you default on your student loans. Thankfully, Alabama is not one of these states. In South Dakota, your driver’s license can be suspended which can make it impossible to get to work.
Creditors Using Extreme Measures
As student loan debts increase, creditors are taking more extreme measures to collect. Taking ones’ professional license seems especially extreme. Many of the states where the licenses can be taken do not track the information so there is no way to determine the exact number of people this tactic has affected.
In the southeast, Tennessee, Mississippi, Georgia, Florida, Arkansas and Louisiana are states where your license can be seized. In Kentucky, records from licensing boards show that 308 nurses and 223 teachers have had their licenses blocked in recent years. Tennessee is one of the most aggressive states at revoking licenses and does track how many borrowers are affected. From 2012 to 2017, reports show more than 5,400 people had revoked licenses by professional licensing agencies. How many lost not only their job but their careers? No one knows. In Louisiana, the nursing board notified 87 nurses last year that due to defaulted student loans, their licenses would not be renewed until the loans were brought current. 84 paid their accounts current while the other 3 are unable to work in the field according to a nursing board report.
Where does that leave someone who default on student loans due to health- related issues? For many in these states, it can trigger a suspension in your license when you are finally able to return to work after getting your health back. These laws seem to prevent borrowers the very ability to bring the loans out of default by preventing them the ability to work.
Best Interest of the Taxpayer?
Proponents of this provision in the law say they are in the taxpayers’ interest. Most student loans are backed by guarantees by the state or federal government which foot the bills if the borrowers default. They reason that if a borrower defaults and face losing their license, they will find the money to bring the loan out of default status. Proponents also reason that many times the license won’t be suspended or revoked if a payment plan is worked out to bring the loan current. However, many cannot afford the high monthly payments required.
Have you lost your license due to a default on a student loan? Please call one of our Bond & Botes attorney’s so we can discuss your financial situation to see if we can help.
States Where Your Professional License Can Be Seized
- New Mexico
- North Dakota
- South Dakota
Gail Hughes Donaldson is a Managing Partner of the Bond & Botes Law Offices in Montgomery and Opelika, Alabama. She holds a Bachelor of Science from Auburn University at Montgomery, and a Juris Doctorate from Thomas Goode Jones School of Law. She’s been helping families work through the bankruptcy process since she started with Bond & Botes back in 1993 as a paralegal. Read her full bio here.