A few weeks ago, I discussed the strain that student loans have placed on married couples, ultimately leading to a break down in the marriage. Unfortunately, marriage is not the only thing you may lose. You can lose your job, as well. While it varies by location, there are currently 15 states where a borrower can have their occupational license suspended or revoked if they default on their student loan payment. An unsettling fact, considering that approximately one-fourth of the U.S workforce holds an occupational license.
Typical methods used to deter defaulting on student loans include lawsuits, garnishments, liens and seizing tax refunds. While these collection methods present obvious financial setbacks to the borrower, the borrower is still able to make a living and pay other expenses. Revoking an occupational license, on the other hand, completely takes away a borrower’s income source, essentially making it impossible to make any future payments at all.
The Severity of Suspended Occupational Licenses
A particularly troubling example where a borrower lost their occupational license involves a Nashville, TN nurse who was unable to keep up with her student loan payments due to sudden epileptic seizures. Unable to work, she defaulted on her student loans. It was only after she had her seizures under control that she learned her nursing license had been suspended by Tennessee’s Board of Nursing. To have her license reinstated, she would have to pay almost $1500. Not an easy task considering she was unable to work without it.
Fortunately, some states have started introducing bills that ban the ability to suspend an occupational license due to defaulting on student loans, although it is alarming that it was allowed in the first place. The student loan default rate has also been slowly dropping since 2013, and as of 2017, it sits at 11.5%. While the decreasing default rate is encouraging, it still means that more than one out of every ten borrowers are delinquent on their student loans.
If you are part of the 11% that default on their student loans every year or have found yourself in a financial bind as a result of student loans, please give one of our Bond & Botes offices a call for a free consultation.