“Stripping delinquent borrowers of their professional license essentially tells them: we want you to do better at repaying your loans, so we are going to deny you the ability to earn the money needed to do so.”
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How states use occupational licensing to punish student loan defaults
Key Points
- 1) 18 states currently have laws on the books that allow them to revoke or suspend occupational licenses from individuals who fall behind on their student loans. These laws originate from the 1980s, and involve pre-2010 student loans.
- 2) These license revocation laws hurt even well-meaning borrowers who fall behind on student loans through no fault of their own, and can make it more difficult for borrowers to catch up on their loan payments.
- 3) These laws should be targeted for repeal in the states in which they exist since they unduly punish borrowers and can even work at cross-purposes with traditional debt collection tools like wage garnishments.