Jan. 23, 2018
Dear members of the Georgia Legislature:
In recent years, the burdens of occupational licensing and student loans have become all too apparent. To date, almost 30 percent of professionals are required to traverse an expensive and time-consuming labyrinth to obtain a license to work. Beyond this, U.S. college graduates owe around $1.4 trillion in student loans—a number that continues to rise. Indeed, roughly 60 percent of Georgians that graduated in 2016 have outstanding student loans, owing an average of more than $27,000.
The combination of these factors creates a challenging environment, but the State of Georgia maintains a policy that exacerbates it even further. Georgia is one of only 15 states that are empowered to suspend the occupational licenses of professionals who have fallen behind on their student loans. While originally enacted to hold borrowers accountable and discourage defaults, this policy is counterproductive.
The simple truth is that the law works against its goal of debt collection. Without a license, many Georgians are forbidden from working in their profession, and it is obviously difficult, if not impossible, to repay one’s debts without a job. But this government-caused unemployment generates other problems too. It leads to poverty and can harm families. Indeed, lost wages can hinder one’s ability to provide shelter and care for one’s family. Grappling with unemployment while attempting to secure the well-being of one’s family can force jobless individuals to apply for state-funded assistance, which unnecessarily burdens taxpayers.
Beyond its detriment to borrowers and the general public, this policy has failed at its central goal—to reliably deter student loan defaults. As of 2015, Georgia’s federal student loan default rate was a little over 11 percent, which is higher than that of states without revocation authority. This suggests that this policy is ineffective at discouraging defaults. In fact, this debt collection method is unnecessary, given that there are alternative approaches.
Therefore, the undersigned find Georgia’s policy of suspending the occupational licenses of those in default of their student loans imprudent. We believe Georgia can and must do better.
Director, State Government Affairs
R Street Institute
President and CEO
Georgia Center for Opportunity
Georgia State Director
National Federal of Independent Business (NFIB)
Vice President of Legislative Affairs
J.D Van Brink
Co-Founder and Chairman
Executive Vice President
Foundation for Economic Education (FEE)
Foundation for Government Accountability (FGA)
Institute for Justice
Cliff Maloney, Jr.
Young Americans for Liberty (YAL)