From Pew:

…Forced collections

Although they can be effective in recouping defaulted loan balances, forced collections can cause severe financial hardship to borrowers, because borrowers can end up paying more through collections than they would have in repayment. Forced collections, also known as “involuntary payments,” include wage garnishment, Treasury offsets of tax refunds (including the Earned Income Tax Credit), and Social Security offsets. See “Overview of the student loan default process” for more details about these forms of collection.

These consequences can motivate some borrowers to avoid default or take action to put their loans back into good standing, but they can come at a steep price. For example, one report found that after their occupational licenses were revoked, some borrowers took action to resolve their defaulted student loans but had to make substantial financial sacrifices to do so, such as forgoing basic needs or taking on more debt…

Some states revoke occupational and driver’s licenses after borrowers default on their federal student loans. This punishment is counterproductive, as it limits borrowers’ ability to maintain or increase an income to cure their default and pay off their loans. A 2018 analysis found that 18 states had laws on the books that allowed them to strip occupational and driver’s licenses from defaulted student loan borrowers…

Principle for reform: Reduce other consequences of default.

Beyond collections, changes could be made to other outcomes of default. Policies could prevent occupational or driver licenses from being revoked because of student loan default…

Loss of professional license

Borrowers’ employment can be jeopardized after they default on their student loans. Some borrowers who default are at risk of having their driver’s or professional licenses suspended, compromising their ability to continue working. A 2018 analysis found that 18 states revoke occupational and driver’s licenses after borrowers default on their federal student loans…

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