R Sheets Competition Policy

R Sheet on Georgia Suspension of Occupational Licenses for Student Loan Defaults

by Marc Hyden AND C. Jarrett Dieterle

Nov 7, 2018

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Authors

Marc Hyden

Director, State Government Affairs

C. Jarrett Dieterle

Resident Senior Fellow, Competition Policy

Key Points

Thousands of Georgians struggle with student-loan debt.

Georgia law permits boards to strip individuals of their professional licenses for falling behind on student loans.

This power creates poverty, harms families, hinders workers’ abilities to repay debts and fails to reliably deter defaults.

Moreover, licensure suspensions are unnecessary because other, less harmful debt-collection tools are available.

Georgia should repeal this power like other states have already done.

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Background

Georgia is currently one of 15 states that can suspend the professional licenses of individuals who have defaulted on their student loans. Nationally, such licensing suspension laws were largely the result of a crackdown on delinquent borrowers throughout the ‘80s and ‘90s. The U.S. Department of Education recommended that states adopt these laws, and many did.

In 1998 and 2001, the Georgia General Assembly approved bills to do just this. The measures directed state licensing boards to suspend occupational licenses for certain borrowers in default of state and/or federal student loans, including federally guaranteed student loans. Once delinquent by at least 270 days, a borrower’s occupational license can be suspended if either the Georgia Higher Education Loan Program or the federal government requests it.

While these laws were well-intentioned e orts to encourage borrowers to recover their satisfactory repayment status and deter future defaults, the measures have proven counterproductive and are largely unnecessary given the existence of traditional loan recollection tools.

Read the full study here.