Internet Explorer 11 is not supported

For optimal browsing, we recommend Chrome, Firefox or Safari browsers.

A Misguided Way to Collect Student-Loan Debt

Suspending delinquent borrowers' occupational licenses just makes it harder for them to repay their loans. Thankfully, states are moving to abandon the practice.

student-loan-debt
(Shutterstock)
Denise Thorman has a passion for helping others. After caring for her aging parents, she decided to go to school to become a certified nursing assistant. In time, she graduated, obtained the necessary CNA license and got a job as a health care provider. However, she struggled with repaying her student loans, and understandably so -- the median CNA salary is only around $26,500.

Before long, Thorman fell behind on her student-loan payments. It was then that she came face-to-face with a cruel and counterproductive public policy: Her home state of Florida suspends the occupational licenses of those who default on their education loans, effectively stripping borrowers of their jobs. "Your license is gone, your livelihood is gone, the care of your patients is gone. How fair is that?" Thorman lamented.

Sadly, Thorman's case is far from unique. Licensing boards across the country have suspended the occupational certifications of an untold number of delinquent borrowers since the late 1980s and early 1990s, when the U.S. Department of Education began urging states to adopt statutes requiring licensing boards to do so. At least 22 states did just that. Effectively, this permitted the federal government to use state governments as collection agents to encourage debt repayment.

The results of these policies have been devastating. When defaulters' licenses are suspended, they are prohibited from working in their chosen profession. And without a job, it becomes even harder for borrowers to repay their loans. This makes it more likely that these borrowers will apply for taxpayer-funded assistance. Borrowers who do manage to extricate themselves from the suspension process usually do so by taking out more loans to pay off their student loans, and their debt continues to spiral out of control. Under these statutes, borrowers lose, government loses and taxpayers lose.

Beyond these matters, the threat of suspension doesn't even appear to be a reliable method of deterring loan defaults. Other more-effective means of debt collection exist, including garnishing wages. Yet as of June 2018, 18 states still had laws on the books permitting license suspensions. Thankfully, states are starting to abandon the misguided policy. Alaska, Illinois, North Dakota, Virginia and Washington did so last year. This legislative session, lawmakers in at least eight states have introduced proposals to prohibit license suspensions due to student-loan defaults, and so far this year the governors of Arkansas, Georgia and Kentucky have signed bills repealing this power.

The license-suspension policy is so egregious that it has even grabbed Congress's attention. Republican Sen. Marco Rubio of Florida and Democratic Sen. Elizabeth Warren of Massachusetts recently joined forces on the matter, creating one of Washington's most surprising political odd couples. They have co-sponsored legislation to discourage states from employing the practice, which Rubio says traps borrowers in a "modern-day debtors prison."

It remains to be seen whether Congress will have the will to pass this measure. But in the absence of congressional action, state legislatures are beginning to take this ill-advised policy head-on. One way or another, it seems only a matter of time before it is eradicated. Only then will people like Denise Thorman be able to rest assured that licensing boards will not punish them for falling on hard times.

Special Projects
Sponsored Stories
Sponsored
Workplace safety is in the spotlight as government leaders adapt to a prolonged pandemic.
Sponsored
While government employees, students and the general public had to wait in line for hours in the beginning of the pandemic, at-home test kits make it easy to diagnose for the novel coronavirus in less than 30 minutes.
Sponsored
Governments around the nation are working to design the best vaccine policies that keep both their employees and their residents safe. Although the latest data shows a variety of polarizing perspectives, there are clear emerging best practices that leading governments are following to put trust first: creating policies that are flexible and provide a range of options, and being in tune with the needs and sentiments of their employees so that they are able to be dynamic and accommodate the rapidly changing situation.
Sponsored
Service delivery and the individual experience within health and human services (HHS) is often very siloed and fragmented.
Sponsored
In this episode, Marianne Steger explains why health care for Pre-Medicare retirees and active employees just got easier.
Sponsored
Government organizations around the world are experiencing the consequences of plagiarism firsthand. A simple mistake can lead to loss of reputation, loss of trust and even lawsuits. It’s important to avoid plagiarism at all costs, and government organizations are held to a particularly high standard. Fortunately, technological solutions such as iThenticate allow government organizations to avoid instances of text plagiarism in an efficient manner.
Sponsored
Creating meaningful citizen experiences in a post-COVID world requires embracing digital initiatives like secure and ethical data sharing, artificial intelligence and more.
Sponsored
GHD identified four themes critical for municipalities to address to reach net-zero by 2050. Will you be ready?
Sponsored
As more state and local jurisdictions have placed a priority on creating sustainable and resilient communities, many have set strong targets to reduce the energy use and greenhouse gases (GHGs) associated with commercial and residential buildings.