You Can Lose Your Driver’s License Over Student Loan Debt In 22 States

Activist Demonstrate Against High Cost Of College Education In U.S.
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Several states including Iowa and Montana are considering repealing laws that take away drivers and occupational licenses when individuals fall behind on their student loan payments.

At least 22 states have similar laws currently on the books, but consumer advocates are trying to get the laws repealed, saying that taking away driving and occupational licenses will only hinder a person’s ability to pay back their loans. Some lawmakers agree, including Montana state representative Moffie Funk who supported a recent bill to repeal the statute:

“It’s the most inappropriate consequence, because you are taking away their ability to eventually pay [their loans] back,” says Moffie Funk, the Montana state representative who sponsored the bill. In Montana, where there is little public transportation to speak of, driving is the only way most people can get to the jobs they need to repay their debt, Funk says.

In addition to transportation issues, debtors can lose their nursing, teaching, or other occupational licenses. Without them, many individuals wouldn’t be able to work at all, or at least not in their chosen fields.

Collection agencies have defended these laws, saying that they are a necessary “deterrent” to individuals who would otherwise stay delinquent in their payments. They also claim that these laws save taxpayers money and that people who fall behind on payments can enroll in repayment plans to avoid losing their licenses.

The reality is that thousands of licenses have been suspended under these laws. In Tennessee alone, more than 1,500 occupational licenses have been suspended by the ironically named Tennessee Student Assistance Corporation. Thousands of people have possibly lost their abilities to support themselves, much less pay back their student loans, and fortunately some lawmakers are fed up with it:

“You’re making criminals out of people who, for a multitude of reasons, have defaulted on their student loans,” says [Moffie] Funk. “It’s so punitive and so demeaning.”

Source: Bloomberg Business