|CAN YOU LOSE YOUR LICENSE FOR MISSING A PAYMENT?|
|Posted on: Nov. 26, 2017 in Uncategorized|
Student loan debts are the second largest source of household debt. 44 million Americans, the most ever, with amounts totally over $1.45 trillion. Unfortunately, that means that the number of individuals who are defaulting on these loans is also growing. Falling behind on student loan will certainly lower your credit score, but the impact could be even worse than that. In some states, you can lose your professional licenses and even your driver’s license if you fail to pay back your loans.
Why Does This Happen?
The Higher Education Act, signed into law by President Lyndon B. Johnson in 1965, not only created financial aid programs for students, but it also incentivized banks to get in on the action by insuring these loans. If a student defaulted, the federal government would cover it. Then, in 2010, the government began directly funding loans, taking banks out of the equation.
As the government began losing more and more money, state agencies began garnishing wages and putting liens on houses and cars. Other states, denied professional license renewals. Over the years, states began denying driver’s licenses, as well as fishing, hunting, and camping licenses for those who were behind on payments.
What States Do This?
Not every state uses this practice, and not every state that has the ability to do it actually enforces these laws. However, if you live in one of these states and you’ve defaulted on your student loan, you may want to research the laws and enforcement polices to see what you’re up against.
Here’s the list: Alaska, Arkansas, California, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, New Mexico, North Dakota, South Dakota, Tennessee, Texas, Virginia, Washington.
It’s a Slippery Slope
Borrowers rarely take out loans with the intention of defaulting and it’s understandable that the government need to be able to get back the borrowed funds. However, students are borrowing money to earn degrees that allow them to get jobs. Many of these professions, including nurses, teachers, lawyers, massage therapists, and many others rely on their licenses in order to work and, possibly, to run their businesses. In many areas, a driver’s license is essential for getting oneself to those very jobs that allow them to pay their bills at all. When these professional and driver’s licenses are revoked, they take with them the ability to earn money to repay the loan, worsening the hole the borrower is in.
The New York Times recently examined this growing trend. To read more about it, check out the article here.
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