Student Loan in Default? You Could Lose Your Job

21 states have laws that revoke professional licenses if a loan is in bad standing

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As if having student loan debt isn’t bad enough. According to Jobs with Justice, more than 20 states have laws that could revoke borrowers’ professional licenses if the loans slip into default. The laws affect lawyers, teachers, nurses, and other professionals who need licenses to work in their fields. Some states can even revoke driver’s licenses.

[Related: [REPORT] College Educated Professionals Saw Biggest Pay Cut Last Year]

Unfortunately, this is not an idle law that doesn’t get enforced. Reportedly, about 40 nurses in Tennessee were forced to leave their jobs in 2010 after they allowed their student loans to go into default. (About half were reinstated after they set up payment plans.) In effect, these laws are not only punishing those who borrowed money to pay for their education, they also prevent student borrowers from paying the money back by preventing them from earning a living.

The following states have these statutes: Alaska, Arkansas, California, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, Mississippi, New Jersey, New Mexico, North Dakota, Oklahoma, Tennessee, Texas, Virginia, and Washington. In some states, teachers must begin paying back their loans before they can work.

The good news is that one state, Montana, has begun to reverse this course: It no longer revokes the driver’s licenses of those whose student loans are in default. Jobs with Justice reports that other states may follow Montana’s lead, effecting “an immediate solution to a problem that never should have existed in the first place.”


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