Defaulting on a student loan could cost you your job in these professions
It's no secret that student debt is an ever-growing crisis. Student loans have become the nation’s top category of personal debt — second only to mortgages — with borrowers owing a collective $1.5 trillion . Nationwide, 44 million Americans have taken out student loans, while a staggering 8.5 million federal student loan borrowers were in default last summer.
Default can invite severe consequences for borrowers, including garnished wages, withheld tax refunds, and a torpedoed credit score. And, though many people don't know, defaulting on student loans can even threaten a person’s career.
In 15 states, borrowers can have their occupational licenses suspended or revoked simply because they failed to pay back their student loans. That is no idle threat: A New York Times investigation “identified at least 8,700 cases in which licenses were taken away or put at risk of suspension” due to default. For instance, one nurse in Nashville, who started suffering from epileptic seizures, couldn’t work temporarily and was forced to default on her loans, which resulted in the loss of her license and thus ability to work at all.
Stripped of their licenses, borrowers essentially lose their ability to earn an honest living. That spawns a vicious cycle that makes it even more difficult to pay back the debt that triggered the loss of their licenses in the first place.
Fortunately, there is a growing, bipartisan consensus that these laws are pointlessly punitive. This month, Illinois Gov. Bruce Rauner, R, signed a bill that bans any state government agency or board from suspending, denying or revoking a person’s license simply because they defaulted on their student loans. Illinois joined Alaska and Washington , which also scrapped their default license suspension laws earlier this year.
Prior to reform, Illinois was one of the most aggressive states for enforcing its license suspension policy. According to records obtained by the Institute for Justice, Illinois suspended licenses for almost 2,300 workers across 50 occupations between 2005 and 2015, blocking credentials for more than 600 different cosmetologists, over 400 pharmacy technicians as well for barbers, counselors, nail technicians and social workers. Illinois even suspended the licenses for almost 500 different nurses, which, considering the nation’s growing nursing shortage , is a deeply warped priority.
Although the policy was originally proposed as a way to limit defaults and collect on back debts, the Illinois Department of Financial and Professional Regulation couldn’t say how much student loan debt had actually been recovered after the department had suspended a borrower’s license. Little wonder then that even the Illinois Attorney General called the license-suspension policy “nonsensical” and backed its reform.
In Congress, Sens. Elizabeth Warren, D-Mass., and Marco Rubio, R-Fla., introduced a new bipartisan bill that would dramatically curtail this disastrous policy nationwide. Their Protecting JOBs Act would ban states from suspending, revoking or denying professional licenses and driver’s licenses “solely” because a borrower defaulted on their federal student loans. States would have two years to comply by reforming their laws or else they would risk the loss of any funding received under the federal Higher Education Act.
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I found this article interesting since it only seems to affect some professions and not others. Can we find a better way to handle defaults on school loans
It also applies to engineers that require a professional license.
When do we wise up and subsidize post-secondary education like other intelligent countries do? Betsy Devos is making this problem worse because she is looking out for the banks interest instead of the students.
We've been subsidizing it, but in the most foolish way possible: guaranteed federal loans. The universities are guaranteed to get their money, so they charge what they like in tuition and use the money to fund a bloated administrative bureaucracy and go on construction spending sprees. The students are the ones who get screwed.
Ah, but there is the rub.
Taxes will simply not go up for everyone.
A well educated popualtion more than pays for the investment by subsidizing post-secondary education. Higher paying jobs means people pay more income taxes and the economy is more stable than service industry or gig jobs. It's also lower unemployment when people can retrain easier and cheaper.
You're somehow stuck on the idea that taxes are fines, you're being punished for others and that wealth is a right.
As long as the government subsidizes loans Colleges have NO incentive to lower cost and that is why it has went up 260% since 1980 and will continue to skyrocket. The only way to get tuition down is to get the government out of it but it is so far out of hand now that no one can afford an education without government "help" which is exactly what they want.
It is ironic that if most liberal professors practiced what they preached they would teach for free and we wouldn't have a problem.
States are cutting funding for public universities and that pushes more costs on to the students. There isn't much that the government can do to control costs at private universities.
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Since when do liberal profs support this idea? Why should any professor teach for free? Many of them are paying off student loans for Masters and PhDs. How do they pay their bills and survive?
See this is what bothers me when having a discussion like this. It's a talking point with no backup. So to set the record straight, it is not the professors that have been getting paid more, but administrative costs that have skyrocketed.
The best data on college costs comes from the Delta Cost Project, a nonprofit that analyzes data reported to the government. It shows that in the decade prior to 2011, the biggest increase in cost per student at large research universities — the ones that set the competitive norms and that are the focus of this essay — was not in instruction but in administration: student services, institutional support, research and academic support.
While faculty critics have made sport of pointing out the proliferation of assistant provosts or the soaring salaries of college presidents, these don’t represent most new spending. What does is the growth in the number and pay of non-teaching professionals in areas such as academic and psychological counseling, security, information technology, fundraising, accreditation and government compliance.
Administrators cite government regulations, along with increasingly demanding students and parents, as the causes; no doubt those pressures are real. But judging from the amount of time these professionals spend meeting with each other, I’d wager there is plenty of savings to be had by setting priorities and streamlining structure and decision-making. As management consultants from Bain & Co. wrote in a recent report , “In no other industry would overhead costs be allowed to grow at this rate — executives would lose their jobs.”
Here’s a simple rule of thumb: A university should spend more on instruction than it spends on anything else, besides research.
Absolutely agree the current process of removing the ability to work seems like the government is cutting off it's own face to spite it's nose
One of the answers to this can be scholarships....I've seen estimates that over 50% of scholarships go unawarded. Scholarships take work to put together the package and update it to the requirments of each scholarship, but it is essentially free money. One of my neighbor's kids was going to college and costing a lot of money (out of state). I asked him if he had applied to schlarships. He said, No, he didn't know how. I told him Google was his friend. No effort, no reward and then staggering debt form college loans.
Additionally, college degrees are good for some careers, but there are lots if careers that don't require a degree and these jobs pay well and need to be filled.....the King is the guy that fixes your car, HVAC, unplugs your toilet, etc., etc.
That's where high school guidance counselors could be of great value. I got quite a few scholarships for undergrad, and he was a great help. This was before Google, too.
Garnish wages and tax refunds. Taking away a borrower's ability to earn is entirely counterproductive.
The Feds have already taken care of that. They won't send you your SS check.
My great niece just graduated with a BS degree. She found employment and her total student debt is around $10,000 total. She is set up to pay this off in as short a time as possible. Much of loans were from her first year. When she figured out how deep in debt she would be if she keep it up she totally changed the way she was funding her schooling.
It worked.
I agree that taking someones ability to earn a living is counter productive. It' makes no sense.
Hmmm...some states take your license--even your regular old driver license-- if you don't pay child support. This sounds similar.
Damn sure does, and it doesn't make any sense either.
Sometimes harsh problems demand harsh solutions.
While each case is unique, I think we all know at least one deadbeat in our lives that might benefit from these harsh punishments.
And no, I am not anywhere close to assuming that all defaults are the result of deadbeats.
But the rate of default is astronomical on student loans, so clearly what we have been doing isn't working anymore.
I agree. I found this link that addresses just that problem. For some reason I cannot link it to this comment.
I read the data in the seeded article, but I have a question.
It states that there were 44 million Americans with student loans, but then when it talks about defaults, it specifies 8.5 million federal student loans.
Right there is an astronomical rate of default, but is the rate really even higher because maybe they ONLY included federal loan defaults?
I think that is the total student loans. I'm not sure but doesn't the fed's insure all student loans?
Not 100% sure but believe you can get a student loan from a bank.
Rates would be higher, though.
Yes you can get a private loan. There are a number of banks that offer them.
I'm not familiar with student loans so a bit of research is due to find out some of the answers to the questions.
This is only fed student loans. When you get them from a bank, defaulting is like defaulting on a mortgage and does not get put into this category due to the much higher rates of interest.
The ones that irk me are those who got the student loans and became financially successful, yet still won't pay back the loans. Those are the people who they need to go after first, the ones who can afford to pay the loans back but have made little to no effort to do so.
"EQUAL" Justice under the law, no matter if one can afford it or not.
The definition of "EQUAL" isn't ……. "Divergence" based on circumstances !