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Mon Nov 20, 2017, 10:29 AM

The government is seizing licenses of people who default on student loans

Fall behind on your student loan payments, lose your job. Few people realize that the loans they take out to pay for their education could eventually derail their careers. But in 19 states, government agencies can seize state-issued professional licenses from residents who default on their educational debts. Another state, South Dakota, suspends driver’s licenses, making it nearly impossible for people to get to work.

As debt levels rise, creditors are taking increasingly tough actions to chase people who fall behind on student loans. Going after professional licenses stands out as especially punitive. Firefighters, nurses, teachers, lawyers, massage therapists, barbers, psychologists and real estate brokers have all had their credentials suspended or revoked.

Determining the number of people who have lost their licenses is impossible because many state agencies and licensing boards don’t track the information. Public records requests by The New York Times identified at least 8,700 cases in which licenses were taken away or put at risk of suspension in recent years, although that tally almost certainly understates the true number.

Shannon Otto, who lives in Nashville, can pinpoint the moment that she realized she wanted to be a nurse. She was 16, shadowing her aunt who worked in an emergency room. She gaped as a doctor used a hand crank to drill a hole into a patient’s skull. She wanted to be part of the action.

It took years of school and thousands of dollars of loans, but she eventually landed her dream job, in Tennessee, a state facing a shortage of nurses. Then, after working for more than a decade, she started having epileptic seizures. They arrived without warning, in terrifying gusts. She couldn’t care for herself, let alone anyone else. Unable to work, she defaulted on her student loans.

Ms. Otto eventually got her seizures under control, and prepared to go back to work and resume payments on her debt. But Tennessee’s Board of Nursing suspended her license after she defaulted. To get the license back, she said, she would have to pay more than $1,500. She couldn’t.

“I absolutely loved my job, and it seems unbelievable that I can’t do it anymore,” Ms. Otto said.

With student debt levels soaring — the loans are now the largest source of household debt outside of mortgages — so are defaults. Lenders have always pursued delinquent borrowers: by filing lawsuits, garnishing their wages, putting liens on their property and seizing tax refunds. Blocking licenses is a more aggressive weapon, and states are using it on behalf of themselves and the federal government.

https://www.nytimes.com/2017/11/18/business/student-loans-licenses.html

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Reply The government is seizing licenses of people who default on student loans (Original post)
ansible Nov 2017 OP
Igel Nov 2017 #1

Response to ansible (Original post)

Mon Nov 20, 2017, 11:59 AM

1. The government tends to look after its own interests.

It's supposedly the fiduciary for those who pay taxes. It makes loans, and like any other lender seeks to find ways to make sure it gets those loans repaid.

There are two telling things in that article that make me wonder what's not said elsewhere. The first is the single mother with a decent salary and large payments. If I had one kid and her income, I suspect I'd find a way to make the payment she was expected to make. It might not have been easy, but possible. I'll come back to this.

The second is the case of the woman who complained that her license was suspended for a week after she had received the notification and responded to it promptly. The suspension was an administrative mistake--but in itself that says that unless mistakes are the norm there was a way to avoid suspension. The requirement is to make "regular payments," not the "originally assessed payment," and when I was repaying my student loan I was constantly told that if I needed to renegotiate the amount of my monthly payment I could call, email, or write various places.

Going back to the first "telling thing," I find that the reporter is being grossly negligent if s/he failed to report that the woman responded to the notice that she would be under penalty if she didn't make payments, and doubly negligent if the woman had tried to negotiate a lower monthly payment and wasn't successful because of administrative technicalities. (And triply so if she worked at a Title I school and didn't try to get covered by loan forgiveness programs. Those may be discontinued now or being discontinued now, but until recently they were very much in force if you taught at a Title I school. I've known teachers who worked at such schools for exactly the amount of time necessary for loan forgiveness.)

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