When student loan borrowers end up defaulting on their loans, aggressive actions have been taken against them in the form of revoking their professional licenses. According to the article “When Unpaid Student Loan Bills Mean You Can No Longer Work,” there are 19 states that 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.”
However, after a story of a Tennessee nurse went viral after she lost her license due to her defaulting on her loans, a bill was introduced in the state to prevent this from happening to others. It was co-sponsored by Senate Minority Leader Lee Harris, D-Memphis, and Rep. Ron Lollar, R-Bartlett according to a report in the Tennessean.
As described on the state government website, the bill would “establish a medical hardship exemption to the requirement that certain licensed professionals who are delinquent or in default on student loan payments have their licenses revoked.” However, the bill would not affect the amount of debt that is owed.
After passing the Senate floor, the House version went before the House Business and Utilities Committee, where it was recommended for passage and sent on to the Calendar & Rules Committee. For a full history of the bill’s movement through the process, you can visit the state government website here.
With student loan debt being the highest household debt behind mortgage debt at 10.6%, mortgage debt sits at 71.4% of household debt according to this New York Times report, the problem is of great concern. According to the above-mentioned New York Times article, those that are in favor of taking away the license of defaulters argue that it is in the taxpayer’s interest. If one does default, the state or federal government will have to eat the bill.
By threatening these individuals with the loss of their licenses, they believe that this will force them to come up with the money to pay for the debt. However, if they are unable to, and they lose their licensing, this leaves them with no job to pay back the debt. Tennessee lawmakers are aiming to address this issue in their state, and perhaps will lay the foundation for a trend for other states to follow. In doing so, it will help defaulters keep their jobs so that they can afford to get back on track with payments.
Understanding the process of how a bill gets passed can be over the head of the average Tennessean. For a rundown of the abbreviations used in the process on the state government websites, as well as how the bill ends up becoming state law, you can refer to the above hyperlinks.