When Unpaid Student Loan Bills Mean You Can No Longer Work

Twenty states suspend people’s professional or driver’s licenses if they fall behind on loan payments, according to records obtained by The New York Times.


They should make their loan payments. I am not crying a river for anyone who borrowed money on favorable terms and doesn’t pay it back.

Or register for one of the many repayment plans available. People also risk their professional licenses here for not paying child support or other court ordered payments.

If someone is maliciously avoiding paying their debts, there should be penalties, but taking away someone’s ability to earn a living is not the right penalty. Once you start missing payments, student loan terms become very unfavorable very quickly, particularly with SallieMae and other private lenders


Presumably you mean that taking away someone’s ability to earn a living makes it more likely that the loan debt will never be able to be repaid. In this case, even if the delinquent debtor decides to stop being delinquent, s/he may not be able to earn enough to pay off the debt.

The case of the doctor refusing to pay off their medical school debt is usually trotted out, but may be apocryphal. I meant someone deciding that paying off loans was too much of a crimp on their lifestyle was abusing the system in a malicious fashion. I do not believe those cases are typical. Mostly it’s just people who can’t make ends meet for various reasons despite their best efforts.

I also meant with the link to point out that causing someone to lose income for not paying means the loan company can pile on penalties such that even when income is restored there is no way to discharge the debt. Private student loans companies have tremendous power over their “customers.”

Interesting article on backlog of student debt relief claims:
“…the Trump administration has allowed tens of thousands claims to pile up at the department without a single approval or denial in 10 months. It has failed to discharge the loans of some borrowers whose claims were approved before the department changed hands, according to the report. People familiar with the matter have told The Post there are at least 10,000 claims that have been recommended for approval, but department officials refuse to move forward as they contemplate ways to grant partial debt relief.”

So the federal government doesn’t process the request, and then the states take away the ability to drive?


It is a vicious circle; if you take away licenses and a person’s ability to work, then they have no way to trying to reduce their debt. I think that many people have struggles, fall behind and then the increased interest makes then feel as they are in a hole that they will never be able to get out of. The see what they owe (for the principal/interest/penalties) and in their heads the debt becomes insurmountable , making them feel like what’s the use.

I cry foul on the Veronica Martish story. I was in college in 1989 and used Sallie Mae for my senior year. Tuition was $1,000/semester at a state flagship. $8,000 for one year at a community college? If she could even get that much in loans, she was using loans to finance expenses beyond tuition and fees. And $8,000 doesn’t turn into $63,000 unless you just don’t pay. It takes 270 days to go in to default. There is still a level of personal responsibility. And I resent using a veteran to increase the guilt level associated with the story. She had GI Bill benefits for ten years post service unless she was discharged in a less than hours nor able status. I do hope they pass a bill that removes the ten year restriction but it was still a great option.

Are there no prisons? Are there no workhouses?

Sorry, I’m getting in the Christmas spirit a little early.

I also call b.s. The annual loan limit was $2,625 in 1989 (for freshman/sophomore - so for CC student). NO cost of attendance at any CC was $8,000 … so the school could not have certified a private loan for that much (schools can only certify up to COA, taking into account all other aid).

I saw a similar mistake in a Reader’s Digest article this month. The supposed federal loan debt borrowed by someone in the article was an impossible amount.

It’s fine to highlight the issues around student debt, but it’s important to do the proper research.

Oh, and for those who owe … I think it would be preferable to garnish wages than to remove the possibility of earning a wage. That is a bit of a “duh,” IMHO.

@kelsmom - this was SallieMae not Federal Direct Loan. Most of the debt horror stories are SallieMae rather than federal subsidized loans.

Schools were being paid bounties to send kids to a preferred private lender in the “bad old days” so students may not even have heard about their better options, and the fees that private lenders can add to “rehabilitated” loans are very real.

This policy makes about as much sense as debtors prison. Advice: move to a state that doesn’t have such policies.

@exlibris97 I was thinking the same thing. From reading the article, it sounds like Jersey may not have to worry about a nursing shortage for much longer if word gets out.

This policy makes about as much sense as debtors prison


That may depend on what the license allows (or requires) the licensee to do. A lawyer’s license allows and in many cases requires the attorney to have an escrow account and handle client funds. There is a good reason to not want those funds in the care of someone who owes a lot of money and doesn’t have a good history with money management.

And it seems to work. In the article it said that only 3 out of 87 didn’t pay their debts and lost their licenses in Louisiana. Other states say it works too. I worked in collections for many years, and people just will not pay until they are going to lose something important to them and it is often a car or snowmobile or boat. They will pay the bill of the thing they are about to lose, and the student loans (which allowed them to become licensed in the first place) will be the last bill paid, so therefore never paid. Threaten them with losing a driver’s license or a hunting license and that unsecured student loan suddenly has some importance and priority to be paid first. It is not possible to garnish the wages of some debtors because they have protections to wage amounts and the salary never hits a bank account (because it would be garnished if it did) or they change jobs or bank accounts so often that the creditor can’t find them or their employers to issue garnishment orders.

You’d be surprised how many people CAN come up with a payment when something they really want depends on it. Clearly 84 nurses wanted to keep their licenses in Louisiana, so they came up with the money to pay their student loans. If those loans had been car loans, the lender would repossess the car if payments weren’t made. Student loans financed those nursing licenses. What else does the lender have to ‘repossess’ but the license?

Agree 100% pay your bills

Even if it wasn’t federal loans … schools can only certify COA for private education loans. I still find it impossible to believe that a student could get a private education loan for $8,000 in 1989 for a CC. While I realize many students borrow way too much, articles need to be factual in order for their research to be believable.

I worked in the business office of a cc and was shocked at some of the loans that showed up on students’ bills, way over tuition & fees and totally out of line with the degree they would end up with. At least for students with dependents, the COA seemed to include living expenses.

Many students at CCs are self-supporting non-traditional students, so it is not surprising that the cost of attendance would include living expenses, just like how the cost of attendance at residential four year schools does. Even students living with their parents still cost non-zero amounts of money for food, utilities, and commuting costs.

Of course, that does not necessarily mean that any given student at a CC (or other school) will be careful about taking out student loans that s/he can reasonably be expected to pay back after graduation.

Because I paid for them myself, I clearly remember the expenses for my state college in 1987. It was $300 per semester for tuition and $3,000 for room and board for the school year. How anyone could need $8,000 back in 1989 for a year at a community college - even including things like rent, food, transportation (remember gas at 99 cents a gallon?) and utilities - is beyond me.