Categories: Student Loans

States Stack the Deck Against Professionals with Student Loan Debt

The professional license that you were counting on to improve your life instead could be taken away simply by a whim of the federal government. Acting as the bagman for federal student loan collection agencies, 20 states will seize or revoke state-issued professional licenses from people who are in default on their student loan debt if the federal government asks them to do so. Other states will also seize a debtor’s driver’s license, which has the effect of making it next to impossible for people to get to the job that would enable them to pay off their student loan debt in the first place.

These punitive measures affect everyone from lawyers and doctors to teachers and firefighters, even barbers and massage therapists. In fact, the New York Times identified nearly 9,000 cases in which licenses were used as both stick and carrot, though the newspaper acknowledges that the tally is almost certainly an undercount.

The following states are the ones that will suspend or revoke licenses over student loan debt at the request of the federal government:

  • Alaska
  • Arkansas
  • California
  • Florida
  • Georgia
  • Hawaii
  • Illinois
  • Iowa
  • Kentucky
  • Louisiana
  • Massachusetts
  • Minnesota
  • Mississippi
  • New Mexico
  • North Dakota
  • South Dakota
  • Tennessee
  • Texas
  • Virginia
  • Washington


There has been very little change since in these laws, although Montana, Oklahoma, and New Jersey repealed or adjusted have professional license suspensions from their laws since a previous report in 2015. Montana likewise repealed the suspension of driving licenses. Iowa, though it was considering a repeal, did not manage to get the law to the launch pad.

A Quick History of the Student Loan Industry

Rolling up on the 2020s, we are almost 55 years into federally guaranteed student loan program and nearly 30 into the Federal Credit Reform Act of 1990. The Federal Credit Reform Act required subsidy estimates for all government loans including student loans and in 1994 the Department of Education was barred from encouraging colleges and universities to switch to Direct Loans. These types of loans began to drop in number. Why?

In 2003 U.S. News and World Report investigated wrote a now-removed article that stated its findings. The student loan industry wanted a bigger piece of the pie and “used money and favors, along with their friends in Congress and the Department of Education, to get what they wanted.” The financial crisis of 2006 saw Direct Loans fall to the lowest point ever until banks who had gone on a lending spree with subprime mortgages suddenly had no more money to lend. They began to bail on student lending, and Direct Loans grew again. Since 2010 all federal student loans are made directly by the federal government, eliminating subsidies previously paid to banks in the program to the tune of nearly $70 billion per year.

All Stick and No Carrot

Unfortunately, the loans that were supposed to make student’s futures brighter have instead choked the economy as graduates are unable to find a way up the ladder. Boomers, affected by the financial crisis have been unable to retire and have created a bottleneck by holding onto jobs well past what used to be considered the retirement age of 55. GenX’ers have had stagnant advancement opportunities, and Millennials have had to put off benchmark events such as marriage and parenthood, automobile and even home ownership. The Generation Z kids are just graduating, and with the highest load of student loan debt ever. In fact, college and university enrollments are plummeting due to 1) a dip in the birth rate during the “dot-com bubble,” and 2) deciding that assuming five to six figures of debt is not in one’s best financial interest, and 3) government loan forgiveness programs are not worth the paper they’re written on.

On top of this, federal and state governments and loan student loan debt have decided on an “all stick and no carrot” approach to getting students to pay back their student loan debt by treating them like criminals even as loan servicers blatantly break the law. Delinquent and defaulted borrowers face being sued, having tax refunds attached, wages garnished, liens against cars and homes, and can even be jailed under certain circumstances. Losing a livelihood on top of these measures – and the means to pay back the loan in the first place – is just stacking the deck further against an already burdened borrower. If a debtor takes out a payday loan to get their license back, they are only being pushed into a cycle of debt from which they may not be able to escape. Worse, if the loss of their license has caused them to lose their employment, there may be a long time between jobs.

Does punishing debtors work? There’s not a lot of evidence for that. Close to half of outstanding student debt is for FFEL loans. How much defaulted debt is there? Roughly $144 billion. In other words, there’s almost enough defaulted student debt to purchase a fleet of 330 Airbus A380s. In the face of all this, Education Secretary Betsey DeVos has rolled back regulations from the Obama Administration that held companies accountable for the quality of their loan servicing and charged them with outreach to borrowers in danger of defaulting. The loan servicing companies complained that doing their job was too expensive and the regulations confusing and inconsistent.

Getting on Top of Student Loan Debt

Sometimes getting on top of student loans is a lot of hard work for one person. If you are short on resources, it helps to at least have some legal advice to learn what avenues are open to you. Deal with a law firm that has dealt with debt in many forms, and helped people just like you to survive and thrive. From loan consolidation to loan forgiveness and forbearance, we have a lot of experience in getting people on top of their debt issues and back to the dream that they pursued by getting an education. Our Fort Lauderdale and West Palm Beach offices are open seven days a week, and your initial consultation is free. Call today and start getting out from under your debts.

About Chad Van Horn

Chad T. Van Horn, Esq. is a South Florida business leader and founding partner attorney of Van Horn Law Group, P.A. Through a combination of dedicated philanthropy, spirited entrepreneurship and legal expertise, he applies his resources and network to helping people. Learn more about Chad Van Horn

Published by
Chad Van Horn

Recent Posts

Marijuana Bankruptcy: What You Need to Know

People consider the law to be a large and unchanging object, much like a monument. However, the law is much… Read More

5 days ago

Talk to Our Team – Working at Van Horn Law Group

Want to hear more about the benefits of working at Van Horn Law Group? Read More

3 weeks ago

What Debt Does Bankruptcy Not Cover?

So, what debt does bankruptcy not cover? Let’s take a look at these, as well as the factors that influence… Read More

4 weeks ago

Do Judgments Ever Go Away?

Having a judgment against you can be very stressful. When dealing with one, it can be easy to wonder -… Read More

1 month ago

What to Know About a Motion to Redeem a Vehicle in Chapter 7 Bankruptcy

One of the most frightening prospects of bankruptcy for many people isn’t what stands to be gained - as in… Read More

1 month ago

Is there a Statue of Limitations for a Judgment Against Me?

Twenty years from the formal date of entry of the judgment against you, your outstanding debt is still actionable from… Read More

2 months ago