January 12, 2015

Chris Hicks

Chris Hicks

These Two States Will Revoke Your License If You Can’t Pay Back Your Student Loans

Photo via Flickr
Photo via Flickr

Did you know that in two states not paying your student loans could mean your driver’s license can be revoked?

That’s the harsh reality for those who have had to borrow to pay for college in both Montana and Iowa, where there are laws that allow the state to take away your driver’s license for failure to pay back your student loans. For many working class families, losing the ability to drive can have dire consequences on employment, childcare and other core pieces of their daily lives. Both states have had these laws on the books for years, with hundreds of workers who have lost their ability to drive and earn a living, but they’ve largely gone unnoticed.

The Montana Department of Justice defines the sanction for borrowers who default on their student loans as an “indefinite suspension until student loan association notifies Motor Vehicle Division of compliance.” Iowa’s Department of Motor Vehicles says much the same, requiring the state “to suspend a person’s driver’s license upon receiving a certificate of noncompliance from the College Student Aid Commission in regard to the person’s default on an obligation owed to or collected by the commission.”

This isn’t the first time in recent history that the inability to pay off a student loan has haunted borrowers long after finishing school. In October 2010, 42 nurses in Tennessee had their licenses suspended for falling behind on their student loans. The Tennessee Department of Health claimed the suspensions marked a renewed effort to uphold a statute passed in 1999, which states that license penalties can be implemented in the event of defaults on loans. A troubling number of states, more than 15, have similar laws that allow states to suspend, revoke or refuse to certify professional or vocational licenses and, in some cases, impose a fine, when a worker defaults on student loans. These state laws can impact a wide range of workers, from teachers to attorneys.

These state laws are especially troubling in light of the December 2014 report by the Department of Education’s Inspector General, which found that the agency doesn’t have a comprehensive plan to prevent student loan defaults. In fact, they might be punishing debtors who otherwise didn’t know about loan repayment alternatives. The report indicated that the department “may have missed opportunities to identify risks, communicate with servicers, streamline activities and be more transparent,” among other shortcomings.

The irony, of course, is that punishing borrowers who get behind on their payments by revoking their ability to drive or preform their job just makes it harder for them to find full-time work or explore other debt solution options. The punishment actually makes it more difficult for borrowers to pay back their loans, perpetuating a cycle of poverty that could become impossible to escape.

If more states were to adopt laws like these, millions of student debtors could find themselves trapped. There are currently more than 40 million student loan borrowers, and more than 7 million of them are in default on their student loans (or 17.5 percent of all student debtors). It is now more imperative than ever that the Department of Education, and its servicers, find a way to curb student loan defaults as student debtors pay the price for their inaction.

This type of punishment is essentially creating modern debtors’ prisons for those who simply borrowed money to afford an education. Instead of offering retribution, our federal and state governments should be helping student debtors who are struggling with their debt burden find repayment options that prevent defaults that could cost them their livelihoods.

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  • Marta

    this is heartbreaking and sooooo wrong!

  • Damon Mason

    I have had the ability to operate a motor vehicle defrauded away from me not because of outstanding student loans but because of asshole parents. Iowa and Montana do not sound like places where I would want to attend college … heck, I have already started to question the wisdom of seeking tertiary education if it subjects you to having your life unjustly ruined this way.

    • Alan Batterman

      If you were over 18, I don’t see how your parents can do anything regarding your driver’s license. If you were under 18, you do need your parents’ permission to get and keep a driver’s license.

  • Alan Batterman

    SUCKS DEAD RATS. If someone cannot repay a loan, making it difficult for him to work is about as counterproductive as you can get.

  • nothinup

    The ONLY reason a drivers license should *ever* be revoked is if the driver poses a true danger to other drives. Unpaid debt needs to be settled up separately, especially if it is NON-DRIVER related!!! Driving has NOTHING to do with a dang educational loan!!! Gosh this peeves me the heck off.

  • TookieBrookie

    So, now these states are treating student loan debt in the same way states treat deadbeat dads? Limiting a person’s ability to earn income limits the ability to repay debt as a consequence of default. What is the goal of such policy that is not to encourage repayment and who benefits from such policies?

  • Dianne Kavon

    time for others to get their noses out of a person’s personal life. What the heck does a driver’s license got to do with student loans. Do they think it would force students to pay off their loans faster?? HELL NO!! With the side effects of the crap, these students will find ulterior methods of travel and then say take the load and stick it where the sun don’t shine since there is nothing left to do. Get your noses out of your asses and stick to what you do best, and it isn’t becoming a moron

  • Kayrenee

    My brother had a couple of kids with a woman he didn’t stay with and was slammed for child support. I’m not sure about other states, but here in Cali child support goes retroactive to when the custodial parent files. So, even though he worked and paid for his kids, he was hit with arrears on top of support. So naturally his license was revoked and he drives for UPS. He had to go to court and pay down a substantial portion of the arrears before his license was released. I know here the DMV likes to remind us that driving is a privilege – not a right. I say b.s. His JOB was to drive and he didn’t lose it due to anything driving related. Oh, and he was pretty annoyed when our state handed out drivers licenses like candy to illegal aliens. Such lunacy…

  • Guch

    If that is so, I would move to a jurisdiction with better public transit and bicycle infrastructure.

    • fratdawgg23

      Europe?

    • Magnus Thunderson

      And carry his 100 gallon tank of cleaning chemicals and all his brushes on his back for his detail business as he keep the cars as several car lots and one big RV dealer clean.

  • James

    REPUBLICAN LOAN COMPANIES GET THESE LAWS PASSED

  • http://billoffreedom.com billoffreedom

    Thats stupid if they can not drive to work then they cant hold a job and pay off the loan, what a dumb thing to do.

  • truth

    I can’t wait for the student debt bubble to collapse and take down all the loan companies with it. Then we can start over and make education a right like all other first world countries.

    • Magnus Thunderson

      I trade my disability for my wiped student loans in a heartbeat

  • Linda Gonzalez

    It’s just an other way our nation and those running it are in a long term plan of imprisoning all Americans. Only the rich and powerful will be able to have a say in our nation. The rest of the people will be under their power. This has happen because we have allowed it. Now we are being imprisoned for the smallest of reasons. Killed for no reason and our rights taken. Freedom to decide what to do with our own bodies, taken! Freedom of religion, taken, speech taken, The right to raise our children, taken. TAKEN, TAKEN, TAKEN! We may speak up for a few weeks but than we go back to our own little comfortable world and that is just the way they want it. We have no long term fight in us. They do! They have long term plans for us and they are not good! You can count on that!

    • Idaho_Dave

      American business has no long term plans for anything, and that is the real problem. US businesses are notorious for failing to do anything not directly related to next quarters profits (like capital investments, or employee training). And this is the thinking that some voters think will be grand when it bleeds over into our government via privatization.

  • Magnus Thunderson

    Just stupid in Florida non payment of child support does the same and a guy I knew had a wife who also worked and a child but he also had 3 more and the down turn bush cased to the economy crashed his income. So he pay what could but the state took his license away anyway and the result was he was out of work they lost there home so started work under the books for to nothing which caused there breakup as she went back to her mothers with there child and he did get picked up but now he was homeless so spend a couple of weeks in jail and released and had to move back in with his mother with all debt cleared

  • Swannyww

    unconstitutional. Who makes up this stuff? What kind of a country do we have that allows this.

  • Idaho_Dave

    You just THINK they wiped the debt out. With the precedence set by reactivating student loans whose statute of limitations had long expired, yours could just as easily come back.

  • Magnus Thunderson

    No they wiped out due to permanent disability

  • Idaho_Dave

    My point is, those who had student loans in the 70’s “wiped out” by the statute of limitations also were told their loans were gone. What really happened was they destroyed all payment records and kept the records of debt. When you are dealing with an organization that has no integrity and no time limits, you could easily be faced with those old loans again despite what they told you.

  • Magnus Thunderson

    back in 1991 they did remove statute of limitations and did not grandfather those who had previously had it so of course these loans reappeared just as it would for deadbeat dads who statute of limitations go into effect when the kid turns 18 but a TPD discharge has been a still a valid way to discharge your student loans the down side is you never be able to get a federal collage loan again

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