In addition to causing irreparable damage to their credit scores, student loan borrowers who default on their debts face a much more devastating and counter-intuitive danger: the lost of their driver’s or occupation licenses, including those used by nurses, doctors, teachers and emergency personnel
Bloomberg reports that 22 states currently have laws on the books giving authorities the power to revoke these privileges from consumers who are more than 270 days behind on paying their student loans.
While it might make sense to punish borrowers who don’t keep up with their obligations to repay debts, taking away their ability to get to work or to actually perform their job duties, seems to perpetuate an environment in which consumers already have few options to get out of debt.
With delinquencies and default rates on the rise, according to reports from the Federal Reserve Bank of New York, more and more consumers face default and the real possibility of losing their licenses. Last year, reports found that nearly one in three borrowers are at least 90 days behind on their student loan payments.
According to Bloomberg, since 2007 Montana has suspended the driver’s licenses of 92 people, while Iowa suspended the licenses of more than 900 residents. The Iowa licenses were reinstated in 2012 after the state moved its student loan portfolio out of state.
As for occupational licenses, Bloomberg found that more than 1,500 professional licenses for nurses, teachers and others have been revoked in Tennessee because of student loan defaults.
Student loan debt collectors say the threat of taking away consumers’ ability to legally drive or work often propels them to deal with their debt.
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Good.
ReplyDeleteGood?
ReplyDeleteThe unstoppable and very heavy hand of the government is now being used to collect debts over STUDENT LOANS from PRIVATE (!?) companies? Those companies took a risk, just like all other corporations that offer credit. Now, that risk has dramatically increased and they want the GOVERNMENT to save them now? I'll bet Visa would love to get in on THAT. And it probably won't be long.
You won't be cheering when car companies or the electric companies get to have your drivers license suspended for nonpayment.
And, what did you expect the debt collector to say? "....often propels them...." leaves out the ones who are now unable to get to work and go on the public dole. Or get evicted. Or lose their home. Or their car is repossessed.
The whole student loan scam is, well, a scam. Fix THAT.
And no, I don't have student loans and never did.
But I can surely recognize a rip-off overpriced con game.
Yawnnn pay ur bills lib.
DeleteEasy to say 12:43 since I'm sure all you have came from daddy. Your or your wife's. All these people on the shore with money and 75% of you didn't earn or make a damn thing. Your parents handed you the farm or the business.
DeleteConstriction at it's best.Colleges are being squeezed out with no help from the government.Can anyone but me see 2 ends playing against the middle here? A full court press is going on against traditional 4 year colleges and NO ONE is coming to their rescue.Every day another opposing force surfaces.Why not DISCOURAGE traditional colleges to high school graduates and then let THEM choose their path.That way they can't say they weren't told.
ReplyDelete