In 19 states, government agencies can seize state-issued professional licenses from residents who default on their educational debts. Another state, South Dakota, suspends driver's licenses, making it difficult for people to get to work.
Few people realize that the loans they take out to pay for their education could eventually derail their careers. But as debt levels rise, creditors are taking increasingly tough actions to chase people who fall behind on student loans.
Firefighters, nurses, teachers, lawyers, massage therapists, barbers, psychologists and real estate brokers have all had their credentials suspended or revoked.
Determining the number of people who have lost their licenses is impossible because many state agencies and licensing boards don't track the information. Public records requests by The New York Times identified at least 8,700 cases in which licenses were taken away or put at risk of suspension in recent years, although that tally almost certainly understates the true number.
Shannon Otto, who lives in Nashville, Tenn., can pinpoint the moment when she realized she wanted to be a nurse. She was 16, shadowing her aunt who worked in an emergency room. She gaped as a doctor used a hand crank to drill a hole into a patient's skull. She wanted to be part of the action.
It took years of school and thousands of dollars of loans, but she eventually landed her dream job in Tennessee, a state facing a shortage of nurses.
Then, after working for more than a decade, she started having epileptic seizures. They arrived without warning, in terrifying gusts. She couldn't care for herself, let alone anyone else. Unable to work, she defaulted on her student loans.
Otto eventually got her seizures under control and prepared to go back to work and resume payments on her debt. But Tennessee's Board of Nursing suspended her license after she defaulted. To get the license back, she said, she would have to pay more than $1,500. She couldn't.
"I absolutely loved my job, and it seems unbelievable that I can't do it anymore," Otto said.
With student debt levels soaring -- the loans are now the largest source of household debt outside of mortgages -- so are defaults. Lenders have always pursued delinquent borrowers; they file lawsuits, garnish their wages, put liens on their property and seize tax refunds. Blocking licenses is a more aggressive weapon, and states are using it on behalf of themselves and the federal government.
Proponents of the little-known state licensing laws say they are in taxpayers' interest. Many student loans are backed by guarantees by the state or federal government, which foot the bills if borrowers default. Faced with losing their licenses, the reasoning goes, debtors will find the money.
But critics from both parties say the laws shove some borrowers off a financial cliff.
Tennessee is one of the most aggressive states when it comes to revoking licenses, records show. From 2012-17, officials reported more than 5,400 people to professional licensing agencies. Many lost their licenses. Some, like Otto, lost their careers.
"It's an attention-getter," said Peter Abernathy, chief aid and compliance officer for the Tennessee Student Assistance Corp., a state-run commission that is responsible for enforcing the law. "They made a promise to the federal government that they would repay these funds. This is the last resort to get them back into payment."
In Louisiana, the nursing board notified 87 nurses last year that their student loans were in default and that their licenses would not be renewed until they caught up on their payments.
Eighty-four paid their debts. The three who did not are now unable to work in the field, according to a report published by the nursing board.
Two years ago, South Dakota ordered officials to withhold various licenses from people who owed the state money. Nearly 1,000 residents are barred from holding driver's licenses because of debts owed to state universities, and 1,500 people are prohibited from obtaining hunting, fishing and camping permits.
"It's been quite successful," said Nathan Sanderson, director of policy and operations for Gov. Dennis Daugaard.
But Jeff Barth, a commissioner in South Dakota's Minnehaha County, said the laws were shortsighted and that it was "better to have people gainfully employed."
In a state with little public transit, people who lose their driver's licenses often can't get to work.
"I don't like people skipping out on their debts," Barth said, "but the state is taking a pound of flesh."
In some states, the laws are unused. Hawaii has a broad statute, enacted in 2002, that allows it to suspend vocational licenses if borrowers default on student loans. But the state's licensing board has never done so, said William Nhieu, a spokesman for Hawaii's Department of Commerce and Consumer Affairs. He said no state or federal student loan agencies have given it the names of delinquent borrowers.
Officials from Alaska, Iowa, Massachusetts and Washington also said their laws were not being used. Oklahoma and New Jersey eliminated or defanged their laws last year, with bipartisan support.
SundayMonday on 11/26/2017