States Review Laws Revoking Licenses For Student Loan Defaults Montana could soon dial back laws that allowed defaulters to have their professional and driver's licenses revoked after failing to pay back debt.

States Review Laws Revoking Licenses For Student Loan Defaults

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Many people work for decades to pay off their student loans, but for some, if they don't pay on time, it can actually keep them from working. There are 22 states where if someone falls behind on payments, they can have their professional licenses - the ones they need to do jobs like nursing or engineering - suspended or revoked. A couple of states can even take away driver's licenses. One state is rolling those sanctions back as Montana Public Radio's Eric Whitney reports.

ERIC WHITNEY, BYLINE: Clementine Lindley said she had a great college experience, but if she had it to do over again, she probably wouldn't pick an expensive private school.

CLEMENTINE LINDLEY: I could actually buy a small home in Helena, Mont., with the amount of debt that I graduated with.

WHITNEY: Fresh out of school, Lindley says there were times when she had to decide whether to pay rent, buy food or make her student loan payments.

LINDLEY: There was a time where I defaulted on my student loans enough that I never was sent to collections, but just long enough to, honestly, ruin my credit.

WHITNEY: That was motivation enough for Lindley to figure out ways to make her payments. But had she defaulted longer, the state of Montana could've revoked her driver's license. When Democratic state Representative Moffie Funk learned that that was a potential consequence, she says she felt...

REPRESENTATIVE MOFFIE FUNK: Embarrassment, I would say. I think it is demeaning. I think it is unnecessarily punitive.

WHITNEY: Not to mention, she says, counterproductive. If the goal is to get people to make loan payments, taking away their ability to drive to work just makes it harder for them to make money, especially in rural states.

FUNK: There isn't public transportation, or very little. You know, people need cars in Montana.

WHITNEY: So Funk wrote a bill ending the state's right to revoke professional driver's licenses because of student loan defaults. Dustin Weeden, a policy analyst at the National Conference of State Legislatures, says lots of states passed license revocation laws for student loan defaulters in the 1990s and early 2000s, back before the federal government started taking on a bigger role in lending to students.

DUSTIN WEEDEN: Because states were essentially the direct lenders to students, many states had large loan portfolios.

WHITNEY: Weeden says tying student loans to licenses, which often have to be renewed every couple of years, created a process to find people when they defaulted.

WEEDEN: The state loan authorities would report anybody who had defaulted on loans to all the licensing entities around the state. Then it's a way for a state to identify that person and help them really get into repayment.

WHITNEY: But some policymakers want to retain consequences for defaulting, like Montana Republican State Sen. Dee Brown.


SENATOR DEE BROWN: Because I think that this is one of the sticks that we can use over a kid who is not paying their student loans. It's a stick to get their attention. And what a better way than their driver's license?

WHITNEY: There are plenty of sticks already, like having your wages garnished and your credit ruined, says Clementine Lindley, who's been in student loan default.

LINDLEY: Removing my driver's license, you've just created one more barrier for me being a productive citizen in my community.

WHITNEY: The Montana bill to take away license revocation as a consequence for student loan default passed with bipartisan support. That wasn't the case in Iowa. An attempt to repeal a similar law there failed earlier this year. For NPR News, I'm Eric Whitney in Missoula.

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