*** UPDATED x1 *** Question of the day
Monday, Nov 20, 2017 - Posted by Rich Miller
* The New York Times ran a story over the weekend entitled “When Unpaid Student Loan Bills Mean You Can No Longer Work.” The paper found that “Twenty states suspend people’s professional or driver’s licenses if they fall behind on loan payments.” Illinois is one of them…
Fall behind on your student loan payments, lose your job.
Few people realize that the loans they take out to pay for their education could eventually derail their careers. But 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 nearly impossible for people to get to work.
As debt levels rise, creditors are taking increasingly tough actions to chase people who fall behind on student loans. Going after professional licenses stands out as especially punitive.
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. […]
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.
Illinois’ revocation law was passed in the 1980s, according to the NYT.
* JB Pritzker is out with a response…
“The disturbing practice of revoking professional licenses of residents who fall behind on student loans must come to an end,” said JB Pritzker. “State agencies stripping Illinoisans of their licenses is morally repulsive and runs counter to our obligation to help families thrive. It’s time to put our government back on the side of working families, and that means fighting to protect their futures. As governor, I will bring an end to this practice.”
* The Question: Should Illinois continue revoking professional licenses for falling behind on student loan debt, or should the practice be stopped? Take the poll and then explain your answer in comments, please.
free polls
*** UPDATE *** ISAC…
Hi Rich—
We also noted the NY Times article this weekend regarding revocation of professional licenses for non-payment of student loan debt, as well as your related Question of the Day. We wanted to let you know that, at least with respect to the Illinois Student Assistance Commission, since 2015 the agency has no longer reported information on student loan defaults to the Illinois Department of Financial and Professional Regulation to request that a license be blocked or suspended.
Please feel free to contact me if you have any questions.
Best regards,
Lynne Baker
Managing Director of Communications
Illinois Student Assistance Commission
- Chicago 20 - Monday, Nov 20, 17 @ 1:51 pm:
Voted no.
It’s unreasonable and strictly punitive.
- blue dog dem - Monday, Nov 20, 17 @ 1:51 pm:
Stupidist thing I have ever heard of. Oh! I take that back. The stupidest thing is charging 7x over prime.
- Perrid - Monday, Nov 20, 17 @ 1:52 pm:
Of course it should stop. Anyone who thinks taking away someone’s ability to make money will make them cough up the dough is an idiot. Sorry for the language but it’s true. I’m not even gonna talk about the obvious moral failings, or the semi-corruption of the state being the loan agency’s enforcer, let’s just focus on how very, very stupid the very premise itself is.
- Honeybadger - Monday, Nov 20, 17 @ 1:54 pm:
Absolutely counter-productive. How about lowering the interest rate being charged?
- Retired Educator - Monday, Nov 20, 17 @ 1:54 pm:
Let me get this straight, if you lose your job, and can’t pay your loan, you may lose the license you need to get another job in your profession. This is really a special kind of stupid.
- A Jack - Monday, Nov 20, 17 @ 1:55 pm:
Stop, it’s the modern version of debtor’s prison.
- pawn - Monday, Nov 20, 17 @ 1:58 pm:
Stop. So many people ended up with student loan debt without fully understanding the implications, persuaded by questionable marketing tactics. I agree with A Jack — this is like debtor’s prison.
- Ron - Monday, Nov 20, 17 @ 1:58 pm:
Just when I thought Illinois couldn’t be anymore backwards….
- ughhh - Monday, Nov 20, 17 @ 1:59 pm:
Blue Dog Dem and Perrid are both spot on -
This is counter productive, and the feds should allow borrowers to refinance at a lower rate.
- NoGifts - Monday, Nov 20, 17 @ 2:00 pm:
Combine that with the new tax proposal to tax tuition waivers for graduate students and probably scholarships.
- Shemp - Monday, Nov 20, 17 @ 2:00 pm:
At one point do you get held responsible for a loan you took? There are restructures, deferments, graduated payment plans, etc. No reason someone with a professional license shouldn’t be capable of repaying a loan he or she took out (unless of course, he/she took out a crazy high loan amount to get a degree that didn’t have an equally high return, which is still not everyone else’s fault).
- Anonymous - Monday, Nov 20, 17 @ 2:01 pm:
*At what point
- Anonymous - Monday, Nov 20, 17 @ 2:01 pm:
For decades paying off student loans was a joke. Then it got tougher on non-payment. The question is: did the get tough policy have the intended effect? What was the statistical/monetary improvement, if there was one? What is the grace period between non payment and revocation? How many ‘chances’ does a person have before the ax comes down. Pritzkers answer is a typical political left response: “Education should be free for everyone”, if he’s saying never force repayment of a loan. Does he feel the same about, say,
No payment of a weeks stay at Hyatt. BS Pritzker
- Colin O'Scopey - Monday, Nov 20, 17 @ 2:05 pm:
It’s like locking up someone for not paying child support. How can someone pay child support if they are not able to earn? There must be a better way, perhaps garnisheeing pay?
- Ducky LaMoore - Monday, Nov 20, 17 @ 2:05 pm:
Absolutely it should stop. If you have fallen behind, how are you going to get even again if you can’t practice your profession? Silly silly. But I do see a flip-side where some individuals may just stop paying even though they have the means. There has to be a way to remedy that situation. But suspending licenses isn’t it.
- Flynn's Mom - Monday, Nov 20, 17 @ 2:05 pm:
I voted stop.It seems like these are predatory loans. They will never get paid back if people can’t work.
- Louis G. Atsaves - Monday, Nov 20, 17 @ 2:07 pm:
Voted to stop. Making things harder for debtors to repay isn’t a solution
- Big Joe - Monday, Nov 20, 17 @ 2:12 pm:
Voted to STOP. GArnishing wages seems like a much better idea. Allow for refinancing at a lower rate should be allowed as well.
- Aldemuvs - Monday, Nov 20, 17 @ 2:14 pm:
I agree with Shemp, the Regulators aren’t notified until all other attempts are exhausted and usually the licenses are not taken away if a plan is reached. Also, this is written in many of the Acts. Hard to be a “professional” if you can’t at least make arrangements to pay your debts.
- Nortorious RBG - Monday, Nov 20, 17 @ 2:14 pm:
Stop. This policy doesn’t take into account that wages have stagnated, the cost of higher education has exponentially increased, and the high interest rates on student loans. Taking away someone’s professional license is not going to get them out of default - if they don’t have the money to pay the debt *with* a license, they certainly won’t have the money without it.
- Anon III - Monday, Nov 20, 17 @ 2:18 pm:
Ducky LaMoore @ 2:05 pm: ===There has to be a way to remedy that situation. But suspending licenses isn’t it.===
How about Debtors Prison with work-release?
- IllinoisBoi - Monday, Nov 20, 17 @ 2:19 pm:
And what happens when people like Trump default on loans? They sic expensive lawyers on their creditors and sue THEM for “predatory lending practices.” And so it goes.
- rivvedup - Monday, Nov 20, 17 @ 2:21 pm:
There has to be some kind of enforcement mechanism once the debtor is truly a deadbeat. Just like with child support, there are “professionals” who will refuse to pay with plenty of cash available. Suspending licenses is supposed to be a wake-up call for the players of the system that fun time is over.
- Anon - Monday, Nov 20, 17 @ 2:22 pm:
“What’cha doing?”
“Moving to a state that will let me be a teacher, doctor, etc.”
- Henry Francis - Monday, Nov 20, 17 @ 2:23 pm:
I don’t think the law goes far enough against these deadbeats. Why not go all the way and just repo the education. /s
- Ducky LaMoore - Monday, Nov 20, 17 @ 2:24 pm:
===How about Debtors Prison with work-release?===
How about some form of means-testing to suspend licenses? But that can get burdensome. I really don’t know what a good answer is. But suspending licenses no matter the situation seems like a poor, albeit simple, choice of policy.
- slient majority - Monday, Nov 20, 17 @ 2:29 pm:
usually you get a six month pass before payments are due. But then you get introduced to the world of compound interest. Let’s add to that trying to support a family with rent, utilities and such. Yes I know you’ve heard it all before, so tell me how you are to come up with over $100K (latest U of I priced at between $30-$35K per year say $120K total) when your starting pay may only be $35K gross…. How long can you eat beans and rice or peanut butter as your “consolidated” debt grows upwards of 6-7%… Oh yeah and try to feed little ones who don’t understand Not until payday….
- blue dog dem - Monday, Nov 20, 17 @ 2:30 pm:
Just wondering. wells Fargo can charge 9.9% on a student loan. When things don’t go their way, they can ask states to threaten a persons chance to earn a living. When wells fargo pulls a criminal act, they layoff a bunch of people to pay their piddly fine. How come nobody pulls their liscence?
- Put the fun in unfunded - Monday, Nov 20, 17 @ 2:32 pm:
Voted stop. Student loans are already nondischargeable in bankruptccy under almost all circumstances, so the creditors already have a leg up. That is a tradeoff - it lowers rates for all borrowers b/c young borrowers can’t easily escape the debt trap through bankruptcy. But, it also saddles borrowers with debts they can’t escape and drives up higher ed costs by making credit more easily available. It might be a good idea to cap then gradually reduce the non-dischargeable amount to deter lenders from loaning on bad risks.
- a drop in - Monday, Nov 20, 17 @ 2:33 pm:
How about bankruptcy like everyone else can do? Why are student loans different than all other debt?
- Name Withheld - Monday, Nov 20, 17 @ 2:34 pm:
This is one of those cases where a law has outlived the circumstances that led to its creation. It may have made sense back in the 80s. Today - it’s unnecessarily punitive. It’s like being told “if you don’t stop crying, I’ll really give you something to cry about.”
- Ron Burgundy - Monday, Nov 20, 17 @ 2:46 pm:
It should stop, at least for people who fall behind but continue paying. Stop paying completely and it might be a different story unless the person is out of work.
- A guy - Monday, Nov 20, 17 @ 2:48 pm:
I voted no because it’s counterproductive to the goal, but I do understand the problem. It would seem a reasonable % of wage garnishment would be a better alternative.
- Earnest - Monday, Nov 20, 17 @ 2:55 pm:
I voted stop. Diminishing a person’s ability to earn money in order to get them to pay out more on a loan makes no sense. The state has better things to do. Let the holders of the loans go after garnishments.
- JohnnyPyleDriver - Monday, Nov 20, 17 @ 2:57 pm:
Here are a couple crazy ideas:
Do more to make college free for more people. Tie it to achievement or offer it for community colleges only, or find whatever scheme works for your ideology, but make higher education free for more people.
Do a better job of tying the debt (or free college) to the projected growth of jobs. Community colleges create job programs based on the need. Student debt should be meted out in some similar fashion.
Mandate training for potential borrowers. As an 18 year old my parents and counselors put lots of forms in front of my face and told me to click and sign, but I never got a lesson in interest rates until I stared down the barrel of $90k in debt. 2 years to go till they’re paid off, and I’ll never understand how it was so easy for me to stumble backwards in to that much debt. WOuld love to have a bigger family right now, but student debt has made that an impossibility. Never would have guessed this would be the case. 15 years ago all the adults in my life told me student debt was the easiest thing in the world to deal with.
- logic not emotion - Monday, Nov 20, 17 @ 2:59 pm:
Think revoking should be an option; but the very last one. There is probably some rich graduate out there that has chosen not to pay just because. With that exception, should first try to work with and establish some type of payment plan, career counseling, etc..
Spent part of this morning reviewing a bunch of applications. Several people with bachelors degrees on up to a doctorate degree applying for a job that pays about 50% more than minimum wage. How much responsibility should “the system” shoulder for not guiding college students into more marketable / higher paying degrees and how much should the student shoulder for not doing their research or being more pragmatic about his/her career choices?
It is almost as if someone should calculate a net present value based upon average salaries and work span for each degree / each college and then require universities to post that with their curriculum / recruitment materials. The rate of return on that medical / engineering / computer degree is probably going to be a whole lot higher than that psychology / family consumer science / liberal arts one yet the debt will be about the same.
- Boone's is Back - Monday, Nov 20, 17 @ 3:01 pm:
Hard no.
It’s funny how student loans were dischargable in bankruptcy when most of these lawmakers needed them. This is draconian.
- IllinoisCitizen - Monday, Nov 20, 17 @ 3:01 pm:
a drop in @ 2:33 pm is right — why should Donald Trump be able to discharge his debt — or at least restructure it — in bankruptcy, but student loan is somehow “different” from other debt. Someone once said it is because it is impossible to “take something” from education — but seriously, how much property are businesses/people allowed to retain as they enter Chapter 11 or 13?
ESPECIALLY if you are now going to charge me as income for a tuition waiver/benefit AND eliminated student loan interest deductions, then you might as well simply make this a debt that can be managed like ANY OTHER DEBT.
- Anonymous - Monday, Nov 20, 17 @ 3:03 pm:
Talk to Dick Durbin. He preaches reforms with student loans but never points out the federal government makes billions and billions in interest from these loans. He had the opportunity for years to do reforms but never did, DD loves those high interest rates.
- Nortorious RBG - Monday, Nov 20, 17 @ 3:03 pm:
=== - a drop in -
How about bankruptcy like everyone else can do? Why are student loans different than all other debt? ===
Student loan debt may not be discharged through bankruptcy without proving to a federal judge that the borrower suffers from an “undue hardship.” Generally, they’re only ever discharged when the borrower suffers some sort of hardship that would physically prevent them from working ever again.
- Mama - Monday, Nov 20, 17 @ 3:05 pm:
I voted Heck NO! Taking away people’s jobs and transportation makes zero sense. No job and no means of transportation equal loans having a zero chance of being pay off.
If would be better to reduce one’s pay for the amount of the monthly loan payments.
- mama - Monday, Nov 20, 17 @ 3:10 pm:
It would make a heck of a lot more sense to reduce one’s pay each month for the student’s loan. The way it is now leaves no means to earn money to make the loan payments.
- Anotheretiree - Monday, Nov 20, 17 @ 3:11 pm:
No.., this seems obvious…This is as bad as the GOP Tax plan that removes the deductibility of student loan interest..
- IllinoisBoi - Monday, Nov 20, 17 @ 3:23 pm:
Another example of how the rich get out of debt: Jeff Parson’s failed company, THR & Associates, had a personal and corporate debt obligation of $57 million, of which only a fraction has been paid back — including $12 million owed to former employees. Parson’s punishment? “Parsons is paying $500 a month toward the overtime settlement after convincing a federal judge he could not afford higher payments.”
http://www.sj-r.com/news/20170703/pieces-of-jeff-parsons-company-assets-continue-to-surface
- Doug - Monday, Nov 20, 17 @ 3:36 pm:
Maybe do away with so many professional licensees to begin with
- Swift - Monday, Nov 20, 17 @ 3:43 pm:
I’ll take a shot at arguing for continuing the practice with a comparison to license suspension for delinquent child support, which I don’t think many would argue against. If a parent fails to pay child support the taxpayer is often on the hook for paying for Medicaid, TANF, etc., thus using taxpayer money for money a parent is required to pay. Same thing with government guaranteed loans, default on these loans means we taxpayers are on the hook for paying the lender so why should the borrower receive the benefit of a state issued professional license. I realize it is harsh, but there has to be some repercussion for defaulting.
- Ahoy! - Monday, Nov 20, 17 @ 3:43 pm:
Stop, what does the State of Illinois gain by doing this? Seems like they would loose workforce.
- Anyone Remember - Monday, Nov 20, 17 @ 4:02 pm:
Stop. The law dates to the era when you could make enough working fast food during the summer to pay for next year’s tuition.
- Claude Peppers - Monday, Nov 20, 17 @ 4:29 pm:
Did I miss physicians being suspended for this infraction? Did the AMA lobby against suspending the doctor
- Chicago Guy - Monday, Nov 20, 17 @ 4:38 pm:
We have stacked the deck against younger people with student loans. There is NO reason they should pay such high interest rates with no possibility of the loans being forgiven.
- James - Monday, Nov 20, 17 @ 4:50 pm:
You think you go to college to get ahead yet for many students, college helps them stay behind their peers in employment opportunities and earnings, forces some to move out of state. Easy to obtain student loans–a lenders’ racket. Repeal.
- blue dog dem - Monday, Nov 20, 17 @ 4:54 pm:
To the update. Thank you.
- Arthur Andersen - Monday, Nov 20, 17 @ 5:14 pm:
I voted no. I was fortunate enough to go to undergrad on scholarships, but took out student loans to pay for grad school. This was in the 80’s, but I remember all the consequences of default listed on the paperwork. “We will notify your employer” was the one that bothered me.
Good for ISAC for their action.
- Matt Vernau - Monday, Nov 20, 17 @ 6:29 pm:
I voted to continue the practice. ” They rented the money didn’t they” first of most of these people have what amounts to an outstanding car loan. Secondly it was the Clinton administration that privatized this system and created this really odd business model. Yes interest rates should be lowered but this system needs to be rethought so that the loans are going out to those who can/will repay them with less need for
repayment to be pursued by negative means.
- Ferris Bueller - Monday, Nov 20, 17 @ 9:43 pm:
The ISAC statement is half true, while they may not refer cases for suspension where a professional licensed is behind on their loans, IDFPR still will not issue a license to someone when they are delinquent to ISAC. IDFPR still suspends for being behind in child support or taxes (perhaps a slightly different discussion).
- cc - Tuesday, Nov 21, 17 @ 12:03 am:
I think that parents should try to pay tuition and books to the extent that they sacrifice some fun stuff themselves so no student loans or small student loans needed. Then if student loans needed, help kids out when and if able unless kids take advantage then quick change of plan. Has worked for 3 generations so far.