Wednesday, January 23, 2019

Student-loan defaulters can lose their professional licenses in some states: America's 21st century equivalent of debtors' prisons


Americans may think the days of debtors’ prisons are over--those dark, dank jails where English magistrates tossed delinquent debtors in the 18th century. Read Charles Dickens' Pickwick Papers or Patrick O'Brian's Reverse of the Medal if you want the details.

But 21st century America is pretty damn close to 18th century England. Our government doesn't throw student-loan defaulters in debtors’ prison; but in 19 states, government agencies can seize professional licenses held by people who default on their student loans. According to the New York Times, lawyers, nurses, barbers, real estate agents, and psychologists have all had their licenses suspended or revoked because they defaulted on their college loans.

Millions of Americans have been beguiled by the promise of a bright future if only they get a college education. Perhaps they saw a for-profit college's advertisement on the subway--an advertisement depicting happy and prosperous individuals who got good jobs because they got a college degree.

And so they enroll. But they have to to take out student loans to pay for tuition and fees, and semester after semester their debt grows larger. And when they graduate (or drop out in discouragement) they often don't find good jobs.

Then, when these hapless student debtors are unable to make their monthly loan payments, the government's student-loan servicers cheerfully allow borrowers to defer their payment obligations while interest continues to accrue.

At some point, borrowers realize that they owe twice what they borrowed--even three times or four times what they borrowed. At that point their student loans are impossible to repay.

Then, when these unfortunate debtors default on their college loans, a cascade of misery showers down on them. The federal government garnishes their pay checks, seizes their income-tax refunds, and (for the elderly) even gobbles up a portion of their Social Security checks.

And--on top of all this--some states even seize defaulters' professional licenses, making it impossible for them to earn a living!

What have we become as a nation that we allow our most vulnerable young Americans (and some older Americans) to be scammed by the old canard that postsecondary education is the ticket to the middle class?

Let's see if one or two of the so-called progressives who seek the presidency will put license-suspension on their campaign agenda. Surely there is enough good will in Congress to pass federal legislation that prohibits the states from seizing people's professional licenses simply because they can't pay back their student loans.

And if Congress can't get that done, let's stop referring to our country as the Land of the Free and Home of the Brave. Because in fact, our nation treats student-loan debtors much like England treated delinquent debtors in the 18th century.

References

Jessica Silver-Greenberg, Stacy Cowley and Natalie Kitroeff. When Unpaid Student Loan bills Mean You Can No Longer Work. New York Times, November 17, 2017.








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