In Some States, Missing Student Loan Payments Could Cost You a Job
In some states, like South Dakota and Iowa, a student loan borrower can have their driver's license revoked due to missed loan payments.
In Virginia, workers who miss student loan payments have more to worry about than just hurting their credit – it can make them lose their jobs as well. Currently, a law in the state allows the suspension of a person’s professional license for falling behind on their student loan payments.
Who Does This Law Impact?
Virginia isn’t the only state to allow a person’s license to be suspended – 18 other states have similar laws. They impact people who rely on their professional licenses to be employed, including teachers and health care workers such as nurses, massage therapists, psychologists, and others.
But falling behind on payments could also cost a person their job in another way – some states, including Iowa and South Dakota, can yank a person’s driver’s license for missing student loan payments. Those without a license may find themselves unable to get to work, and that would lead to more problems in the realm of student debt.
One Tennessee woman who had graduated from nursing school was diagnosed with epilepsy 14 years later, ABC News affiliate WRIC reported. Because she could no longer work due to the seizures, she defaulted on her student loans. She received notification from her state that her license was suspended until she resumed her loan repayments.
Currently, Virginia lawmakers are considering a bill that would repeal the state’s ability to suspend licenses for falling behind of student loan payments.
The Big Issues With Student Loans
Student loans are larger than ever and when they aren’t repaid, it spells big trouble. American borrowers owe about $1.5 trillion in student loan debt, according to LendEDU. The average borrower owes $28,000 in student loans when they graduate now.
With the increase in the amount of the average student loan debt, Federal Reserve data shows the number of defaults is also on the rise.
People who are in favor of revoking the licenses or certificates of borrowers who fall behind on their loans say it might prevent defaults from happening – and ultimately save taxpayers from that burden. But people who are against the laws say that yanking a borrower’s license or certificate will essentially guarantee they won’t be able to pay off their loans because they won’t have the ability to earn a paycheck without their credentials.
What Borrowers Can Do to Stay On Top of Student Loans
There are many reasons borrowers should try to keep their student loans paid on time if not sooner – it can help their credit, will stop them from being fired in some cases, and might let them sleep easier at night.
In order to stay current on their student loan obligations, they should watch other areas of spending until they have a firm grip on their finances. That means being cautious with other big-ticket expenditures like mortgages and vehicles.
In addition, if borrowers feel their finances are starting to spiral out of control, they should consider applying for a forbearance or deferment as soon as they’re able. That can suspend their payments for a few months up to a year, which can hopefully give them time to get back on their feet financially. By planning ahead and thinking strategically, borrowers have a better chance of keeping their loans current and protecting their livelihood.