Georgia Law: Fall behind on student loans, lose your job

In 2015, Debra Curry — nurse and mother of six — received a notice from the government in the mail. It informed her that she risked losing her registered nurse license because she had fallen behind on her student loans, which were considerable. Making matters worse, without her license, she would be barred from working until she entered into satisfactory repayment status. The specter of having her livelihood profoundly disrupted her life and understandably frightened her.

Curry was also shocked to learn that the state of Georgia was authorized to take away her license and therefore her job simply because she had fallen on hard times. But Georgia has wielded this obscure authority — which affects a host of professions, including teachers, nurses and emergency medical technicians — for over 15 years.

The policy’s original drafters hoped that these suspension laws would hold borrowers accountable, deter future student loan defaults and serve as another debt-collection tool. Yet despite the law’s perhaps laudable goals, in practice, this policy has been counterproductive and unnecessary. It simply compounds already challenging financial situations. Thankfully, relief may soon be on the way. If approved, the recently filed HB 42 would put Georgia on a better track by eliminating the state’s authority to suspend the licenses of those in default.

The fact that American student loan debt is surging highlights the need for reform. It’s estimated that U.S. graduates owe around $1.4 trillion in student loans, which is more than double the total from a decade ago. And despite the availability of the lottery-funded Helping Outstanding Pupils Educationally (HOPE) Scholarship, which helps cover tens of thousands of Georgians’ college tuition every year, student debt burdens many in the Peach State. Around 60 percent of Georgians from the Class of 2016 have outstanding loans from their education. In fact, they owe an average of more than $27,000 each. This is about a $7,000 increase from the national average just over a decade ago.

This rising student loan-debt problem is exacerbated by Georgia’s occupational licensing statutes that empower the state to strip professionals of their licenses. When the suspension process is executed, licensees are forbidden from working in their profession. Unsurprisingly, without a job, it can be virtually impossible to repay one’s debts. Thus, license suspensions simply make it more difficult for individuals to satisfy their loan obligations.

This government-induced joblessness has other side effects, too. For instance, it harms the borrowers’ families who rely on their income. After all, these lost wages can mean the difference between feeding families and putting roofs above their heads, or not. Second-order impacts associated with revocation are also undesirable. While unemployed, borrowers are more likely to look elsewhere for support and apply for taxpayer-funded assistance. Sometimes such programs are their only option. As a result, suspending delinquent borrowers’ occupational licenses burdens taxpayers, who are subsequently forced to fund assistance programs to aid these individuals.

It’s true that suspending defaulters’ licenses doesn’t always result in long-term unemployment. Sometimes when threatened with joblessness, borrowers find other ways to repay their loans. But they often must resort to unsustainable options to do so, including taking out additional, high-interest loans or credit card debt to satisfy their student loan obligations. This only aggravates their problems as their debt spirals out of control.

Despite all of these drawbacks, there’s little evidence that the threat of licensure suspensions effectively deters defaults. As of 2015, Georgia’s federal student loan default rate was just over 11 percent, a rate higher than that of comparable states without revocation authority. If Georgia’s policy adequately encouraged timely loan repayment, then the state’s default rates would likely be lower than those of its peers.

In 2018, Illinois, Virginia and Washington realized the error of revoking defaulters’ licenses, and each repealed the authority altogether. It is easy to understand why. The government should not be in the business of taking away people’s jobs, harming families or frivolously increasing taxpayer exposure. Rather, the state should foster an environment that does the opposite. The Peach State can and must do better, and that’s why it is vital that the Legislature pass HB 42.

Scot Turner is the State House Representative for Georgia’s 21st District. You can follow him on Twitter at @scot23.

Marc Hyden is State Government Affairs Director for the R Street Institute, and he is a longtime Georgia resident. You can follow him on Twitter at @marc_hyden.