The provincial government has proposed legislation to expand ICBC's ability to refuse driver's licences to those in debt.

The insurance company is already able to withhold licences from people who owe money, such as toll fees, but the new bill — if passed — would be a "last-resort measure" to collect on outstanding court fines or student loans in default.

Zachary Crispin, the chairperson of the Canadian Federation of Students B.C., said the proposed change is troubling.

"Missing a student loan payment, or paying late, might warrant a telephone call, but certainly not the loss of your driver's licence," he said.

Crispin said B.C. charges the highest rate of interest on student loans of any province, and according to the government's own figures, half of all B.C. graduates leave school in debt.

He called the proposed legislation both unhelpful and unnecessary.

"If we take away people's driver's licences because they're having a hard time paying back their student loan, they're going to lose their jobs. And that means they're going to default more often," he said.

"So the government is essentially ensuring that people are going to lose their jobs, because they're already having a hard time paying down their student debt."

The province said it will give people 30 days' notice before getting ICBC involved, after warning letters have been sent and debtors have had time to comply voluntarily.

"The refuse-to-issue provision is a last-resort measure to collect on outstanding debt," said Brennan Clarke, a spokesperson with the department of finance. "It will only apply to student loan borrowers whose accounts have been out of good standing for more than a year."

He added that unpaid court fines that are more than 120 days overdue could also be subject to the refuse-to-issue tool.