The laws that allow licenses to be revoked for missed payments are being debated. Flickr / Robert Couse-Baker I’ve always envied classmates who graduated debt-free thanks to grants, scholarships, or because their parents were able to foot the bill, and that envy is growing.

Believe it or not, it is possible to lose your driver’s license or have other professional and career-mandated licenses revoked if you are delinquent in repaying a loan funded by your state government.

Student loan borrowers are not the only one subject to these laws. Anyone who has borrowed from state funding is included here; even those who received some kind of low-interest loan from a state grant could be affected, too.

Although this kind of situation is rare, and most borrowers are aware of this penalty, lawmakers are still discussing it, and it’s making headlines.

Nobody is safe from losing their license in a tough economy when states are starved for revenue. Officials may decide to take these drastic measures to recoup the loss of taxpayer dollars. Could that include grounding people who have not kept up with their student loan payments?

Yes.

Legislators are now debating the law.

Legislators in Montana successfully passed a bill to revise the laws regarding defaulting on student loans. In the meantime, Iowa stopped enforcing the license revocation law, but not because the state objected to it. Instead, they quit revoking licenses because the responsibility for managing Iowa’s student loans was transferred to an agency in Wisconsin as the result of a recent contractual deal.

Those who favor license revocation say that it is a great deterrent. Rarely do those affected actually have their license revoked because once the borrower realizes that is about to happen, they pay their obligations.

Some argue this punishment could create a domino effect of bad consequences.

Those who oppose the practice argue that revoking someone’s driver’s license simply makes it harder for them to get to work, earn money and repay the loans. In some states — like Montana, for example — there is minimal public transportation infrastructure, so the burden on people whose driving privileges are taken away can be extreme. Plus, if professional occupational licenses are revoked, it can mean that the borrower loses their job.

Furthermore, many of jobs requiring a professional license are in the field of health care and public safety. Doctors, nurses, teachers, paramedics, police officers, and even firefighters hold a professional license.

Revoking driver's licenses could may it more difficult for borrowers to get to work and maintain that income that allows them to make payments. REUTERS/Claro Cortes IV

The risk isn't limited to just a few states.

In Montana, if you get behind on one of these loans by at least nine months then you may have your license or licenses revoked. Over the past eight years, Montana suspended nearly 100 driver’s licenses because of student loan delinquencies. In Iowa, up until the state shifted student loan management out of state, over 900 licenses were suspended due to student loan obligations not being met on time. Across the nation, in Tennessee, the state's student loan agency has suspended more than 1,500 professional licenses because of student loan defaults.

Bloomberg News featured a report explained the issue is not just limited to two or three states. The report revealed that almost 22 different states have these kinds of laws. This law isn’t new, either, because some of these laws have been on the books since the 1990’s.

Alternatively, just because laws are in place doesn’t mean that states are making an effort to enforce them, but they do have that option. Today student loan debt is one of the most severe kinds of debt in the nation, coming in at more than one trillion in debt. States that have issued substantial loans that are not being repaid may decide that it is time to crack down and start enforcing these revocation laws.

Alternative solutions may be more effective.

State and federal enforcement of debt collection has been going on for a long time. Instead of using license suspension as a method of getting repaid, what typically happens is that the debtor has their wages and earnings garnished. If your wages are garnished, the state takes a portion of your paycheck right out of your employer’s payment, or your checking account, and then it gets applied to your loan balance. The process will continue until you have satisfied the loan obligation.

In situations where you owe back taxes or child support, you may also be denied a visa for foreign travel, a policy intended to prevent debtors from escaping to another country. These kinds of actions may make more sense and be more effective than policies that simply put obstacles between borrowers and their ability to work and earn wages.

Kari Luckett joined CompareCards in 2012. A graduate of Southern Illinois University-Edwardsville with a BA in Mass Communications and a minor in Business Administration, Kari is able to translate the complicated credit card industry to the common consumer. She contributes articles on credit card rewards, developing industry technology, and saving with credit cards to Entrepreneur, The Huffington Post, and the CompareWallet blog.