Bill would protect licenses of those who default on student loans

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June 14, 2018 3:18 PM

Sens. Marco Rubio and Elizabeth Warren planned to introduce a bill Thursday that would prevent states from suspending residents’ driver’s and professional licenses over unpaid federal student loans. Critics have called the practice a self-defeating approach that denies borrowers the means to pay their debts.

The bipartisan proposal comes after a November report by The New York Times revealed that 20 states had laws allowing government agencies to seize licenses from residents who had defaulted on their education debts.

Records requests turned up 8,700 cases in which borrowers had lost their credentials in recent years, although that figure most likely understated the true tally.

“It makes no sense to revoke a professional license from someone who is trying to pay their student loans,” Rubio, R-Fla., said in a statement. Warren, D-Mass., called the policies “wrong and counterproductive.”

Under the bill, states would no longer be permitted to deny, suspend or revoke the driver’s and professional licenses of those who have defaulted on federal student loans. States will have two years to comply if the law is enacted.

The bill represents an unusual instance of collaboration during a politically tense year. But despite being in opposing parties, Rubio and Warren teamed up to put forward legislation helping student-loan debtors.

Rubio is personally familiar with the pain of education loans — he revealed in 2012 that he had only recently paid off the roughly $150,000 in debt he had after graduating from law school. Warren has long been an advocate for debtors, and has pressed for more accountability for loan servicers and debt collectors.

States had been using license revocation as a tool to strong-arm debtors into restarting payments on their loans. Proponents argued that it was a legitimate strategy to recoup loans that had been funded with taxpayer dollars. Tennessee took a particularly aggressive approach by reporting more than 5,400 people to professional licensing agencies from 2012 to 2017. Many of them lost their credentials.

Critics said the tactic merely stripped borrowers of important licenses they needed to earn money and pay the government back.

This article originally appeared in The New York Times.