Student loan debt could cost you your job

Over the past decade, Louisiana’s public colleges and universities have seen sharp cuts in state support combined with sharp spikes in tuition and fees. This has shifted the cost of higher education from society as a whole to students and their families. As college costs have risen, many students work multiple low-wage jobs to pay tuition and cover their costs of living. But that isn’t enough. The rising cost of a college degree means students can no longer pay their way through college and are instead forced to take on student loan debt.

According to the Federal Reserve Bank of New York, Louisiana’s borrowers now owe $20.4 billion in student loan debt, an increase of nearly $1.5 billion in just the past 12 months. And thanks to a quirk of Louisiana law, students who have trouble paying back those loans are at risk of losing the occupational license that their educations helped enable. This means nurses, teachers and even physicians could be barred from their chosen profession because of student loan debt.

The perverse effect of this policy is to penalize indebted professionals by taking away the license necessary for them to earn money to pay down their debt. While this policy would seem to disadvantage both borrowers and lenders, this hasn’t stopped the state from pursuing vigorous enforcement. Earlier this year, the National Conference of State Legislators named Louisiana one of the most aggressive enforcers of this policy in the nation.

This session, however, new legislation aims to end this counterproductive practice. State Rep. Julie Emerson’s House Bill 423 would repeal this policy in Louisiana, allowing workers to keep the professional license that helps them earn a living.

In recent years, Alaska, North Dakota, Virginia, Illinois, Washington, and Virginia have all repealed similar statutes that allowed professional licenses to be revoked for student debt default. Twelve other states have laws on the books allowing this practice, but the momentum is swinging toward change. This legislative season lawmakers in Arkansas, Georgia, Kentucky, and Texas have filed bills to repeal similar policies. The issue has attracted bipartisan attention in Washington, as well, where U.S. Senators Elizabeth Warren and Marco Rubio have introduced a bill to prevent states from suspending licenses over federal student loan debt.

The Baton Rouge Area Chamber found that in 2017, more than 80 licensed professionals had their occupational licenses suspended because they were behind on student loan payments. The Louisiana State Board of Nursing has been particularly aggressive in using this provision to revoke professional licenses due to student loan debt. In their 2016 annual report the Board reported that 87 nurses were deemed to be in default, a 12 percent increase from the prior year, putting them at risk of being unable to renew their nursing licenses for 2017. At the time of the report’s publication, three of those nurses remained in default, leaving them unable to practice as nurses in Louisiana. While the remaining 84 nurses were out of default by the time they would have needed to renew, half of all nurses at risk of losing their licenses had defaulted on their loans before, indicating that many are likely in a tenuous financial position.

With student indebtedness rising, Louisiana should invest more in need-based aid, adopt a Student Loan Borrower Bill of Rights to prevent borrowers from being poorly served or misled by the companies that collect student loans, and require all colleges to adopt institutional strategies to help reduce the burden of student debt.

At the very least, we should stop taking away the tools that people need to pay down their loans, as a punishment for falling behind in their payments. While the state’s current law was originally designed to hold borrowers accountable and prevent defaults, this policy has failed. If people cannot work in the profession they’ve trained for, how can we expect them to pay down the student loans that funded their training? The bottom line is that Louisiana should not be in the business of taking people’s jobs away because of failure to pay back student loans. House Bill 423 is a big step in the right direction.