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U.S. senators file bipartisan bill to stop state seizure of student loan defaulters’ licenses

The 19 states where licensing boards can seize licenses from residents who have defaulted on their education debts would have to halt the practice, under a bill (S. 3065) introduced in Congress June 14 by Sen. Marco Rubio (R-FL) and Sen. Elizabeth Warren (D-MA).

The bipartisan measure, dubbed the “Protecting Job Opportunities for Borrowers Act” or Protecting JOBS Act, would give states two years to stop denying, suspending, or revoking the driver’s and professional licenses of anyone defaulting on federal student loans. Borrowers who find their licenses threatened by a state not complying with the Act would be allowed to file for prospective injunctive relief.

The bill was referred to the House Health, Education, Labor and Pensions Committee.

Controversy over the harsh punishment, which only applies to student loans and not other debts, surged following a November 2017 report in the New York Times, revealing that at least 8,700 borrowers are known to have lost their occupational licenses in recent years, while far more are suspected to have lost their licenses.

One state, Tennessee, reportedly took a particularly aggressive approach, reporting more than 5,400 student loan defaulters to professional licensing agencies between 2012 and 2017.

On the other hand, some states including Oklahoma, Washington, and New Jersey have changed course and already removed laws allowing license seizure over student loan defaulting, while others such as Hawaii have never enforced their law. The Hawaii Department of Commerce and Consumer Affairs reported that it had not removed licenses under the state’s law because no state or federal agency had reported student loan defaulters.

In Texas, reported the Texas Tribune June 21, more than 4,215 licensees in the state, including security guards, cosmetologists, and pharmacists, were at risk of losing their license because of student loan default in 2017. Some 530 nurses were unable to renew their licenses because they were in default on their student loans, while 250 teachers had a license renewal application denied for the same reason over a five-year period.

The newspaper reported that when it tried to contact the members of the Texas state commission that helped pass the law in 1989, they were either deceased, could not be reached, or did not recall details about the bill’s passage.