June 26, 2018

Behind On Student Loans? You Could Lose Your Right to Work

Do you have defaulted student loans? In nearly half of U.S. states, you could have your driver’s license – along with any professional licenses you hold – suspended for failing to repay your loans. Last year, the New York Times exposed a law in 20 states that gave government agencies the right to take away […]

Do you have defaulted student loans? In nearly half of U.S. states, you could have your driver’s license – along with any professional licenses you hold – suspended for failing to repay your loans.

Last year, the New York Times exposed a law in 20 states that gave government agencies the right to take away licenses from state residents who were in student loan default. In the report, which was released in November 2017, records obtained by NY Times staff showed up to 8,700 cases where borrowers had lost their licenses due to default.

But as the Times pointed out last November, this may include many more.

Senators Move to Protect Borrowers in Student Loan Default

After the article was published, two U.S. Senators took notice, and quickly put together a bipartisan proposal designed to prevent states from suspending licenses on delinquent borrowers.

On June 14, 2018, Senators Marco Rubio and Elizabeth Warren crossed the aisle to introduce the Protecting Job Opportunities for Borrowers (Protecting JOBs) Act. And as part of this legislative motion, the two plan on making sure states aren’t keeping borrowers from making a living due to simply falling behind on their student loans.

If passed, the act wouldn’t allow states with this type of law to “suspend, revoke, or deny the approval or renewal of a State-issued license”.

And in wording designed to protect student loan borrowers specifically, the act takes things a step further. According to the bill’s wording, which can be found here, it won’t allow states to “issue a fine or other penalty with respect to an individual based solely on such individual’s default or delinquency on a loan made, insured, or guaranteed under title IV”.

Why the Protecting JOBs Act Matters

One of the major issues surrounding the state law is that borrowers who are already behind on their payments won’t be able to repay those loans if they lose their ability to work.

In a statement on the state law’s impact, Senator Warren said, “State governments punishing people struggling with student loans by taking away drivers’ and professional licenses is wrong. These policies don’t make sense, because they make it even harder for people to put food on the table and get out of debt.”

Senator Rubio echoed these sentiments by saying, “Difficulty repaying a student loan debt should not threaten a graduate’s job. It makes no sense to revoke a professional license from someone who is trying to pay their student loans.”

How the Protecting JOBs Act Works

The Protecting JOBs Act wouldn’t go into effect until two years after it’s been enacted. So for now, anyone who has had their license impacted by the state law may not get reprieve. However, as is often the case, states would likely stop revoking and suspending licenses in the interim – and potentially reinstate those licenses already affected.

According to Senator Warren’s official website, the act would give states two years to comply with the legislation. It even gives borrowers the right to legal recourse in states that don’t comply or are in violation of the act.

So far, the types of licenses that have been affected by the state law include:

  • Driver’s licenses
  • Teaching licenses
  • Professional licenses
  • Any form of license required to work in a certain field

Speaking about how the bill would help borrowers, Senator Warren stated, “I’m glad to work with Senator Rubio to make sure borrowers can work to pay off crushing debt and build a future.”

How to Handle Student Loan Default

Until the bill is passed by Congress, the two-year window for states to follow the act’s policies aren’t in effect. For borrowers with currently defaulted loans, the wait could be more than they’re willing to risk.

That being the case, here are a couple of options you have to get your student loans out of default.

Federal Student Loan Consolidation

One way to get out of default with your student loans is through federal student loan consolidation. To qualify for a Direct Consolidation Loan, the loans included in your consolidation need to be at least one of the following:

  • Federal Stafford Loans
  • PLUS Loans from the FFEL Program
  • Supplemental Loans for Students
  • Federal Perkins Loans
  • Nursing Student Loans
  • Health Education Assistance Loans
  • Health Professions Student Loans
  • Loans for Disadvantaged Students
  • Direct Subsidized Loans
  • Direct Unsubsidized Loans
  • Direct PLUS Loans
  • FFEL Consolidation Loans and Direct Consolidation Loans (under certain conditions)

After meeting other requirements for a Direct Consolidation Loan, any loans under this plan will be merged into a single loan and a single monthly payment. By doing so, you can also simplify the repayment process.

Student Loan Rehabilitation

To take part in student loan rehabilitation, you’ll need to set up an agreement with your servicer to set up a new payment plan that is “reasonable and affordable”.

Usually, loan rehabilitation involves making nine out of 10 on-time payments under the new plan’s terms before a loan is considered rehabilitated. But once they qualify as rehabilitated, you can take advantage of other student loan forgiveness and repayment options you couldn’t access before.

Pay Off Your Student Loans

Of all the options available, paying your student loan balance in full is the quickest way to get out of default – and get your credit in good standing. It could also help you to avoid wage garnishment, if it isn’t happening already.

If paying off your loans isn’t an option for you right now, LoanForgiveness.org can help get your loans out of default. Simply fill out our free online assessment or call a student loan expert at (800) 771-6358 right away to get started!