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22 States Where You Could Lose Your License for Not Paying Your Student Loans

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Failing to repay student loans has all sorts of terrible consequences, but in some states, more than just your financial well-being is at risk — student loan default could cost you your professional certification or even your driver’s license.

Two state legislatures (Iowa and Montana) are considering bills that would repeal laws that allow states to suspend the driver’s licenses of student loan defaulters, Bloomberg reported in a March 25 piece on the topic. Even if those repeals succeed, several other states have such laws in place. Some states suspend licenses needed to practice in certain fields, from health care to cosmetology, though license suspension can extend to driving, too.

Repeal advocates argue that license suspension is a counterintuitive punishment for student loan defaulters, because it may keep them from working, which theoretically enables them to repay their debts. That’s the case Montana state Rep. Moffie Funk is making for the bill she introduced to repeal the state’s law that allows driver’s license suspension, Bloomberg reports.

According to a list from the National Consumer Law Center, 22 states have laws that enable suspension of state licenses issued to student loan defaulters. The professions and licenses affected by suspensions vary by state and cover a wide range of earning potential, but some of them include doctors, social workers, barbers, transportation professionals and lawyers — the lists can be quite extensive. If your state is on the list and you’re at risk of defaulting, you might want to research the details:

New Jersey
New Mexico
North Dakota

Student loan default trashes your credit, and the loans continue to incur interest and fees as long as they remain unpaid, so getting out of default can be very challenging. If you have federal student loans, as most people who borrow do, there are many options available to you before you’re 270 days past due on your student loan payments (that’s the definition of default): You can apply for income-based repayment or pay-as-you-earn programs, in addition to applying for an extended repayment period, which will raise the cost of your loans in the long run but make them more affordable now.

If you want to see how your student loans are affecting your credit, you can get your free credit scores, updated monthly, on Credit.com. You can check your credit reports for free once a year from each of the three major credit reporting agencies at AnnualCreditReport.com. Because student loans are generally not dischargeable in bankruptcy and default can be catastrophic for your credit, it’s crucial to prioritize making your loan payments on time.

More on Student Loans:

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  • saber-dance

    And we keep hearing things like ‘the economy is improving steadily’ The researchers obviously did not poll the current and former students affected by this sad situation.

  • The Samurai

    That’ll teach them! Let’s take away their cars so they can’t get to work on time or affect their chances at better employment elsewhere so they can NEVER pay us back.


  • didi

    Persons who have an outstanding student loan but have become permanently handicapped can have their loan forgiven.

  • Todd Abshire

    The DOE has several income based programs to help.

  • Karen Gross

    The consequences of default on student loans are actually vastly more extensive that students (and their advisors) imagine. Consider offsets with tax refunds and social security payments. Consider wage garnishments. Never mind the trashing of your credit score. Watch for a forthcoming article on Education and Bankruptcy. There are protections that have not been realized upon — yet.

  • Wud he say

    And when the United States of America defaults on our bond obligations of trillions of dollars to other countries, nothings going to happen to him. So you kids keep on worrying about your student loans, because Uncle sam sure as hell isn’t worried about his obligations. He regulate the 3 credit agency’s that are watching yours.

  • Voter

    These stories never report the guarantee agencies that have sought bankruptcy protections for themselves that their customers are denied. Best government money can buy.

    They always portray it as a young person problem, rarely mention the change in law that allows garnishment of senior citizen social security for ancient student loans.

    They also never mention that many of these payment reduction programs do not include older student loans.

    Basically very little research is done into just how unjust it all is.

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