The NCSL Blog

19

By Iris Hentze

Can you lose your professional license for unpaid student loans? The answer depends on your state and occupation.

worker holding hard hatThe number of Americans living in states where defaulting on their student loans could result in disciplinary action related to their occupational license is decreasing.

In 2010, about half of all states had so-called license suspension for default laws in place. The laws require regulatory boards to suspend professional licenses if the board receives notice from an education commission informing them that an applicant holds outstanding student loans. Some states required boards to revoke professional licenses from only workers in the health care sector, while others applied only to state education loans. In most states with license suspension for default laws on the books, they applied to all licensed occupations and all types of education loans.

Even at the height of these laws being adopted, it is unclear how many states were enforcing them and to what extent. As reported by NCSL in 2018, many states do not keep a master list of individuals facing licensure-related discipline, including revocation based on unpaid student loans. Additionally, given that the enforcement of such laws is left up almost entirely to individual licensing boards, different boards may have been interpreting the law differently, even in the same state.

Over the past decade, states have sought to repeal these laws. In 2018, 19 states had some form of professional license suspension law related to student loan default. That same year three states, Alaska, Illinois, and Washington all adopted legislation successfully repealing their license suspension for default laws.

In 2019, even more states followed the trend with Arkansas, Hawaii, Iowa, Kentucky, Louisiana and Texas all enacting legislation to abolish or modify their license suspension for default laws. The legislation tends to look similar from state to state, simply removing from licensing entities the authority to suspend or revoke licenses based on outstanding student loans. A handful of states, such as Louisiana, take it a step further and even prohibit licensing entities from considering student loan default or delinquency during the application process for an initial licensee.

So far in 2019, Florida and Tennessee have introduced legislation on the topic. Florida’s H 115 would prohibit state authority from denying or renewing a license to an applicant and from suspending or revoking the license of a current practitioner, based on the delinquency or default of the individual’s student loans. The bill is currently on third reading in its second chamber.

Tennessee’s 2020 legislation would prohibit a current licensee from having their license revoked due to debt. However, it would not protect first-time applicants from having their debt considered during the board review process as the Florida legislation does.

Iris Hentze is a policy specialist in NCSL’s Employment, Labor and Retirement Program.

Email Iris

Actions: E-mail | Permalink |

Subscribe to the NCSL Blog

Click on the RSS feed at left to add the NCSL Blog to your favorite RSS reader. 

About the NCSL Blog

This blog offers updates on the National Conference of State Legislatures' research and training, the latest on federalism and the state legislative institution, and posts about state legislators and legislative staff. The blog is edited by NCSL staff and written primarily by NCSL's experts on public policy and the state legislative institution.