Can’t Pay Your Student Loan? There Are States That Take Your Driver’s License Away Until You Can

At the current time, three states have laws on the books that allow them to revoke your driver’s license if you fail to pay your student loans. But there are many more that are trying to take away your professional licenses as well.

photo courtesy of

photo courtesy of


“Driver’s License suspension: When a driver’s license is suspended, the privilege to drive a motor vehicle upon public highways is withdrawn for a specified period. Default on a student loan: Indefinite suspension until student loan association notifies Motor Vehicle Division of compliance.”


“Nonpayment of Certain Financial Obligations: Nonpayment of Student Loan.The department is also required to suspend a person’s driver’s license upon receiving a certificate of noncompliance from the College Student Aid Commission in regard to the person’s default on an obligation owed to or collected by the commission.”


“REASONS FOR DRIVER’S LICENSE SUSPENSIONS: There are a variety of reasons why your Tennessee driver’s license might be suspended. Some of these are related to specific driving violations, while others may be due to violation of other State laws. . . . Non-Driving Reasons for License Suspension. A variety of non-driving violations or issues can result in your license being suspended.”

This is a catch 22. If you can’t get to work, you can’t earn money and if you can’t earn money, you can’t begin to pay your student loans. The penalty suspends common sense and these three states seem to be driving in ‘neutral.’ But that isn’t the whole story.

Many states are revoking professional licenses for failure to pay student loans in a timely manner. Tennessee became the poster child when it suspended 42 nurses in default on their student loans in 2010.

According to the Student Loan Borrower Assistance Project, 18 states are considering or have initiated disciplinary measures against licensed professionals for failure to pay student loans: Alaska, Florida, Georgia, Hawaii, Illinois, Iowa, Kentucky, Louisiana, Massachusetts, Minnesota, New Jersey, New Mexico, North Dakota, Oklahoma, Texas, Virginia and Washington. And this discipline is available to any state on any day if the state’s legislature decides to entertain these penalties.

This means that doctors, attorneys, nurses, teachers, pilots, real estate agents, nail and hair professionals–anyone with a license–could be prevented from working if they default on their student loans.

So let’s see where we are. No driver’s license, no professional license, tens of thousands of dollars in debt and unfortunately, bankruptcy is not an easy way to jump start your way to a clean slate. But be advised, the traditional view that it was impossible to discharge student loan debt in a bankruptcy proceeding is not necessarily the modern view. Take heed and research your options. It isn’t easy but it isn’t impossible, either.

Some other penalties that you should know about for defaulting on your loans no matter where you live: Your college may place a hold on your transcripts and you might not be able to apply for some federal jobs.

When you hear someone like Elizabeth Warren, Bernie Sanders or President Obama making noise about student loans, pay attention. Even if you are current now, ‘life’ has a way of throwing curve balls. Question those running for office in your state about where they stand on student loans and then vote with your financial future in mind. Be smart and use that education in the voting booth.