Federal Student Loan Defaults Can Block Renewal of Professional and Driver's Licenses

If a borrower has defaulted on his or her federal student loan(s), the federal government can block renewal of professional licenses. This option is usually employed as a last resort, after all other attempts to collect the defaulted loan have failed. The ability to block renewal of professional licenses seems counterproductive, because a defaulted borrower will be unable to repay the debt if he or she is prevented from working in his or her occupation.

Professional Licenses

The following states can block the renewal of professional licenses for health care professionals for defaulted borrowers of federal student loans. Health care professionals include nurses, licensed practical nurses (LPN), registered nurses (RN), nurse practitioners, doctors, speech pathologists, occupational therapists, physical therapists and psychologists.

The following states can block the renewal of teaching licenses for K-12 teachers who are in default on their federal student loans.

The following states can block the renewal of any professional license for borrowers who are in default on federal and/or state student loans.

Several of the state laws also name specific occupations, such as accountants, attorneys, barbers and cosmetologists, correctional officers, debt collectors, dentists, genetic counselors, insurance, locksmiths, marriage counselors, pharmacists, roofers, social workers and veterinarians.

Driver’s Licenses

Three states include driver’s licenses within the scope of licenses that may be suspended for a failure to repay federal student loans. Montana, Iowa and Oklahoma suspend driver’s licenses for borrowers who are in default on their federal education loans.

Some states suspend driver’s licenses for people who do not register with Selective Service, while others allow men to register when they obtain or renew their driver’s licenses.