Originally published by The Hill June 22, 2018.
Americans owe nearly $1.5 trillion in student loans, with the average borrower owing around $30,000. Unfortunately, because of a number of factors, about 5 million Americans are in default on those loans. Worse still, a perverse policy underlying many state laws almost ensures that many of those in default will never manage to repay their loans. Fortunately though, recently introduced legislation could change that.
A rising tide of commentators, scholars and policymakers has noted the growing problem of burdensome occupational licensing laws. Indeed, nearly one-third of American workers must now get state permission before engaging in their chosen occupation.
And for those workers and professionals who manage to persevere through many hours of education, multiple exams, and hundreds (sometimes thousands) of dollars in fees, nearly 20 states have erected yet another obstacle: fall behind on a student loan and you risk losingyour hard-earned license, and thus your ability to earn a living.
Such policies are colossally misguided and counterproductive. As I wrote earlier this year, taking away the ability of borrowers to work just because they defaulted on student loans “kicks people while they are down and is an abuse of the government’s licensing authority.” From a more practical perspective, it’s virtually impossible for people to bring overdue loan payments current if we take away their ability to work in their chosen fields.
These policies also are constitutionally questionable. The Supreme Court of the United States has held that occupational licensing requirements must be rationally connected to a professional’s fitness or capacity to work in their chosen field. And because it’s hard to see what the ability to pay personal loans has to do with one’s ability to competently perform a job as a cosmetologist or landscape contractor, for example, these policies may lack a sufficiently rational connection.
Fortunately, these overzealous state debt-collection policies soon could be prohibited. On June 14, Sens. Marco Rubio (R-Fla.) and Elizabeth Warren (D-Mass.) introduced a bill that would prohibit states from revoking occupational licenses of workers who have defaulted on student loans owned by the U.S. Department of Education.
Specifically, the Protecting JOBs Act would prevent states from denying, suspending, or revoking state-issued driver’s licenses, teaching licenses, professional licenses, or other employment credentials solely because the worker defaulted on his or her federal student loans. The act would give states two years to comply, and would provide a mechanism for borrowers to enforce the act in court, if necessary.
The legislation, as introduced, is a helpful addition to the growing list of licensing reform efforts seen across the country at the state level. It clarifies that Congress does not authorize states to use heavy-handed collection methods in the name of the Department of Education. More importantly, the legislation allows people to engage in the profession for which they are trained and qualified, which is a necessity if we expect them to pay down their outstanding student loan balances.
The Protecting JOBs Act is a modest reform. The federal government doesn’t need the help of state licensing boards to collect federally guaranteed student loans. But the act doesn’t otherwise alter the authority given to licensing boards by their state legislatures. They are free, for example, to suspend licenses for violations of state law concerning fraud or consumer protection.
Furthermore, the act would allow the government to continue using other debt collection methods and bankruptcy laws to pursue repayment and protect taxpayer dollars. Yet, in so doing, the act provides much-needed protections to professionals who find themselves in difficult financial circumstances. In sum, the Protecting JOBs Act is an important, if limited, approach to easing the burdens on workers’ ability to exercise their right to earn a living free of unreasonable government interference.
Caleb R. Trotter is an attorney at Pacific Legal Foundation, which litigates nationwide to achieve court victories enforcing the Constitution’s guarantee of individual liberty.