Revocation Of Driver's License
Submitted by Dreamharp on Fri, 09/30/2005 - 12:33pm.
I just read from a company that some states are taking driver's license
away from people who have defaulted student loans. I don't know if this
is true or not. Anyone hear about this?
Driver's license and more may be at risk...
Yes, some states do suspend or revoke driver's licenses based upon student loan default. Montana is one example. The practice is likely to become more common in the future unless student loan borrowers unite to stand against this type of disparate treatment. Borrowers of other types of loans are not subjected to similar punishment. If a person borrows $70,000 to purchase a Mercedes Benz and defaults, there is no threat of that borrower losing his/her driver's license. You might think that when the government is the lender or guarantor, they can simply change the rules of the game and impose penalties on defaulting borrowers substantially in excess of penalties that can be imposed by private sector lenders. However, if you borrow money under a federally guaranteed housing program, default, and have the debt discharged in bankruptcy, you are never at risk of losing your driver's license. That is what we call intrinsic unfairness, and is arguably violative of the Fifth Amendment's due process guarantee that has been interpreted as an imposition on the federal government to ensure equal protection under the law (comparable to the Fourteenth Amendment's equal protection guarantees imposed upon the states).
Also know that withholding or revoking professional licenses such as bar membership (license to practice law) based upon default of a student loan is a common practice across the United States. While you're thinking about that, consider that approximately 40% of graduate students in medicine, law or business have student loan debt that exceeds their current salaries. Further, 65% of student loan borrowers with low earnings and high debt in typically high-earning fields indicate their loans are causing them more hardship than anticipated. And when they run into difficulty making their huge monthly student loan payments, the government in its infinite wisdom takes away their professional licenses to ensure they have no hope of repaying their massive debt. Brilliant.