States Resort to Suspending Licenses in Effort to Collect Student Debt

By Allen Kors

The student loan bubble has ripened to such an extent that over 7 million debtors were in default as of mid-2014 and they're holding on to over $100 billion in outstanding debt. Consequently, both private and federal lenders are exploring a variety of tactics to collect outstanding payments. Those payments, after all, represent forecasted revenues that never arrived. One such tactic employed by the Education Department is engaging private debt collectors to bring in borrowed money. While they often rely on unethical (and illegal) pressure tactics to coerce borrowers to start paying, these glorified bounty hunters have earned over $1.6 billion in commissions and bonuses from 2010 – 2013. Still, when engaging debt collectors just doesn’t cut it, many states resort to other, more punitive means. 22 States have passed litigation that permits them to suspend professional and/or driver's licenses of student loan defaulters. [more...]