Law Schools

You Can Lose Your Law License After Defaulting On Student Loans, And That's Messed Up

If policymakers were truly interested in having student loans paid on time, they would not be suspending law licenses.

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Everyone knows that there are serious consequences for defaulting on student loans.  Indeed, all of us are probably aware that defaulting on student loans can impact your credit score, which affects your ability to buy a house, purchase a car, or borrow money for any other reason.  In addition, defaulting on student loans can impact your eligibility for a security clearance and has a number of other impacts on someone’s life.

However, most people might not realize that you can have your law license suspended after defaulting on student loans.  In fact, if you live in nearly two dozen states, professional licenses can be suspended if you are not in good standing with your student debt.  In many ways, this consequence is perhaps more monumental than being dinged on your credit report or facing obstacles when obtaining certain kinds of employment.

Of course, the availability of student loan refinancing options and income-driven repayment plans makes it easy for many borrowers to stay current on their student debt.  However, it is still extremely messed up that individuals can have their law licenses taken away after defaulting on student loans.  Indeed, this consequence exhibits an unbelievable level of tone deafness and misunderstanding about student loans.

It is unclear why student loans are singled out as being so sacred that someone can have a professional license suspended for defaulting on their student debt.  Why can’t states suspend law licenses when people default on mortgages, car loans, or any other types of debt?  Of course, proponents of this policy might relate that student debt is borrowed so that an individual is eligible to practice law.  As a result, some might argue that there is a closer connection between student loans and a law license than other types of debt.

However, all kinds of debt are ultimately connected to being an attorney.  Indeed, one would not have the money to purchase a car or buy a home if they did not earn an income while practicing law.  As a result, there is really no special connection between student loans and a law license that warrants suspending law licenses after individuals default on their student loans.

Some might also believe that since student loans do not have any collateral, there needs to be special protections in place to ensure that attorneys pay off their student loans.  However, student debt already receives unique protections under the law.  Indeed, student debt is almost impossible to discharge in bankruptcy.  As a result, there is nothing unique about student loans that requires any type of special treatment by state licensing authorities.

Also, suspending a law license due to a student loan default is extremely counterproductive.  Many lawyers with student loans rely on their law licenses to earn a living.  And of course these individuals use the money they earn from practicing law to pay off their student loans.  If individuals can no longer practice law, how do state licensing authorities expect people to pay off their student debt?  If policymakers were truly interested in having student loans paid on time, they would not be suspending law licenses, since this actually impedes individuals from paying off student loans.

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I really struggle with understanding why policymakers would empower licensing authorities to suspend law licenses if someone defaults on their student loans.  Perhaps banks and student-loan lenders are special interests that are more important to policymakers than student-debt borrowers.  Or maybe there is a belief that individuals who default on their student debt lack the financial responsibility and character to practice law.

Or perhaps ageism and misunderstandings about student loans are behind why laws suspending law licenses in the event of a student debt default are still on the books.  Such laws disproportionately affect younger professionals.  Indeed, it is usually people just starting out in their careers who have the most difficulty repaying their student loans.  In addition, individuals who have likely been practicing law for a long period of time (and are older) probably do not have student debt at all.  The fact that this one type of debt that disproportionately burdens the young is singled out for special treatment demonstrates that ageism may be behind why law licenses can be suspended because of student loan defaults.

Or perhaps policymakers just do not understand the modern realities of having student debt.  In the past, maybe it was inexcusable to default on student loans.  Indeed, it cost a much smaller amount of money to attend college and law school years ago, and this is even after adjusting for inflation.  In the present, however, students must borrow massive amounts of student debt to earn a law degree.  In addition, the reality is that most law school graduates will not land a job that will enable them to easily pay off the large sum they borrowed to attend law school.  Perhaps older policymakers still think it is relatively easy to pay off law school loans, and this misunderstanding is the reason why law licenses can be suspended due to student loan defaults.

Of course, there are few reasons to default on student loans, since numerous strategies can be employed to pay off student debt.  However, if someone does in fact default on their student debt, they should not have their law license suspended.  There is no reason why student loans should get any special status, especially since ageism and misunderstandings about student debt are likely the reasons why such laws still exist.

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Jordan RothmanJordan Rothman is the founder of Student Debt Diaries, a personal finance website discussing how he paid off all $197,890.20 of his college and law school student loans over 46 months of his late 20s. You can reach him at Jordan@studentdebtdiaries.com.

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