A phrase with which Tyler residents struggling with financial challenges will likely be all-too-familiar is “pull yourself up by your bootstraps.” The idea that one should simply work more – longer hours or an extra job – to pay off debt is hard-wired into many minds. But especially for individuals struggling with student loan debt, working may actually become more difficult or even impossible.
The reason for this is that Texas is one of 19 states where failure to keep current on student loan payments means that an individual could lose a professional license issued by the state. This includes anyone from nurses, firefighters and teachers to lawyers, realtors and psychologists. Without a license, these professionals cannot work and earn income and unemployment in turn makes debt payments increasingly difficult.
The issue of student loan debt only grows more serious by the year. Today, the amount of student loan debt is second only to mortgage debt for the typical American household. And as such, defaults on student loans also continue to rise. Borrowers are likely familiar with tactics like wage garnishment, seizure of tax refunds, lawsuits and others used by creditors. But suspension or revocation of a professional license has the potential to push a borrower into a financial black hole from which it may be impossible to envision escape.
While student loans cannot be discharged in Chapter 7 bankruptcy, most other unsecured debts can. Eliminating one’s credit card debt, medical debt and other types of unsecured debt is one strategy that can free up the resources to stay current on those crucial student loan payments, or to make good on lapsed payments and possibly earn back a professional license suspended due to a student loan default.
Source: The New York Times, “When Unpaid Student Loan Bills Mean You Can No Longer Work,” Jessica Silver-Greenberg, Stacy Cowley and Natalie Kitroeff, Nov. 18, 2017