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This policy makes about as much sense as debtors prison
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That may depend on what the license allows (or requires) the licensee to do. A lawyer’s license allows and in many cases requires the attorney to have an escrow account and handle client funds. There is a good reason to not want those funds in the care of someone who owes a lot of money and doesn’t have a good history with money management.
And it seems to work. In the article it said that only 3 out of 87 didn’t pay their debts and lost their licenses in Louisiana. Other states say it works too. I worked in collections for many years, and people just will not pay until they are going to lose something important to them and it is often a car or snowmobile or boat. They will pay the bill of the thing they are about to lose, and the student loans (which allowed them to become licensed in the first place) will be the last bill paid, so therefore never paid. Threaten them with losing a driver’s license or a hunting license and that unsecured student loan suddenly has some importance and priority to be paid first. It is not possible to garnish the wages of some debtors because they have protections to wage amounts and the salary never hits a bank account (because it would be garnished if it did) or they change jobs or bank accounts so often that the creditor can’t find them or their employers to issue garnishment orders.
You’d be surprised how many people CAN come up with a payment when something they really want depends on it. Clearly 84 nurses wanted to keep their licenses in Louisiana, so they came up with the money to pay their student loans. If those loans had been car loans, the lender would repossess the car if payments weren’t made. Student loans financed those nursing licenses. What else does the lender have to ‘repossess’ but the license?