published Tuesday, January 18th, 2011

Loan defaults sting Tennessee nurses


by Emily Bregel

Dozens of Tennessee nurses have had their licenses suspended for ignoring their student loans under new enforcement of a decade-old statute, state officials said.

In October, 42 nurses' licenses were suspended for failure to repay their federal student loans, including three in Chattanooga, according to the Tennessee Department of Health's monthly disciplinary action report.

But state officials say the suspensions don't represent a problem in the nursing field.

The suspensions were the culmination of 18 months' worth of efforts to notify and to work on repayment plans with hundreds of professionals licensed under the Tennessee Department of Health and Department of Commerce and Insurance, said Peter Abernathy, staff attorney for the Tennessee Student Assistance Corp., which provides financial assistance for post-secondary education for Tennessee residents. Some of them had been in default on their loans for years, he said.

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The action stems from a newly enforced state regulation allowing professional licensing boards to penalize those in default of their student loans, he said, and that regulation -- rather than the economy -- is the cause of the October backlog of suspensions.

"Going forward, when (the state boards) are taking action on these on a month-to-month basis, the number will drop dramatically ... down to a small handful," Abernathy said.

Twenty of the Registered Nurse and Licensed Practical Nurse licenses have since been reinstated after the nurses joined a repayment plan, according to the Tennessee Department of Health.

Libby Lund, executive director for the Tennessee Board of Nursing, said in an e-mail that the "vast majority" of Tennessee nurses repay their loans in a timely manner.

"With more than 100,000 licensed RNs and LPNs in the state, it would stand to reason some might default on student loans and be faced with license suspension, but this is more the exception than the rule in Tennessee," she said.

Student loan default rates in Tennessee hovered around 7 percent for years, before the economic recession set in, Abernathy said.

The national student loan default rate in fiscal year 2007 was 6.7 percent, according to the U.S. Department of Education. The default rate rose to 7 percent the following year, the most recent year available, according to the department.

Since the recession began in 2007, loan default rates have gone up to about 9 percent in Tennessee, which is not "dramatic," he said.

"Some of it is going to be there whether there's a recession or not," he said.

jobs not the problem

During the recession, local hospitals reported fewer RN position vacancies as older RNs delayed retirement and new RNs entered a field considered "recession-proof." But nursing school leaders said a nationwide nursing shortage, particularly in rural areas, is still a very real problem.

The U.S. nursing shortage could reach 260,000 registered nurses by 2025, particularly as the nursing workforce ages toward retirement, according to projections in a 2009 article published in the Health Affairs journal.

Bob Perry, director of financial aid at Tennessee Wesleyan College, said loan default rates have stayed stable across the college, which has a nursing school, even in the midst of a recession.

"I would think the nurses especially would have no problem paying back their loans," he said. "We've had 100 percent (job) placement in our nursing program for the last eight years."

The Tennessee Board of Nursing is one of several groups taking action on the law, aiming to get more former students paying back their loans.

A 1999 statute allowing licensure penalties for nonrepayment affects the more than 30 professional boards that fall under the domain of the Tennessee Department of Health, as well as most boards under the Department of Commerce and Insurance, Abernathy said.

Tennessee Student Assistance Corp. only began sending names of delinquent debtors to the agencies in the summer of 2009, after a state comptroller's office audit directed them to do so, Abernathy said.

Before that, TSAC used other methods to try to collect on debts, including turning them over to a collection agency and garnishing wages, he said.

"We've used other tools to try to get them to pay their loans back, and this was just kind of pushed to the back burner," Abernathy said.

Contact staff writer Emily Bregel at ebregel@timesfree press.com or 423-757-6467.

about Emily Bregel...

Health care reporter Emily Bregel has worked at the Chattanooga Times Free Press since July 2006. She previously covered banking and wrote for the Life section. Emily, a native of Baltimore, Md., earned a bachelor’s degree in American Studies from Columbia University. She received a first-place award for feature writing from the East Tennessee Society of Professional Journalists’ Golden Press Card Contest for a 2009 article about a boy with a congenital heart defect. She ...

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ann said...

I THINK THIS IS A DISGRACE TO OUT COUNTRY.WE ALLOW ILLEGALS TO COME HERE BE SCHOOLED FOR FREE THEN TAKE THESE PEOPLES LIENCE BECAUSE THEY CAN;T PAY FOR THEIR SCHOOLING,WHAT A WONDERFUL COUNTRY PUNISH YOUR OWN AND REWARD FORINERS,THESE LOANS SHOULD BE FORGIVEN,WE DO IT FOR OTHERS SO WHY NOT THESE NURSES,AT LEAST THEIR TRYING TO WORK AND SAVE LIVES NOT SIT BACK HAVE BABIES AND DRAW A WELFARE CHECK

January 18, 2011 at 1:25 a.m.
alohaboy said...

Ann, I hope you aren't an RN.

January 18, 2011 at 8:04 a.m.
fairmon said...

Why is there not a reasonable withholding for loan repayment when the licensed person is working? The loan should be with little or no interest and no penalty when the individual is not working.

January 18, 2011 at 8:21 a.m.
ceeweed said...

It took 11 years to repay my student loans. I paid, on time, just the way they were set up. Ignoring this obligation was never an option. To fail in this obligation demonstrates a lack of integrity on the part of the borrowers.

This whole idea of forgiving debt for anyone who shuns their part of a loan agreement is inane. I am not a banker, in fact, I have a low opinion of nearly that entire industry. People confuse their wants with their needs. They spend on items and services they could easily live without. Yet, these same people will ignore student loan debt. Well, cue the strings and play "Cry Me A River"...Yo, ann, lose the CAPS.

January 18, 2011 at 9:08 a.m.
fleet2011 said...

Good, and about time, too. They can pay their loans and subsequently get their license back.

They defaulted, pure and simple. The loan terms weren't hidden or deceiving, so it is reasonable to demand they be held accountable. They cheated the funding system to gain a career and now that they have been caught their career is on hold. This common sense tactic will motivate many repayments or refinancings. Rule #1: always pay your govt loans.

January 18, 2011 at 9:08 a.m.
fleet2011 said...

harp3339 Please tell me you are a bank loan officer so I can stop by and sign up for your generous terms. No interest, no penalty. Pay only if you happen to have a job. I'm in.

Actually student loan terms are very generous, with reduced (or zero) interest rates while in school, and plenty of repayment time (usually 10 years) after graduating.

The issue here involves honor and integrity. Skipping out on your student loans demonstrates neither.

January 18, 2011 at 9:23 a.m.
user_name said...

Bravo! Someone found a way to turn student loans into quasi-secured debt. This may discourage so many people from defaulting on them (or even borrowing in the first place).

January 18, 2011 at 10:40 a.m.
Serpico said...

"The issue here involves honor and integrity. Skipping out on your student loans demonstrates neither." Bull. It usually demonstrates an inability to pay rather than an unwillingness to pay. You'd condemn a baby with childhood leukaemia as irresponsible for not taking care of their own health, wouldn't you? Wow, with supporters like you, no wonder the corporate socialists run the show. I'm glad I'm not your neighbour, you pig.

June 9, 2011 at 6:19 p.m.
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