In the span of one year, 270 Tennessee health care professionals had their licenses suspended for an offense that had nothing to do with health care: They all failed to pay their student loans.
Nurses, EMTs, physical therapists, social workers, massage therapists — even a few doctors and dentists — all defaulted on their loans and lost their ability to work in 2014.
By the numbers
4,236 unique Tennessee borrowers have had their professional licenses suspended for failing to pay their student loans since the law started being enforced in 2009.
3,185* of those have been reinstated.
295 unique borrowers had their licenses suspended in 2011
1,724 unique borrowers’ had their licenses suspended in 2014**
*This number does not mean that all 3,185 are currently reinstated, as some of them may have encountered a second or third suspension that has not yet been lifted.
**Includes professional boards that were not included under law prior to a 2012 amendment.
Source: Tennessee Student Assistance Corporation
Most common suspensions
Here are the three types of licensees who have most commonly defaulted on the student loans and had their licenses suspended. Numbers show unique borrower suspensions, not total suspensions.
1. Cosmetology Licensee — 656
2. Registered Nurse — 483
3. Nurse Aid — 509
Tennessee Student Assistance Corporation
They are among more than 4,200 Tennessee professionals, everyone from attorneys to cosmetologists, who since 2009 have had their licenses suspended for defaulting on their student loans, according to the state's student loan guaranty agency, the Tennessee Student Assistance Corp.
Tennessee and Georgia are among an estimated 20 states whose laws allow suspension or revocation of professional licenses for people who don't pay their loans. Still, many professionals are unaware of such laws until they're behind on their payments.
Officials with the Tennessee Student Assistance Corp. say the policy is a last resort after months of attempts to notify the borrowers.
"It's a last-ditch effort on our part to catch their attention," said Peter Abernathy, TSAC staff attorney. "Many have gone years without making a payment. This, it has been a helpful thing to help get them back into compliance and good standing with their credit."
Of the 4,200 who have lost their licenses, 3,185 have been reinstated after getting on a payment plan.
Still, others question whether the policy is counterproductive, especially in a time when student loan default rates are at historic highs.
"If you can't pay your student loans and all of the sudden you can't work, you're in a Catch-22," said Sharon Adkins, executive director of the Tennessee Nurses Association. Behind cosmetologists, RNs and nurse aides had the highest rates of suspensions.
Such questioning has driven lawmakers in some other states to revisit such laws. This year, Montana legislators repealed a bill that allowed revocation of professional and driver's licenses. The bill's sponsor called it "unnecessarily punitive."
Illinois considered a similar repeal this year, with that bill's sponsor calling the law "counter-intuitive."
Dustin Weeden, a policy specialist at the National Conference of State Legislatures, said he expects to see more conversation around the issue in coming years.
"With the rise in student default rates, it's causing some states to take a second look to see if they're working as intended," he said.
Most states that passed laws tying professional licenses to student loan payments were passed in the late 1990s and early 2000s, before the federal government was a direct lender and when states had more incentive to collect on the loans they guaranteed, Weeden said.
Tennessee's 1999 statute applied to all professions under the Tennessee Department of Health and most boards under the Department of Commerce and Insurance — but the state only began enforcing it a decade later.
In 2012, lawmakers passed another bill that added all other licensed professions to the list, including teachers and lobbyists.
While the laws may seem crippling for people struggling financially, Weeden said that wasn't the intent when they were written.
"The idea sounds really bad — that you're going to take away someone's livelihood when they default on [their] student loans," he said. "But most policies include due process. It was a tool for [states] to identify those people who were in default, and get them into a repayment plan."
Abernathy said that is how Tennessee's process works.
"The crux of the matter is the due diligence that takes place prior to [revocation] ever happening," he said. "Many of these people will simply ignore the letters."
People are in default when they go 270 days without paying on their loans. Once the loan is sent to TSAC, the agency sends a notice and gives borrowers 90 days to respond, offering them a variety of payment options and warning them their licenses are in jeopardy.
If the borrower does not respond, then the agency notifies the licensing board, such as the Board of Nursing, that the licensee is in default and the board needs to take action.
At that point, he says, most people become serious about getting into a repayment plan.
Weeden said the effectiveness of license-revocation policies is unclear.
In Tennessee, the policy has a "fairly minimal" impact on overall loan repayments compared to more common tools the agency uses, he said. Still, he estimated the law helped officials recover between $30 million and $40 million in repayments.
"The loans that aren't repaid are ultimately paid by the taxpayer," he added.
Contrary to the national rates, Tennessee's student loan default rate has been going down over the last several years following an increase during the recession. It is now around 9 percent, compared to the national rate of 13 percent.
At both the University of Tennessee at Chattanooga and Chattanooga State Community College, student loan default rates also have decreased in recent years, officials say.
Still, the amount that students borrow to attend college continues to go up. Nearly 70 percent of 2013 graduates had student debt, with an average of $28,400 per borrower, according to the latest report from the Institute for College Access and Status.
"Student loan debt has a prominent role in our discourse these days," said Weeden. "I would expect these laws to become a part of that conversation."