Rauner signs bill preventing professional license suspension for student loan delinquencies

Rauner signs bill preventing professional license suspension for student loan delinquencies

A new law will ensure Illinoisans don’t lose their right to practice their professions if they fall behind on student loan payments.

Gov. Bruce Rauner signed into law the Career Preservation and Student Loan Repayment Act on Aug. 14. The new law will prevent Illinoisans who fall behind on student loan payments from having their professional licenses denied, revoked or suspended for that reason. State Sen. Scott Bennett, D-Champaign, introduced the measure, which passed 54-0 in the Illinois Senate and 104-3 in the House of Representatives.

The new law is a step in the right direction toward dismantling the roadblocks that too often get in the way of struggling Illinoisans trying to earn a living. But lawmakers should go beyond amending the educational loan provision in Illinois’ administrative code: Illinois’ professional licensure requirements themselves should be re-examined.

Prior to the enactment of the Career Preservation and Student Loan Repayment Act, Illinois law directed the Department of Financial and Professional Regulation to refuse a license or a license renewal to anyone in default on educational loans or scholarships guaranteed by any Illinois state agency, and allowed the department to grant or renew licenses only if the licensee in default was performing satisfactorily under a repayment plan.

Thus, if an Illinois licensed worker fell behind on student loan payments, state officials could refuse to grant a renewal of or suspend that person’s license, making it even harder for him or her to earn a living and repay the loan. Cosmetologists and dental hygienists have been among those affected by this law.

With $1.5 trillion in student loan debt nationally, and nearly 40 percent of borrowers at risk of defaulting by 2023, according to a Brookings Institution analysis of data from the U.S. Department of Education, student loan debt is a significant problem for many. A September 2017 report from the Institute for College Access and Success found 61 percent of Illinois graduates of four-year public and nonprofit colleges and universities from the class of 2016 had educational debt, totaling more than $29,200 on average. And that’s not even counting Illinoisans who have borrowed money to attend community college, vocational or technical programs.

The hardships that often drive borrowers to fall behind on payments and the illogic of making it more difficult for defaulting borrowers to earn an income inspired legislation in the General Assembly in 2016 as well, but a bill to repeal the harsh licensing provisions died in the House of Representatives.

The newly enacted law reverses the former policy and provides: “[N]o [state] governmental agency or board … may impose or refer a matter to any other governmental agency to impose a denial, refusal to renew, suspension, revocation, or other disciplinary action upon a professional or occupational license … for a person’s delinquency, default, or other failure to perform on a [state-provided or guaranteed] educational loan or scholarship.”

Illinois should reduce licensing burdens

The enactment of the Career Preservation and Student Loan Repayment Act shines a spotlight on the fact that Illinois makes it harder for people to enter many occupations by making it illegal to work in these fields without obtaining a state-issued license, which can be a time-consuming and expensive process. Nearly 25 percent of Illinois workers need a license to work in their fields, according to a 2015 Brookings Institution report.

It’s not only relatively well-paid professionals such as doctors, engineers and accountants who need licenses to practice. Barbers, nail technicians and locksmiths are all licensed in Illinois, too.

Licensure – requiring a government permission slip for someone to work in his or her chosen field – is a severe form of state-imposed quality control. A 2017 report by the Institute for Justice, or IJ, shows licensing is often an unnecessary method for protecting the public, is frequently poorly suited to that end, and reduces competition by erecting a barrier to entry for people trying to gain a foothold in a given profession. This hurts job seekers and would-be entrepreneurs, as well as consumers, who face restricted choice and higher costs for services.

Illinois could boost opportunity for residents by overhauling outdated and ineffective licensing restrictions.

According to the IJ report, the best way to protect against harm from incompetent or dishonest service providers and to reward outstanding professionals is through market-based mechanisms such as online reviews, voluntary, third-party certification, and voluntary insurance and bonding. Only when market-based solutions are inadequate should the government step in. And licensure should be the last resort among government interventions, behind measures such as mandatory inspections and insurance.

In a state where post-recession jobs growth still lags the rest of the nation, policymakers should do everything possible to eliminate excessive licensure requirements that can make it even tougher for residents to earn a living.

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