(Michael Arria) Thanks to the work of local organizers pressuring lawmakers, Montana residents will no longer have their drivers licenses suspended if they fall behind on their student loan payments. This April, a Montana law that allowed the state to revoke licenses for that infraction was scrapped. However, in at least 21 states, similar laws remain on the books.
The criminalization of low-income Americans’ everyday life has experienced a fair amount of coverage lately in the wake of the Department of Justice’s report on Ferguson. That report detailed how steep fees and fines for nonviolent offenses inevitably strapped residents of Ferguson with ridiculous debts. Those debts are then criminalized in a process the report called “illegal and harmful.” If poor people fall behind on their payments, they could even face jail time. Although student debt is not generally interpreted in quite the same way, portions of it have certainly been criminalized. Perhaps nothing showcases this fact more than states’ ability to suspend people’s licenses if they default on their loans. Nearly 30% of US workers now need a license in order to perform their jobs, which means that defaulting on a student loan could effectively mean losing a job.
Unlike other forms of debt, student loans possess specific criteria that make them nearly impossible for many people ever to escape. Students can’t declare bankruptcy and collectors aren’t regulated by the same rules they are with other kinds of debt. Borrowers are unable to declare bankruptcy and student loan collectors aren’t regulated by the Fair Debt Collections Practices Act.
While the crisis might be brutal for student debtors, it’s been the opposite for the federal government. The $40 billion a year raked in from debtors would make the government one of the most profitable companies in the world if it were a private lender.
The average student debt in the United States is about $30,000. That’s no different in Montana where 64% of college graduates owe an average of $27,475. Like a number of other states, Montana had a law that said a driver’s license could be taken away if a resident defaulted on his or her loans. This is a perplexing policy for most states, but it’s particularly confounding for a place like Montana where most people have to drive in order to get to work. A story in Bloomberg cited a spokesman for the Montana attorney general’s office who said that the state has suspended the licenses of 92 people who defaulted on their loans. Montana Guaranteed Student Loan Program estimates that the license-revoking program helped net about $200,000 from debtors.
I talked to Sheena Rice of the Montana Organizing Project about the effort to decriminalize student debt in the state. After learning of the punitive language associated with student debt default, Rice’s organization and a number of other local groups joined together and made the issue a priority. “In 2014 MOP interviewed 120 current borrowers, a third of whom are currently not able to pay their student loans,” Rice told me. “While none have had their licenses suspended, we knew it was a serious issue as Montana is a rural state and drivers licenses are critical to work.”
Montana maintains a Republican majority in both the House and the Senate. This meant it was crucial for organizations to obtain support from both parties in order to revise the law. “We worked with legislators from both parties to pass the legislation and members with personal default stories came forward to talk about the importance of decriminalizing student loan default,” Rice said. “Their stories helped shed light on the fact that student loans are a burden to Montana’s economy.”
This momentum led to Democratic State Rep. Moffie Funk introducing a bill that would do away with the practice. “I think it is demeaning. I think it is unnecessarily punitive,” Funk told NPR. “There isn’t public transportation, or very little. You know people need cars in Montana.” The bill was co-sponsored by Republican state representative Daniel Zolnikov and signed by Montana governor Steve Bullock.
Montana is the only state that has taken the law off its books (although similarlegislation is developing in Iowa), but it provides a blueprint for other organizations looking to change their student debt policies.
“I think other states can follow this, by focusing on bringing together a broad group of supporters including students, grassroots organizations, and bipartisan legislative champions,” Rice said. “There are plenty of ‘sticks’ to use when it comes to loan default from wage garnishment, tax garnishment and damaged credit. States should not take away the right of people to work to pay their student loans. We do hope that this trend will spread and that the other 21 states will follow our lead and decriminalize student debt.”
In addition to doing away with the law, residents of Montana have also beenfighting for a tuition freeze throughout the state. There have been two freezes over the past couple years, but many claim that they’ll be unable to afford their education if the cost increases. In the last thirty years, tuition costs in Montana have increased by over 1,100 percent.
Beyond decriminalization, student debt strikes have been increasing throughout the country. The US Education Department recently acknowledgedthat students at the for-profit Corinthian Colleges could potentially have their debts waived if they can prove they were defrauded. Forty million Americans now have at least one outstanding student loan.