Student Loan Debts and Professional Licenses

As a licensed professional, you can face disciplinary action by your licensing board or agency for various reasons, resulting in undesirable consequences. In some states, a failure to pay student loan debts can cause your licensing board to bring disciplinary proceedings against you. Fortunately, in the state of Texas, that is no longer the case.

If you are facing disciplinary proceedings before your professional licensing board or agency, you should not hesitate to contact a licensing board defense lawyer for advice and counsel. We can determine what strategies are most likely to be effective in defending you from adverse action against your license.  

Disciplinary Action Based on Student Loan Default Prohibited

Previously, like many other states, Texas enacted a law allowing state licensing agencies to take disciplinary actions against license holders who had defaulted on their student loans. This law was part of a nationwide movement led by the U.S. Department of Education to crack down on high student loan default rates.

However, public support for these measures was poor, particularly as the economy slowed and salaries failed to increase as expected. At the same time, higher education costs continued to increase exponentially, causing student debt to spiral out of control. Default rates on student loans rose, and laws jeopardizing occupational and professional licenses made it even more difficult for license holders to comply with the terms of loan repayment agreements. By 2017, more than 4,200 Texas occupational and professional license holders were at risk of losing their licenses due to student loan default. These license holders included 250 teachers, nurses, pharmacists, cosmetologists, and security guards.

As a result, in June 2019, the Texas legislature decided to change course and prohibit disciplinary action against Texas occupational and professional license holders based on student loan default. SB 37 repealed the provisions in Texas law that permitted licensing boards to discipline license holders for defaulting on their student loans. Furthermore, Tex. Occ. Code § 56.003 now states: “[a] licensing authority may not take disciplinary action against a person based on the person’s default on a student loan or breach of a student loan repayment contract or scholarship contract, including by:

  1. denying the person’s application for a license or license renewal;
  2. suspending the person’s license; or
  3. taking other disciplinary action against the person.

“Licensing authority” under § 56.001(3) refers to “[a] department, commission, board, office, or other agency of the state or a political subdivision of the state that issues a license.” A “license” is any license, certificate, registration, permit, or other authorization issued by a licensing authority that a person must obtain to practice or engage in a specific type of business, occupation, or profession. 

Other Types of Debts May Still Affect Your License 

Although you cannot face disciplinary proceedings and the potential loss of your professional or occupational license for defaulting on your student loan payments, you can face adverse consequences for other unpaid financial obligations. These debts include child support arrearages and unpaid state and federal taxes. 

Child Support Debts

Tex. Family Code § 232.003, a court or a Title IV-D agency (a state agency that enforces child support orders) may issue an order suspending the license of an obligor who:

  • owes overdue child support in an amount equal to or greater than the total support due for three months under a support order;
  • has been provided an opportunity to make payments toward the overdue child support under a court-ordered or agreed repayment schedule; and
  • has failed to comply with the repayment schedule.

Under § 232.001(1), “license” is any license, certificate, registration, authorization, or another permit that a licensing authority issues, that is subject before expiration to renewal, suspension, revocation, forfeiture, or termination by a licensing authority and that a person must obtain to engage in a particular business, occupation, or profession. 

Tax Debts

License holders in various professions may be disciplined by their respective licensing boards if they fail to file income tax returns as required, have unpaid tax debts, or commit tax fraud, such as by failing to claim income on which they owe taxes. Only a few laws governing certain professions explicitly refer to tax fraud and debts as a reason for discipline, such as those relating to certified public accountants (CPAs) and property tax consultants. However, the laws concerning many professions and occupations contain references to conduct and crimes involving fraud, deceit, dishonesty, and misrepresentation, which arguably could encompass failing to file tax returns, filing fraudulent tax returns, and failing to pay taxes. These professions include attorneys, CPAs, real estate brokers, and real estate sales agents. Occupations that the Texas Department of Licensing & Regulation (TDLR) oversees that also may be subject to discipline on these grounds include auctioneers, code enforcement officers, electricians, and midwives, among others.  

Standing Up for Your Rights, Defending Your License

Facing an investigation and potential disciplinary proceedings before your professional licensing board can be difficult and stressful, especially if you are unsure what to expect. In addition, you may fear the consequences of those proceedings on your career and future. Together, we can work to resolve your disciplinary investigation in the most positive manner possible. Get legal assistance from an experienced Texas licensing board defense attorney today. Contact Bertolino LLP at (512) 515-9518 or visit us online.

Call or text (512) 476-5757 or complete a Case Evaluation form