South Dakota Punishes People Behind On Their Student Loans By Stripping Them Of Their Driver's License

Crushing student loan debt is known to prevent people from making substantial purchases, like a new car. In South Dakota, falling behind on your student loan debt can also mean your driver’s license will be revoked, according to the New York Times.

Over the weekend, the Times published a long story that looked at how people can lose their professional license or even their driver’s license as a result of falling behind on their student loan payments.


Few people realize their student loans could lead to this, the Times wrote (admittedly, I had no idea), but 19 states have laws on the books that allow government agencies to seize state-issued professional licenses from those who default on their student loans.

South Dakota takes it one step further—it can suspend your driver’s license. The situation began two years ago, the Times reports, after South Dakota officials ordered licenses to be withheld for various debts to the state.

As a result, nearly 1,000 residents can’t hold a driver’s license because of their debt to state universities, according to the Times.

South Dakota, like many states, has limited, poor access to public transit. You need a car to get around, to run errands or hold down a job. This is nothing short of a maddening way to punish people who’re saddled with the ever-increasing costs of attending college.


The South Dakota governor’s administration thinks this is a good thing.

Here’s more from the Times:

“It’s been quite successful,” said Nathan Sanderson, the director of policy and operations for Gov. Dennis Daugaard. The state’s debt collection center — which pursues various debts, including overdue taxes and fines — has brought in $3.3 million since it opened last year. Much of that has flowed back to strapped towns and counties.

But Jeff Barth, a commissioner in South Dakota’s Minnehaha County, said that the laws were shortsighted and that it was “better to have people gainfully employed.”

In a state with little public transit, people who lose their driver’s licenses often can’t get to work.

“I don’t like people skipping out on their debts,” Mr. Barth said, “but the state is taking a pound of flesh.”


Sanderson responded by saying that licenses can be returned if people enter into a payment plan, but as the Times notes—and as a similar situation in Michigan has demonstrated—those payments can also be excessive.

Here’s one example the Times cited:

Tabitha McArdle earned $48,000 when she started out as a teacher in Houston. A single mother, she couldn’t keep up with her monthly $800 student loan payments. In March, the Texas Education Agency put her on a list of 390 teachers whose certifications cannot be renewed until they make steady payments. She now has no license.


Expectedly, the South Dakota law authorizing this hasn’t gone without controversy. And it shouldn’t. Montana rolled back a similar measure in 2015; South Dakota should follow suit.

Senior Reporter, Jalopnik/Special Projects Desk

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On top of all of that, you can’t get rid of student loans through bankruptcy except in exceptional cases.

So: You have no way of earning money to pay off your debt. You have no way of getting rid of your debt through bankruptcy (which violates the whole idea of bankruptcy - that you can’t be worth less than nothing).

So unless you get hit by the money fairy, what’s the plan? That you’ll magically find a way to make money in your home without driving anywhere?

Terrible legislative thinking. It takes capable people and holds them back from doing things that are good for the people and society (like holding down jobs and leading productive lives), all for some Dickens-esque obsession with paying debt.