- Associated Press - Tuesday, January 18, 2011

CHATTANOOGA, Tenn. (AP) — More stringent enforcement of a state statute involving federal student loans has suspended the professional licenses of dozens of Tennessee nurses.

The Chattanooga Times Free Press reports 42 nurses were notified in October that their licenses were suspended because they had not been repaying their student loans. The information was contained in a monthly disciplinary action report by the Tennessee Department of Health.

A 1999 statute that allows licensure penalties for nonrepayment affects the more than 30 professional boards that fall under the domain of the Tennessee Department of Health, as well as many boards under the Department of Commerce and Insurance, said Peter Abernathy, staff attorney for the Tennessee Student Assistance Corp.

The report reflects a backlog from the Health Department starting to enforce the licensing suspension penalty.

“Going forward, when (the state boards) are taking action on these on a month-to-month basis, the number will drop dramatically … down to a small handful,” Abernathy said.

He said other agencies, including the Department of Education, are not required to enforce licensure suspensions when employees fail to pay student loans. He said legislative efforts to broaden that requirement have failed in the past but could succeed this year.

“It is helpful in the sense that it motivates people to repay their student loans,” Abernathy said in a telephone interview Tuesday.

Abernathy said the nurse suspensions follow 18 months of working to notify and work out repayments plans with hundreds of borrowers. Abernathy said some of them had been in default on their loans for years.

The Department of Health said about half the suspended nurses have been reinstated since joining a repayment plan.

With more than 100,000 nurses in Tennessee, state officials say the suspensions don’t represent a problem in the profession.

Libby Lund, executive director for the Tennessee Board of Nursing, said in an e-mail that the “vast majority” of Tennessee nurses repay their loans in a timely manner.

Abernathy said there was a student loan default rate of about 7 percent in Tennessee for years before the recession started in 2007. Loan default rates have since gone up to about 9 percent in Tennessee, which is not “dramatic,” he said.

Bob Perry, director of financial aid at Tennessee Wesleyan College, which has a nursing school, said loan default rates have stayed stable.

“I would think the nurses especially would have no problem paying back their loans,” he said. “We’ve had 100 percent (job) placement in our nursing program for the last eight years.”

Tennessee Student Assistance Corp. started sending names of delinquent debtors to the agencies in the summer of 2009, after a state comptroller’s office audit directed them to do so, Abernathy said.

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