Decades-Old SC Law Bars Defaulting Students From Government Jobs | News
The recent firing of a Charleston County sheriff’s official brought to light an arcane law that has barred student debtors from government jobs in South Carolina for more than four decades.
Some public officials say the law needs to be reconsidered by lawmakers, with at least one law professor worried it could disproportionately harm minority job applicants.
On April 1, Charleston County Sheriff Kristin Graziano fired Chief Deputy Joyce Smith for failing to remedy multiple federal student loans that had been in default since at least January 2021, when the former major of the North Charleston police was hired for the first time.
Graziano said in a termination letter that she gave Smith time to resolve the issue, but did not. By January, the loans had fallen into “collection status”.
The county’s top cop told Smith she was in charge of law enforcement, which included statute SC 59-111-50.
But the sheriff’s decision raised eyebrows among local and state officials, many of whom were unaware the law even existed.
South Carolina law prohibits anyone who has willfully defaulted on a federal student loan from government employment unless they remedy the loan through their lender.
The law was passed in 1980 amid national concerns about student loan debt and rising default rates on federally backed student loans. High rates of inflation and a sluggish economy pushed the default rate into the double digits in the late 1970s. Some officials also feared that student borrowers would choose to discharge their debts through bankruptcy instead. than to pay them back.
A clamor of responsibility resounded throughout the country. Joining the chorus was Rep. Bobby Kinard, a Democrat from North Charleston who introduced a bill that would become the Student Loan Default Act.
Kinard, who later became mayor of North Charleston, told The Associated Press at the time that anyone who willfully refused to repay a student loan was a thief.
“If a person borrows money and gives their word, they will pay it back, and not doing so is like stealing,” the lawyer-lawmaker said.
Kinard said he learned about the problem after people approached him for legal help filing bankruptcy to avoid paying their student loan debt.
“They are not bankrupt,” he said. “Most just don’t want to repay the loan.”
Rep. Marshall Cain then amended the bill to allow borrowers to take jobs in the state if they repaid their loans through their provider. The Aiken Republican told the AP he fears the bill could potentially prevent someone from getting a job to pay off their debt.
The bill passed and was signed into law by Governor Dick Riley in April 1980.
With that came a change in the state job application that remains today: A person must certify that they are not in default on their federal student loans when applying for a job in the State. It’s true whether they want to police the streets or sweep them, teach at a public university or mop the floor.
Few states seemed to follow Palmetto State’s lead on job bans.
Josh Cunningham, project manager for the National Conference of State Legislatures, researched the number of states that have similar laws on the books at The Post and Courier’s request.
Cunningham said he could find only one state, Illinois, that also barred in-state employment for defaulting borrowers who failed to repay their loans.
In Florida, state employees face the risk of having 10% of their wages withheld if they find themselves in the same situation, but the law specifically prohibits firing someone for their debt, according to Cunningham.
If South Carolina lawmakers hoped the new law would help solve the country’s debt problems, they were seriously mistaken. The student debt crisis only worsened in the decades that followed.
In January, Americans owed $1.61 trillion in federal student debt, according to the Education Data Initiative. About 12% of student loans are currently in default, meaning a payment has been overdue for more than 270 days, despite an ongoing moratorium on student loan repayments in response to the COVID-19 pandemic.
The educational landscape has changed in the 40-plus years since South Carolina passed the law. Tuition fees and debt incurred by students to attend institutions have risen dramatically, even as four-year degrees have become increasingly important for landing well-paying jobs.
In the 1980-81 academic year, students earning a four-year degree from a public university spent an average of about $8,300 in today’s dollars, including tuition, fees, and accommodation, according to the College Board. The average student these days will spend nearly triple, $22,700, for the same degree.
Bankruptcy laws have also changed since 1980 to prevent students from paying their debts.
South Carolina law allows state employees to keep their jobs if they resolve their debt problem.
If the employee cannot pay the full amount at once, he has two options to avoid default: rehabilitation or consolidation. Both plans require the student to make a number of affordable monthly payments, as determined by the loan provider, before the debt is no longer considered a default.
It’s unclear why Smith, who earned $126,000 a year at the sheriff’s office, didn’t remediate his loans. The former deputy chief did not respond to requests for comment.
But to catch up on debt repayment, a person needs a job in the first place.
It’s unclear how many people have been denied state jobs, or simply never applied, because of their unpaid student debt.
Several labor lawyers and professors told the Post and Courier they were only dimly aware the law existed before Smith’s firing made headlines.
Columbia attorney Lewis Cromer has practiced labor law since 1959. He said he knows the law, but it’s rarely brought up in litigation.
“I heard about it during my practice, but I have no idea when it came into effect,” Cromer said.
Dennis Nolan began teaching labor law at the University of South Carolina in 1974, while at the same time running an arbitration and mediation firm.
“Usually I keep a pretty close eye on labor law developments at SC, but this one slipped my mind,” Nolan said in an email.
Joe Seiner, another USC law professor, said he was also unfamiliar with the law, but was concerned about the disparate impact it might have on minority hiring within of the government.
African-American college graduates owe an average of $25,000 more in student debt than white students, while also experiencing higher default rates — 18% versus 9%. At 13%, Hispanic students are also more likely to default than whites.
Seiner said that if the law discriminates against some groups more than others, it could violate federal employment protections.
Officials have also expressed concerns about the law.
Ninth Circuit public defender Ashley Pennington said he never had to turn down a candidate or fire any of his attorneys over student loans, but he still thought the law was bad policy.
Poor planning or just plain bad luck can cause a person to fall behind on their debts, Pennington said.
“It obviously serves society for those with student debt who want to work to find a job,” the public defender said.
Rep. Jerry Govan, who is running for state superintendent of education, co-sponsored student loan rights legislation last year to bolster borrower protections in South Carolina, but that doesn’t did not address the state’s hiring practices.
The Orangeburg Democrat said people had to pay their bonds, but the law essentially trapped people in debtors’ jail.
“If you can’t find a job, how are you going to pay off your debts? ” he said. “It just doesn’t make sense.”
Govan said he would contact state human resources to find out how many people have been turned down for jobs in the state because of student loan default.
Even Graziano has reservations about the law.
In an April 12 statement, the sheriff said she would like to see the law changed to help financially troubled employees who are making reasonable efforts to resolve the debt issue.
However, she pointed out that debt is a bigger issue for law enforcement officers, who may be more susceptible to influence or corruption due to money issues.