Iowa Real Estate Practice Exam

What should a licensee do if they find themselves in default of a college student loan?

1. They should renew their license as usual

2. They are at risk of denial for license renewal

3. They can apply for a deferment

4. They should ignore it until it gets resolved

The correct answer is: They are at risk of denial for license renewal

If a licensee finds themselves in default of a college student loan, the situation could directly impact their ability to renew their real estate license. Being in default may lead to significant consequences, including being at risk of denial when attempting to renew the license. This is because many states, including Iowa, have regulations that stipulate that licensees must maintain good financial standing, and defaulting on a student loan can be seen as a failure to fulfill financial obligations. Renewing a license as usual without addressing the default is not advisable, as the licensing authority may conduct checks that reveal the default, leading to complications or denial of the renewal application. Applying for a deferment may be a wise strategy to manage the loan in default, yet it does not directly address the implications for license renewal. Ignoring the issue entirely can result in more severe consequences, including potential legal action or lasting impacts on one’s professional reputation. Thus, being aware of and addressing the risk of license renewal denial due to a student loan default is an essential step for any licensee in this situation.