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Supreme Court Says Feds Can Grab Social Security to
Pay Old Student Loans
Unanimous decision concerned only debts that are over
ten years old
Dec. 8, 2005 – The Supreme Court yesterday said the
Social Security payments to senior citizens are up for grabs by the
government to collect on old student loans.
The case addressed specifically loans that are over
10 years old. The government argued they needed this tool to collect on
the $5.7 billion they are owed on student loan debt that is more than 10
years passed due. The total outstanding student loan amount is $33
billion.
The government, which began collecting these debts
through Social Security in 2001, is limited to taking only 15 percent of
the Social Security payment.
The Education Department also has the authority to
forgive debts in some hardship cases.
The case was brought by James Lockhart, a
67-year-old disabled man from Seattle, Washington. The public housing
resident said he needed all of $874 Social Security check to buy food
and medicine, despite his $77,000 student loan debt that he had incurred
between 1984 and 1989 under the Guaranteed Student Loan Program.
These loans were eventually reassigned to the
Department of Education, which certified the debt to the Department of
the Treasury through the Treasury Offset Program.
In 2002, the Government began withholding a portion
of Lockhart's Social Security payments to offset his debt.
Lockhart sued in Federal District Court, alleging
that under the Debt Collection Act there is 10-year statute of
limitations.
The court's unanimous decision applies to loans
that date back more than 10 years, and covers both disability and
retirement benefits under the Social Security program.
"It means that you can take the Social Security
benefits of someone who is 90 years old and living on a small amount of
money," said Brian Wolfman, director of the Public Citizen Litigation
Group and the lawyer for Lockhart. "The losers are clearly older Social
Security beneficiaries."
Other groups siding with the senior included the
National Consumer Law Center and AARP.
The ruling was written by Justice Sandra Day
O'Connor.
To read her complete ruling in pdf format –
click
here.
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