High court to decide on seizing Social Security funds

Government took income for unpaid student loans

April 26, 2005|By David G. Savage | David G. Savage,LOS ANGELES TIMES

WASHINGTON - In the latest installment of the baby-boomers-reach-retirement-age saga, the Supreme Court said yesterday that it would decide whether the government can seize Social Security benefits from former college students who failed to repay student loans. At issue is $3.6 billion in student loans that have gone unpaid for more than 10 years.

One federal law says Education Department officials should aggressively seek to collect money from those who defaulted on government-backed loans. But a second law says the government should not take Social Security benefits to repay debts that are more than 10 years old.

To resolve the dispute, the justices voted to hear the case of James Lockhart, a Washington state man who went to four colleges in the 1980s with the help of federally guaranteed student loans. He became disabled from diabetes and heart disease and was unemployed in 1991 when he defaulted on nine student loans.

Lockhart was living on $874 a month that he received from Social Security's disability program in 2002. At the time, he had $80,000 in unpaid student loans. To repay his debts, the government took $93 a month from his disability benefits. A year later, Lockhart reached age 65 and began receiving old-age benefits instead of disability. Now, the government is taking $143 a month.

Under the law, the government can seize 15 percent of a recipient's monthly benefits to repay the loans.

The Education Department said these seizures had "proven to be an effective means" of recovering unpaid student loans. In 2003, the collection effort brought in $400 million from reclaimed Social Security benefits.

Lockhart sued three years ago to block seizure of his benefits, but lost before a federal judge in Seattle and the 9th U.S. Circuit Court of Appeals in San Francisco. Its judges pointed to the education law that encourages the government to aggressively collect unpaid student loans.

But the U.S. appeals court in St. Louis, in a separate case, came to the opposite conclusion by pointing to the Debt Collection Act, which bars the government from seizing Social Security benefits to pay debts that are more than 10 years old.

The Supreme Court said it would hear the case in the fall.

Meanwhile, the court also agreed to consider whether a homeowner who trips over a piece of mail on her front porch can sue the U.S. Postal Service.

A third case, also set for the fall, will test whether convicted murderers can try to avoid the death penalty by arguing before the sentencing jury that they are not guilty after all.

In the past, the Supreme Court has said the sentencing hearing should focus on whether the defendant deserves to die for the crime, not whether he committed the crime.

The Los Angeles Times is a Tribune Publishing newspaper.

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