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The Student Loan Debt Blog: A Blog About Student Loan Debt and Student Loan Consolidation

Student Loan Debt

A Blog About Student Loan Debt & Federal Student Loan Consolidation

Wednesday, December 07, 2005

Supreme Court Decision: Social Security Benefits Are Fair Game

Years ago, when the government emptied my bank account in order to satisfy a portion of the student loan debt that I wasn’t repaying, I was floored. I could not believe that the government had the power to take away all my money in such a manner. It was a wakeup call that I won’t ever forget, and it was, quite frankly, one that I really needed.

From this day forward, many retired and disabled folks who receive Social Security (SS) benefits, and who’ve made the mistake of disregarding their student loan debts, may experience the same shock and horror that I went through when they get their next SS check.

Today, the Supreme Court ruled against Mr. James Lockhart, the 67-year-old retired postal worker who’s SS check had been cut by 15% in order to make payments towards his 20-year-old student loan debt.

Lockhart’s case was controversial in 3 dimensions:

  1. Lockhart defaulted on his student loan debt 20 years ago, which means that his SS benefits should have been protected by the Debt Collection Act of 1982.

  2. The Social Security Act stipulates that SS benefits should not be "subject to execution, levy, attachment, garnishment, or other legal process."

  3. Lockhart claimed that he needed every penny of his monthly social security check ($874) to pay for food and the medicines he needs to treat his diabetes and heart disease. James Lockhart lives in public housing.

Today’s Supreme Court ruling sorts out 2 conflicting rulings made by 2 lower courts regarding Lockhart’s case and another similar case.

The 9th US Circuit Court of Appeals had ruled against Mr. Lockhart because The Court felt that the Higher Education Act gives the government every right to take a cut of Lockhart's SS benefits.

However, the 8th Circuit Court made a contradictory ruling in a case that was separate from, yet very similar to, the Lockhart case. The case involved Ms. Dee Ella, a Kansas City, Missouri woman who defaulted on her student loan debt 20 years ago; the 8th Circuit Court decided that the Social Security Act and the Debt Collection Act should protect Ms. Ella from having her SS benefits offset by the government.

So, basically, the job of the Supreme Court was to decide which Act of Congress should trump the other: The Higher Education Act (or, to be more precise, the Higher Education Technical Amendments) won out.

So now it doesn’t matter how poor or disabled your are, it doesn’t matter if you need every penny of your SS check to pay for life-preserving medicines and food, and it doesn’t matter if you defaulted on your student loan debt 30 or even 50 years ago: the government can--and most likely will--offset your SS benefits if you default on your federally subsidized student loans.

Your comments are welcome and appreciated.



Anonymous blunt said...

The case against James Lockhart pulls me in two different directions. First, the governemnt should be held to the same standards that every other business in the country is held to. That is, is someone defaults on a loan, you go to court AT THAT TIME, not twenty years later.

But I also feel that, while it is commendable that Mr. Lockhart went into debt for a noble reason - educating himself - the truth is, Americans as a whole need to take more responsibility for incurring debt. If you need to work a second job to pay off a debt, then work a second job for a couple of years, and get it done.

The United States government is funded by taxpayers, guys like me. Someone loans money from me, I don't really want excuses as to why they can't work extra hard to pay me off. I did them a favor in the first place, they should be willing to pay it back over time - and Lockhart had 20 years to o so.

Friday, December 09, 2005 11:50:00 AM  
Blogger Zack said...

I'm curious to know when you sign to get a student loan are you signing away some of your rights because It has to be unconsitutional to garnish your wages without a court hearing. I have 3000 dollar student loan that i am in default on and it scares me badly that i can't pay it.

Tuesday, December 13, 2005 5:21:00 AM  
Anonymous Anonymous said...

While I am sensitive to the argument that the government had 20 years to chase this debt and didn't, I am also not sympathetic to Mr. Lockhart, who failed to make payments for 20 years. I haven't looked for the opinion, but I wonder why he stopped paying: was it because he ran into health problems, or just that he thought he could get away with it?

In any event, even if he did run into health problems or something which substantially cramped his ability to make the monthly payments, in my experience the government is pretty good about giving you some leeway. When you can't pay your taxes when you file, you can a reasonable time extension and/or a payment plan. If you find yourself in substantial hardship, you can ask the government to back off of your student loan repayments for a while. Like I say, I don't know why Mr. Lockhart didn't make the effort to ask for some help instead of just defaulting.

Zach, you too: if you have a good reason you can't make a monthly payment toward your student loan debt, don't just ignore the debt. Contact your lender and ask to work out an acceptable payment schedule.

Thursday, December 15, 2005 5:48:00 PM  
Anonymous Anonymous said...

I am here just to make a general post over the current situations with student loans. I am, in fact, a default student loan collector. I work for a company that is contracted by the Dept. of Ed. and I can tell you more horror stories than anyone. I have seen marriages ruined, homelessness, extreme poverty, etc. The fact of the matter is this. We try and contact you everyday. EVERYDAY. You have almost 3 different collection agencies looking for you before you get sent to my company. By the time these loans get to my desk they are 10-15 years old. So these are the people who are causing major problems in student aid. A certain state has an extreme deficeit that we are working on right now. Over 100 million dollars of federally backed money is out in defaulted student loans there. Now the crap that I myself have to go through on a regular basis is very mentally stressful. Keep in mind I am berated every single day because borrowers won't address the issue. Fact of the matter is this. These loans NEVER go away. The creator of this website dealt first hand what will happen if you don't do anything about it. That is when trying to contact him was exhausted. Now, for those of you out there you need to take care of it. No ifs, ands, or buts about it. The faster you take care of it, the better off you'll be. I help every single one of my friends out with theirs. What borrowers need to understand is that we aren't harrassing you. We have a job to do and you have the responsibilty to pay. I'm here to help you along. In fact we are there to help. Now for those of you willing to take care of it, you'll get a better reception from those collectors if you make the attempt to call. If we have to track you down, we will. Plain and simple. The tools out there are almost limitless as to how we can find you. I can find you if you've been hiding under a rock for twenty years. So just be adults and take care of it. Save everyone, up to the Feds and the I.R.S., the trouble and just do you civic duties. PAY YOUR BILLS. Now I have been very polite in this post, but truly and honestly I wish there were more ways to pin debtors down. I don't need a court order to garnish wages. I serve federally mandated garnishments. I wish I would put leins against you homes. The feds take your money each year in tax returns, you'd think you'd learn. So you let it go on for 15 to 20 years and then get mad because you owe 4x more than you originally took. The common concensus is that "I'm not paying that back #$^$ you...click." Ok, have fun when you children can't go to school because their parents are deadbeats who can't pay somethng back. Great example to set for your kids. Yell at me on the phone, cuss at me infront of your kids. I wonder what child protective services would have to say about that. Those of you working, I wonder what up to 25% of you check being taken feels like? I bet it feels horrible, that feeling inside of not know how your going to pay for christmas for your children. Have fun changing your phone number every few months, or having to put your phone or home under someone else's name. Now I'm not a bad person but you people hiding are pathetic. Just take care of. Be an adult. Set an example for your children.

For you Zach. I would try and do what i said above. Try and contact the company who is collecting on you loan. If you don't, wait until the relization that you dont have a weeks worth of pay, then you will call. Don't let it get to that. Take the initiative. It will save you months of hassle because the garn won't just stop. It may take up to 90 days to get that stopped.

So sorry if I offended you but honestly, tax payers are tried of footing your bills. The real people suffering are the kids out there who can't recieve financial aid because there's a deficientcy in aid. Those are the real losers. So don't deny someone else the ability to further their education because you don't wanna deal with it. Ulitmately, you'll get caught.

Friday, December 16, 2005 7:36:00 PM  
Blogger Mamacita said...

I'm sorry, but I just can not imagine NOT paying a debt. I think sometimes that when it comes to money, people get it and forget where it came from. They've got it now so they spend it, and when the lender asks for it back, people are amazed. It took me over twenty years to repay my student loans, but I did it, paying a small sum every month. I would be ashamed NOT to pay a debt.

Now we are helping our daughter repay HER student loans. And we will continue to sacrifice until it is paid. When a person borrows money, that person signs a contract and that contract is a promise and people who do not honor their promises are not good people.

Saturday, December 17, 2005 11:44:00 AM  
Blogger Cyber Watcher said...

"Lockhart defaulted on his student loan debt 20 years ago, which means that his SS benefits should have been protected by the Debt Collection Act of 1982."

Could you explain something more on the Debt Collection Act of 1982. How does it protect SS benefits?

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Wednesday, February 01, 2006 7:03:00 PM  

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