Ruling lets benefit be seized to pay off old student loans

Former students who are retired or disabled should still pay, lawmakers say.
LOS ANGELES TIMES
WASHINGTON -- The government can seize part of a person's monthly Social Security benefit to pay off old student loans, the Supreme Court ruled Wednesday.
The 9-0 ruling gives the government an extra way of collecting on more than $7 billion in delinquent student loans. It could cost retirees up to 15 percent of their monthly benefit.
Generally, Social Security benefits have been shielded from being seized. But Congress revised the law in 1996 to allow specifically for the collection of unpaid student loans, the justices said.
This "provides exactly the sort of express reference" that courts must honor, said Justice Sandra Day O'Connor in what likely is one of her last opinions.
Bad news for boomers?
The ruling may come as bad news for many baby boomers who are near retirement age. While the government has backed billions of dollars in bank loans to college students, those loans become the government's debt if the former students default.
Lawmakers have made clear those debts should not be forgiven simply because the former students are disabled or retired.
In 2003, the government estimated it had been recouping about $400 million a year by seizing the Social Security benefits of debtors.
The court was ruling in the case of James Lockhart, who attended four institutions of higher education between 1984 and 1989 and took out nine federally guaranteed loans. By 2002, he was disabled from diabetes and heart disease, and had $80,000 in unpaid student loans.
As a person with disabilities, Lockhart received a Social Security benefit, but the government withheld $93 per month to repay his student loans. His monthly benefit grew in 2003 when he reached retirement age, but the government then began withholding $143 per month.
Filed a lawsuit
Lockhart sued three years ago to block the seizure of his benefits, but he lost before a federal judge in Seattle and the U.S. 9th Circuit Court of Appeals. Its judges pointed to the Higher Education Act that authorized the government to seize benefits as a way to pay down old debts.
Separately, a U.S. appeals court in St. Louis came to the opposite conclusion and pointed to a law that set a 10-year time limit on the government's collecting of old debts.
The Supreme Court took up the case of Lockhart vs. U.S. to resolve the dispute and affirmed the decision of the 9th Circuit. The justices concluded that the amended Higher Education Act had repealed the 10-year limit.