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The www.FedPrimeRate.com Personal Finance Blog and Magazine

Tuesday, November 01, 2005

The James Lockhart "Social Security Offset" Case Goes To The Supreme Court

Student Loan Debt Horror Story Remember the story about James Lockhart, the 67-year-old guy who's having his meager Social Security (SS) benefits garnished because he defaulted on his student loan debts 20 years ago? Well, Mr. Lockhart sought a legal remedy for his predicament, and now his case has made it all the way to the Supreme Court!

The case is now being decided by the nation's highest court because 2 lower courts have made conflicting rulings regarding Lockhart's case and another similar case.

Let's first consider Mr. Lockhart's case, in which The 9th US Circuit Court of Appeals ruled against Mr. Lockhart. This particular panel of jurists ruled against Mr. Lockhart because, according to their decision, the Higher Education Act gives the government every right to take a cut of Lockhart's SS benefits (also known as an "offset") in order to satisfy his student loan debts, even though these debts are over 10 years old. The age of Lockhart's debt is very significant here, because according to the Social Security Act and the Debt Collection Act, Mr. Lockhart's SS benefits should be shielded from government collection because his student loan debts are over 10 years old.

In other words, there's some serious conflict between these laws: on the one hand, you have the Higher Education Act which should permit the government to take a portion of Lockhart's SS benefits despite the fact that his student loan debts are very old, while on the other hand, Lockhart's SS benefits should be protected by the Social Security Act and the Debt Collection Act.

So with this critical conflict between the above mentioned laws, it was probably inevitable that another court would rule contrary to the decision handed down by the 9th US Circuit Court of Appeals. And that's exactly what happened.

Dee Ella of Kansas City, Missouri, had borrowed over $4,000 via government student loans in order to pay for college. Back in 1984, Ella defaulted on her student loans. In 2001, her SS benefits were cut from $814 to $750 as a result of a government offset. Sounds familiar? Indeed. Ella's case is very similar to Lockhart's: student loans debts that are over ten years old; the government offsetting SS benefits despite conflicting laws.

Well, in Ella's case, the 8th Circuit Court ruled in favor of Ella; the Court decided that the ten-year limit on SS offsets should be applied in her case, and that her SS benefits should be left alone.

So now it's up to the Supreme Court to sort out this mess. The Court's ruling should be interesting, especially because the Court has a new boss. Stay tuned.

How do you feel about the government offsetting SS benefits in order to satisfy old student loan debts? Should the ten-year rule stick, or should student loan defaulters be responsible for their education loans regardless of how much time has passed? Your comments are welcome and appreciated.

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National Institutes of Health Starts Taking Applications For Its Loan Repayment Program

The National Institutes of Health (NIH) has started a Loan Repayment program that repays up to $35,000 of student loan debt per year. Sounds super-generous, right? Well, as you might have guessed, it's a program reserved for highly qualified individuals, i.e. you've got to have a PhD, and you have to satisfy other very specific prerequisites to boot.

Details from a press release issued today are below:

"On Thursday, September 1, 2005, the National Institutes of Health (NIH) began accepting applications to its five Loan Repayment Programs (LRPs). Deadline for applications is December 1, 2005.

The five LRPs offered by the NIH include the Clinical Research LRP, Clinical Research LRP for Individuals from Disadvantaged Backgrounds, Contraception and Infertility Research LRP, Health Disparities LRP, and Pediatric Research LRP.

Through these programs, the NIH offers to repay up to $35,000 annually of the qualified educational debt of health professionals pursuing careers in biomedical and behavioral research. The programs also provide coverage for federal and state tax liabilities.

To qualify, applicants must possess a doctoral-level degree, devote 50 percent or more of their time (20 hours per week based upon a 40-hour work week) to research funded by a domestic non-profit organization or government entity (federal, state, or local), and have educational loan debt equal to or exceeding 20 percent of their institutional base salary. Applicants must also be U.S. citizens, permanent residents, or U.S. nationals to be eligible.

'The NIH Loan Repayment Programs offer an easy and effective way for research scientists to focus more on medical research and less on repaying student loans,' says Dr. Norka Ruiz Bravo, Deputy Director for Extramural Research. 'Since 2002, nearly 4,000 qualified health professionals have benefited from more than $225 million disbursed in loan repayment support. Through these programs, the NIH has opened doors for many young scientists to launch careers in research without the burden of student loan debt.'

All applications must be completed by 8 p.m. eastern time, December 1, 2005. Visit www.lrp.nih.gov to apply.

The Office of the Director, the central office at NIH, is responsible for setting policy for NIH, which includes 27 Institutes and Centers. This involves planning, managing, and coordinating the programs and activities of all NIH components. The Office of the Director also includes program offices which are responsible for stimulating specific areas of research throughout NIH. Additional information is available at http://www.nih.gov/icd/od/.

The National Institutes of Health (NIH) — The Nation’s Medical Research Agency — is a component of the U. S. Department of Health and Human Services. It is the primary Federal agency for conducting and supporting basic, clinical, and translational medical research, and it investigates the causes, treatments, and cures for both common and rare diseases. For more information about NIH and its programs, visit http://www.nih.gov."

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