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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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Anonymous Peter Porcupine said...

Sorry, but a debt is a debt.

This should be done, as it will get worse as baby boomer retire.

Tuesday, November 01, 2005 4:12:00 PM  
Anonymous The Student Loan Debt Blog said...

> Sorry, but a debt is a debt.
> This should be done, as it
> will get worse as baby
> boomer retire...

I agree that when you borrow money you've got to pay it back, no matter how rich the lender is. That's simple responsibility.

I also agree that the situation could get worse with baby boomers starting to retire.

I don't agree, however, with the government "offsetting" Social Security benefits. Let the government go after property, wages, investments, etc. But they should not be able to touch Social Security benefits. A monthly Social Security check is the only thing keeping many retired folks off the street. The government shouldn't be in the business of forcing retirees into a state of poverty over 20-year-old student loan debts.

Tuesday, November 01, 2005 5:06:00 PM  
Anonymous stranger said...

seems to me it shouldn't matter how old your loans are. you owe the money, you pay. and that's quite aside from the fact that social security is a giant scam anyway... i'm 26, i've been paying into SS for 11 years now, and i'll never see a cent. so yeah, they should garnish his checks. the man should have been responsible and saved for his future, not put it on us taxpayers to take care of him.

Saturday, November 05, 2005 1:24:00 AM  
Anonymous sm said...

while there's certainly a risk that some folks would take advantage of conveniently having their old student loan debts go unaccounted for, this particular case is a bit extreme as it involves an aged person who's retired and probably doesnt have that great a source of income.

Saturday, November 05, 2005 1:11:00 PM  
Anonymous margalit said...

This is very interesting to me, because it's happening to me right now. I am disabled and SSDI has offset $250 for a student loan that was defaulted on from 1975. Yes, THIRTY years ago. And I wasn't the one that defaulted on it, although it was my loan. My parents agreed to pay off this one loan, and never did. I paid off ALL my other loans, and only found out about this loan in the 90's when my father passed away and I was hit with the debt. The loan was for $4,000, and the interest has the loan up to close to $50K. I can't ever pay it off. As a single parent, they are literally taking food from my children's mouths. After they take their cut, I have less than $100 for the month to pay for food, utilities, clothing, and sundries. Even the IRS agrees that nobody can live on that little money. I'm feeding my family from a food pantry, eating food that is so deadly for my diabetes that I can't control my blood sugar at all, because the Student Loan assholes will not discharge my loan EVEN THOUGH I'm totally disabled and have filled out the paperwork. This has been ongoing since last March and I've gotten nowhere.

I didn't know there was a law suit, but now I'm interested in how to get involved with my own case.

Tuesday, November 08, 2005 12:12:00 AM  
Anonymous Student Loan Debt Blog said...

> The loan was for $4,000
> and the interest has
> the loan up to close
> to $50K...

I think that you have a very compelling case, and I think that you should contact a few Social Security attorneys ASAP and listen to what they have to say. With a strong case like yours, I am willing to bet that you will not have a problem finding an experienced lawyer who will represent you for free.

Maybe you can setup a small website to help bring awareness to your situation. Contact me if you want some free help with this.

Tuesday, November 08, 2005 9:21:00 PM  
Anonymous Karen Brundige said...

This is such an important issue. I am 63 and my husband is 73. We only have SS benefits. We paid all of our daughter's student loan from 1979 but gov says we still owe late charges and collection fees. They are deducting 15% of each of our ss checks. My issue is with the SS Act which set forth a law that said ss benefits would not be touched ever and NO LAW would be passed in the future to change that law. So 30+ years later the gov says "so what". We each worked since we were 17, our whole life. Fair is fair. Wrong is wrong. In this instance our gov is wrong and we are praying the supreme court will set it back on track.

Monday, November 21, 2005 8:33:00 PM  
Anonymous Zack said...

Wow! They don't play! I think its a little agressive to garnish someone's social security benefits at 67, but you better read the contract before you sign it. I wonder, why they just didn't garnish he's wages in the last 20 years? I bet that would have solved the problem. I think tho that his social security benefits shouldn't be touched. They should find other means to get there money back.

Saturday, November 26, 2005 10:25:00 AM  
Anonymous 0xide said...

I think that they have the right to take away some of this benifits, although i do not belive they have the right to take all of his SS benifits away... He is a citizen and i dont see why they should just leave him their with nothing.

Saturday, November 26, 2005 9:46:00 PM  
Anonymous Anonymous said...

This is a sad case, but looking at this man in his current situation is like watching only the last 5 minutes of a movie. They're collecting from his social security because he hasn't paid his debt over the last 20 years. I have $115,000 in student loans and I probably won't finish paying them off until a few years before retirement, but I plan to pay them. Many people assume they can ignore them and they'll eventually go away. There are certain jobs that pay less and are less stressful that I might like to take but can't because of my debt payments. But, I knew that when I took the loans. Limiting collections to 10 years opens the door for abuses of the student loan system that could hurt future generations' ability to borrow to get an education.

Wednesday, December 07, 2005 2:37:00 PM  
Anonymous Anonymous said...

Ok lets look at it this way. Those of you who call the people collecting on you loans assholes take this into consideration. It's not our fault you didn't pay. It's you responsibility. The Fed garnishing you SSI...too bad. Pay your bills and it wouldn't have happened. It's all cause and affect. I'm glad they garn your SSI. It's something that should have been inacted long ago. So quit your bitching b/c you weren't responsible. It's not like you didn't aghve ample time to pay it of.

To you Karen I agree that you shouldn't be garnished. Your paying collections cost that they shouldn't be charging you. I will agree with you and you should seek council in yours efforts to stop this.

Now to margalit sorry about it but that's your problem. So what your disabled. What happened all those years that it went unpaid. It was your loan. The money spent on YOUR education has to be recouped. So boo hoo not anyone else's problem but yours. Good luck trying to get it discharged btw...since its been in default over 30 YEARS. Its not free money.

Friday, December 16, 2005 7:58:00 PM  
Anonymous Anonymous said...

If they are taking our around$150 a month he owes $77,000 and he is 67 and in bad health there is no way he will ever pay the full amount back. At the most the government will get $1,800 a year and is take around 40+ years for him to pay it back. He is 67 he would be 107. He probably won't live that long especially if he is broke. I suppose on the positive side the government didn't take his whole ss check. But, I do think that it is on the whole is punitive since they will never fully recover the amount. The government probably should have more stringen standards for lending out student loans.

Tuesday, January 31, 2006 11:06:00 AM  
Anonymous Anonymous said...

I have a question since James B Lockhart is the Social Security Commissioner, is he the one who filed the case using his name instead of the student. I find it strange that both the student and commission have the same name.

Tuesday, January 31, 2006 11:16:00 AM  
Anonymous www.BalanceTransfer.cc said...

> since James B Lockhart
> is the Social Security
> Commissioner...

James B Lockhart is the name of the DEPUTY Commissioner of The Social Security Administration. It's a (weird) coincidence that the names match.

Tuesday, January 31, 2006 2:02:00 PM  
Anonymous I.C. Jackson said...

This is a tough one...

On the one hand, your debt is your debt, and you are supposed to pay it back. Although things happen in life that may complicate the process of repayment for the borrower, the fact remains that they owe the debt.

However, no one wants to take social security benefits from little old ladies! That's just terrible!

After carefully considering this argument, I think the courts were right. While there must be retribution for outstanding debts, it is also the lender's job to perform due diligence in collecting those debts within a reasonable amount of time.

So basically, if it takes you over 10 years to collect a payment, you are pitiful, too, so maybe you deserve to get got.


That's my take on it.

Monday, December 15, 2008 12:35:00 PM  
Anonymous Anonymous said...

Fuck you all and Fuck student loans. You should be able to bankrupt those crappy loans.

You people are all dumbasses.

Friday, April 09, 2010 7:11:00 PM  
Anonymous justup247 said...

I did NOT get the education, did not get the loan, did not get the certificate/diploma, but did get the "royal screwing". None of which was my fault, so the self righteous among you should know...
The school defrauded me by changing the LDA by 4 months (Dec-Mar). First.
Then Sallie Mae continued the fraud by adding another month to that LDA, when the readout clearly showed that I had left school in Dec...(Six month course folks!).
Then Dep. of Ed. continued the fraud by changing it to "graduated" instead of "separation"..OH, BTW they tried to charge me 166.00 interest for a two week loan, also!
Then they offset three tax refunds...
SO, yes by allowing them to further abuse the system they will... STOP them.

Friday, December 17, 2010 8:46:00 AM  
Anonymous Anonymous said...

Debt may be debt but the whole system is fundamentally flawed because there are no basic consumer protections for student loans. You cannot discharge them in bankruptcy; it is incredibly difficult even if you are disabled or elderly because they will drag out the process, "lose" the paperwork, and continue to just take whatever they can get to add to their massive profits. Sallie Mae and the rest of them have had no problem lining their pockets for years at the expense of students, and I am sure they have already paid well over what they borrowed initially. Since there are no statute of limitations when it comes to collections either, they can wring you dry until you die. I wouldn't have a problem if people just had to pay back what they borrowed and had protection from completely predatory practices, but the system is woefully broken and anyone who says "it's your problem" has no idea what is like to be on the receiving end of non-stop harassment and borderline poverty just because you tried to better your life and in many cases, dutifully tried to pay what ultimately ends up being an impossibly large amount of money for it. I hope this affects at least this part of the student loan laws so that they can't go after the elderly who already have health care to worry about.

Friday, December 17, 2010 10:33:00 AM  

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