On December 7, 2005, the United States Supreme Court, in Lockhart v. United States et al., unanimously held the United States Government can seize a person's Social Security benefits to pay old student loans. The case interprets the Social Security law and could signal other threats to benefits.
In 2002, the Government began withholding Social Security Benefits from James Lockhart, a disabled sixty-seven year old former postal worker. Lockhart incurred student loans between 1984 and 1989 under the Guaranteed Student Loan Program; some of the loans were outstanding for over ten years.
Lockhart's Social Security Benefits, totaling $874.00 per month, were cut by 15% to cover the student loan debts.
Lockhart contended the ten-year statute of limitations in the Debt Collection Act of 1982, 31 USC § 3716(e)(1), barred the Government's action offsetting his Social Security benefits to repay overdue student loans. Petitioner further claimed the availability of offsets against Social Security Benefits is limited because the Social Security Act, 49 Stat. 620, as amended, makes Social Security benefits, in general not "subject to execution, levy, attachment, garnishment, or other legal process." 42 USC § 407(a).
Another operative statute examined was the Higher Education Technical Amendments of 1991, 20 USC § 1091(a)(2)(D), which eliminated time limitations on suits to collect student loans.
When the Court examined the Social Security Act and Debt Collection Act in conjunction with the Higher Education Technical Amendments, the Court determined time limitations were essentially eliminated as to certain loans: "Notwithstanding any other provision of statute…no limitations shall terminate the period within which suit may be filed, a judgment may be enforced, or an off set, garnishment, or other action initiated or taken." 20 USC § 1091a(a)(2). The Court, therefore, determined the Higher Education Technical Amendments did not make Social Security Benefits subject to off-set.
The Court, however, held "it is clear that the Higher Education Technical Amendments remove the ten-year limit that would otherwise bar, off setting Petitioner's Social Security Benefits to pay off a student loan debt." Despite Lockhart's argument, Congress could not have intended in 1991 to repeal the Debt Collection Act's statute of limitations as to offsets against Social Security benefits, the Court held the fact Congress did not foresee all consequences of an enactment is not sufficient for refusing to give effect to a statute's plain meaning.
The Bush Administration maintains the Lockhart case is important because outstanding student loans total approximately $33 Billion, which includes about $7 Billion in delinquent debt. Of the delinquent loans, about half are over ten years old, the government lawyers have said.