Supreme Court: Student Loan Debt May Be Offset from Social Security, Even for Debts Older than 10 Yrs

The federal Debt Collection Act of 1982 authorized the use of administrative offset to recover government debts but prohibited its use on all claims that were outstanding for more than ten years. In 1991 Congress passed the Higher Education Assistance Act of 1991 which purported to abrogate statutes of limitation with respect to student loans, but made no reference to 42 U.S.C. § 407(a) the anti-assignment provision of the Social Security Act. An earlier Congress had enacted a provision stating that 407(a) could not be modified except by express reference. Subsequently in 1996, Congress passed the Debt Collection Improvement Act which extended the 1982 offset authorization to Social Security benefits with express reference to 407(a). The ten year limit was retained in the 1996 legislation. 31 U.S.C. § 3716(e)(1). How are these statutes to be reconciled? Two Circuits addressed this question within two weeks of each other last year and reached opposite conclusions. Lockhart v. United States, 376 F.3d 1027 (9th Cir. 2004); Lee v. Paige, 376 F.3d 1179 (8th Cir. 2004).

Lockhart appealed to the Supreme Court which this week unanimously affirmed the Ninth Circuit decision in favor of the government. Lockhart v. United States, ___U.S.___, 2005 WL 3299398. Lockhart argued that the repeal of the statute of limitations in 1991 applied only to then valid means of debt collection. The Court rejected this argument and found the express reference in the 1996 legislation to be sufficient. “The fact that Congress may not have foreseen all of the consequences of a statutory enactment is not a sufficient reason for refusing to give effect to its plain meaning.”

Justice Scalia joined in the opinion of the Court and filed a concurring opinion stating his view that statutory express reference provisions such as 407(b) are without effect because “one legislature cannot abridge the powers of a succeeding legislature.” Fletcher v. Peck, 6 Cranch 87 (1810). For further information, contact Gerald McIntyre in the NSCLC Los Angeles office.


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