Justices to Review Loan Offsets

washingtonpost.com
Justices to Review Loan Offsets
Court to Decide Whether a 10-Year Limit Shields Student Debts

By Charles Lane
Washington Post Staff Writer
Tuesday, April 26, 2005; A02

The Supreme Court announced yesterday that it will decide whether the federal government may force debtors who have been delinquent on their student loans for more than a decade to repay them by forfeiting Social Security benefits.

The court said it will review a ruling last year by the U.S. Court of Appeals for the 9th Circuit, based in San Francisco, which said the government could deduct money from James Lockhart's monthly Social Security checks to offset the $80,000 in unpaid student debt he had accumulated as of March 2002.

Billions of dollars are at stake in a case that asks the justices to reconcile the key federal goals of keeping educational aid programs solvent and maintaining the incomes of the elderly and disabled.

According to the Treasury Department, $3.6 billion of the $7 billion in delinquent student debt is more than 10 years old. The government used deductions from government benefits to collect $400 million a year in delinquent student debt between 2000 and 2003.

The Bush administration told the court that, without the authority to go after Social Security benefits to pay decades-old student debts, it would lose "the most efficient (and, in many instances, the only) means of collecting delinquent debt to the United States."

The 9th Circuit ruled that, although a 1982 law barred withholding benefits to collect debts older than 10 years, two subsequent laws overrode it. Lockhart contends that the statute of limitations was never explicitly repealed.

He says he is disabled and relies on $874 a month in Social Security benefits. The government began deducting part of that in May 2002, for a total of $3,555 as of January 2005.

Both sides concur that the first $9,000 of a debtor's annual benefits is exempt from seizure, and that the debtor must be notified before withholdings begin.

The Bush administration agreed that the issue should be considered to resolve a conflict between the 9th Circuit and the U.S. Court of Appeals for the 8th Circuit, based in St. Louis, which ruled last year that a 10-year statute of limitations still applies to student loans.

But the justices rejected the administration's request to review the 8th Circuit case, putting the government at a slight disadvantage. Lockhart, as the petitioner, is allowed to write a rebuttal brief and may have time to rebut the government's case at oral argument.

The case is Lockhart v. U.S., No. 04-881. Oral argument will take place next fall, and a decision is expected by July 2006.

Separately, the court announced that it will decide a case about what kind of evidence capital crime defendants may introduce to save themselves from the death penalty.

Defendants who have been convicted of a death-penalty offense face a second hearing at which a jury must decide whether to impose death or a lesser penalty. At these sentencing hearings, the defense has a constitutional right to introduce mitigating evidence to persuade jurors to spare the defendant's life.

At issue in the case the court agreed to hear yesterday, Oregon v. Guzek, No. 04-928, is whether the Constitution requires a state to permit the defense to introduce claims that the defendant is innocent as mitigating evidence.

The court's ruling could have a significant impact at a time when death penalty opponents are seeking to heighten public doubts about capital punishment based on recent death row exonerations.

The prosecution's job at sentencing hearings might become more difficult if the court were to say that the defense has an absolute right to try to reinforce "residual doubts" among jurors who have already concluded that a defendant is guilty beyond a reasonable doubt -- but not, perhaps, beyond any doubt.

In a fragmented 1988 decision, the Supreme Court ruled that the Constitution does not require a trial judge to instruct a jury to consider such evidence. Most courts have interpreted that to mean that the defense has no right to introduce the evidence on its own.

But last year the Supreme Court of Oregon ruled 3 to 2 that convicted double-murderer Randy Lee Guzek must be allowed to present testimony at his sentencing hearing from his grandfather and mother, who placed him elsewhere at the time of the crimes.

In its appeal to the U.S. Supreme Court, the state of Oregon asked the court to intervene "to establish a uniform interpretation of whether the Eighth Amendment creates a constitutional right to offer evidence and argument of residual doubt in a penalty-phase proceeding." The Eighth Amendment bans "cruel and unusual punishments."

Oral argument will take place in the fall, and a decision is likely by July 2006.