8th & 9th Circuit split on whether government may offset social security benefits for student loans defaulted more than 10 years ago. SCOTUS agrees to hear the case Yahoo.com news. Dee Ella Lee a social secuirty beneficiary from kansas City beat the governement in the 8th Circuit Court of appeals when it sought to garnish her social security checks for a loan default from the early 1980's. The 8th circuit ruled that the Federal Debt Collection Act limitation on garnishing social secuity checks for debts older than 10 years overrode the federal student loan law revision from 1991 that eliminated any limitation of action on collecting defaulted student loans 20 U.S.C. § 1091a(a)(2).. James Lockhart was surviving on $874 a month in Social Security disability payments plus $10 in food stamps when his student loans from nearly 20 years earlier caught up with him.He was told his Social Security checks would be cut by 15 percent, an offset to pay more than $80,000 in delinquent student loans. The next day, he started legal action that has led to a hearing Wednesday before the U.S. Supreme Court. The case is compelling because many other people are potentially in the same position as Lockhart, at or near retirement age with 20-year-old student loans still unpaid, said Deepak Gupta, an attorney working on his appeal. The government brief on the case said there is nearly $7 billion in delinquent student loan debt, with about half of that amount over 10 years old. The case hinges on a pair of laws that send mixed messages about whether Social Security payments are shielded from the government's collection efforts: the Debt Collection Act and the Higher Education Act, or HEA. According to Public Citizen Litigation Group, which is representing Lockhart, one federal appeals court has ruled in another case that the government is barred by the Social Security Act and the Debt Collection Act from offsetting Social Security payments to repay student loans that are more than 10 years old. The 9th U.S. Circuit Court of Appeals, however, ruled in Lockhart's case that the HEA eliminated that bar, Public Citizen says. Lockhart, now 67 and receiving old age benefits instead of disability payments, wouldn't comment. Speaking by phone from his home in Seattle, he explained that his attorneys advised him not to talk about the case until it has been settled. Gupta, an attorney with Public Citizen, the public interest law firm founded by Ralph Nader, described Lockhart as an old, disabled man living in public housing and barely getting by on his Social Security payments. He has significant medical expenses following double-bypass heart surgery — including six different prescriptions — and because of diabetes. Gupta said Lockhart had more or less given up on his case before the call from Public Citizen. "We told him 'You have nothing to lose. They're not going to take away more money from you,'" he said. The Supreme Court probably agreed to hear Lockhart's appeal because of the conflicting ruling by the 8th U.S. Circuit Court of Appeals in a nearly identical case. The appeal of the 8th Circuit case is on hold until the Supreme Court rules on Lockhart's case. From 2000 through 2003, the Department of Education collected about $400 million a year in delinquent student loan debt through the offset program. In a government brief to the Supreme Court, Solicitor General Paul D. Clement wrote that it is essential to eliminate the 10-year limit on collections through Social Security because offset typically only occurs because the student debtor has successfully evaded collection by lenders and collection agencies for many years. The 8th Circuit case involves Dee Ella Lee of Kansas City, Mo., who took out two government loans to fund her studies. She defaulted in 1984 on more than $4,000, and in 2001 the federal government began offsetting her Social Security benefits, reducing her payment from $814 to $750 a month. The 8th Circuit ruled that the 10-year limit on Social Security offsets applied and her benefits should not be cut."the Debt Collection Improvement Act, which authorizes federal agencies to recover money owed on delinquent student loans (as well as some otherdebts) by offsetting a debtor's social security benefits. See 31 U.S.C. § 3716(c)(3)(A)(i)." However the original Debt Collection Act's limitation on the right of offset, under which government agencies are not allowed to use the remedy of administrative offset on claims that have been outstanding in excess of ten years. See 31 U.S.C. § 3716(e)(1).