The United States Supreme Court ruled in Lockhart v. U.S., 04-881 that student loans can be collected through garnishment of up to fifteen percent (15%) of Social Security benefit payments. Because the ruling covers disability as well as retirement benefits, recovery may be made against SSDI (Social Security Disability Income — payable to disabled adults whose parents paid into the Social Security system) and SSI (Supplemental Security Income — payable to those with almost no income or assets) as well as traditional retirement Social Security.

Further, in 1996, Congress removed the statute of limitations on recovery of defaulted student loans. So people who attend school then become disabled and unable to work may have their very limited public benefits further reduced to repay their student loans.

Money left or given to a disabled person in a Special Needs Trusts is not impacted by this ruling and is still safe from attachment.

It is possible that Congress will reconsider this issue, as lower courts have been divided on whether student loans can be collected against Social Security benefits.