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United Student Aid Funds11/3/2003
Heard September 24, 2003
AFFIRMED
The Court granted a writ of certiorari to review the decision of the Court of Appeals in United Student Aid Funds, Inc., v. South Carolina Dep't of Health and Envtl. Control, 349 S.C. 162, 561 S.E.2d 650 (Ct. App. 2002). We affirm.
FACTS
The United States Congress enacted the Federal Family Education Loan Program to encourage the making of loans by private lenders to finance the post secondary education of eligible students. See 20 U.S.C.A. §§ 1071 et seq. (2000) (the Act). Under this Act, guaranty agencies guarantee payment of the loan to eligible lenders and pay the holder of the loan if the student defaults. 20 U.S.C.A. § 1078. Thereafter, the United States Secretary of Education reimburses the guaranty agency for these payments and loan collection costs under a reinsurance arrangement with the agency. 20 U.S.C.A. § 1078.
To assist private guarantee agencies in collecting defaulted student loans, Congress provided guaranty agencies with authority to administratively garnish the wages of student borrowers who have defaulted on their student loan agreements. 20 U.S.C.A. § 1095a(a). Under the Act, a guaranty agency may issue a withholding order requiring a defaulted borrower's employer to withhold 10% of the borrower's disposable income until the debt is paid. 20 U.S.C.A. § 1095a(a)(1). The Act permits guaranty agencies to sue an employer who fails to comply with the withholding order. 20 U.S.C.A. § 1095a(a)(6). Specifically, § 1095a(a)(6) provides:
the employer shall pay to the Secretary or the guaranty agency as directed in the withholding order issued in this action, and shall be liable for, and the Secretary or the guaranty agency, as appropriate, may sue the employer in State or Federal court of competent jurisdiction to recover, any amount that such employer fails to withhold from wages due an employee following receipt of such employer of notice of the withholding order, plus attorneys' fees, costs, and in the court's discretion, punitive damages, but such employer shall not be required to vary the normal pay and disbursement cycles in order to comply with this paragraph....
(Emphasis added).
In the present case, Brenda Irons obtained a student loan from private lenders to pay educational expenses under the Act. Petitioner United Student Aid Funds, Inc., (United) guaranteed the promissory note. When Irons defaulted on her loan, United paid the private lender the loan balance. The Secretary of Education reimbursed United for the amount of the defaulted loan.
United issued a wage withholding order to Respondent The South Carolina Department of Health and Environmental Control (DHEC), Irons' employer, after following the procedures outlined under the Act. DHEC failed to comply with the withholding order. United sued DHEC and other state representatives (collectively, the State) requesting monetary and equitable remedies.
The trial court dismissed the case finding the Eleventh Amendment barred United's action against the State. The Court of Appeals affirmed. United Student Aid Funds, Inc., v. South Carolina Dep't of Health and Envtl. Control, supra.
ISSUES
I. Did the Court of Appeals err by holding the Eleventh Amendment bars United's suit against the State for failing to comply with a withholding order issued pursuant to 20 U.S.C. § 1095a(a)(6)?
II. Did the Court of Appeals err by failing to address the issue of injunctive relief?
DISCUSSION
I.
A. Statutory Construction
United asserts the United States Constitution is not implicated in its
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