EDUCATION

Betsy DeVos Held In Contempt For Violating Order On Student Loans

The Education Department improperly tried collecting on loans to former students defrauded by the defunct for-profit chain Corinthian Colleges.

Education Secretary Betsy DeVos was held in contempt of court by a federal judge on Thursday and ordered to pay a $100,000 fine after wrongly trying to collect on student loans taken out to attend a chain of now-shuttered for-profit colleges.

U.S. Magistrate Judge Sallie Kim wrote in her order that there was “no question” that DeVos’ Education Department “harmed individual borrowers who were forced to repay loans either through voluntary actions or involuntary methods.”

Around 16,000 people were affected by the department’s continued efforts to collect on the loans, even after the judge ordered it to stop. Of those, 1,808 faced wage garnishment or offsets from their tax refunds, and 847 saw their credit scores negatively impacted. The borrowers have since been reimbursed, according to the department.

Kim wrote that “the evidence shows” the department made “only minimal efforts to comply with the preliminary injunction.” 

The judge had ordered DeVos’ Education Department to stop collecting on the loans in May 2018. After discovering her order had not been followed, Kim issued a sharp rebuke of the department earlier this month.

“I’m not sending anyone to jail yet, but it’s good to know I have that ability,” the judge said at the time, Politico reported.

It is extremely rare for a court to hold a Cabinet secretary in contempt of court, and DeVos is facing fresh calls for her resignation over the issue. 

Because DeVos is named in the lawsuit in her official capacity as education secretary, the billionaire school-choice activist will not be personally responsible for paying the fine. The $100,000 will go toward debt relief promised to former students of Corinthian Colleges, who former President Barack Obama’s administration found were defrauded by the company.

Corinthian Colleges, which closed in 2015, was found to have inflated job-placement rates of graduates by counting students who were employed prior to enrollment as successfully placed, and by paying temporary employment agencies to hire graduates. 

“We’re disappointed in the court’s ruling,” the Education Department said in a tweet. “We acknowledged that servicers made unacceptable mistakes.”

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