The Slatest

Federal Court Holds DeVos in Contempt for Not Trying Very Hard to Stop Loan Collections From Defrauded Students

Betsy DeVos bends over and smiles at kids.
Secretary of Education Betsy DeVos speaks with middle school students in D.C. on April 9, 2018. Saul Loeb/Getty Images

Education Secretary Betsy DeVos was held in contempt by a federal judge Thursday for violating a court order to stop collecting loan repayments from thousands of students who were defrauded by a for-profit chain of colleges. Magistrate Judge Sallie Kim of the U.S. District Court in San Francisco issued a preliminary injunction in May 2018 for the Department of Education to cease collections from the former students of Corinthian Colleges, which was found to have engaged in deceptive recruitment practices and falsified job placement rates before going bust in 2014. The Department of Education said it stopped pursuing some 15,000 student borrowers as a result, but nearly 2,000 people had their wages garnished or had their tax refunds seized by the federal government.

“There is no question that the defendants violated the preliminary injunction. There is also no question that defendants’ violations harmed individual borrowers,” Kim’s court ruling said Thursday. “Defendants have not provided evidence that they were unable to comply with the preliminary injunction, and the evidence shows only minimal efforts to comply.”

Mark Brown, chief operating officer of the Education Department’s Federal Student Aid office, said in a video posted on Twitter that 16,000 students had “mistakenly” been billed by loan servicing companies. “Although these actions were not done with ill intent, students and parents were affected, and we take full responsibility for that,” Brown said. “The Education Department has said it sent emails to the loan-servicing companies it pays to manage the federal student loan portfolio, directing them to postpone the payments of Corinthian students and halt collection of their debts,” the Washington Post reports. “But the agency did not send specific instructions to the companies to postpone the payments indefinitely.”

DeVos, however, minimized the scope and impact of the student loan collections failure earlier this month in a back-and-forth on Twitter with Democratic presidential candidate Sen. Elizabeth Warren.

“[This week’s] decision stems from a class-action lawsuit filed in 2017 by the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School and the group Housing and Economic Rights Advocates, both of which represent former Corinthian students,” the New York Times notes. “For more than a year, the students’ lawyers argued that Ms. DeVos had illegally punished thousands of cheated students who were owed relief from the federal government.”

In a rare but not unprecedented rebuke, the court issued a $100,000 fine to DeVos, in her role as head of the federal education agency, for violating the preliminary injunction.