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Judge Holds DeVos in Contempt Over Student Loans

Court finds Education Department disregarded order to stop collecting on loans of 16K
By Arden Dier,  Newser Staff
Posted Oct 25, 2019 9:28 AM CDT
Education Secretary Betsy DeVos listens during a Cabinet meeting in the Cabinet Room of the White House in Washington on July 16, 2019.   (AP Photo/Alex Brandon, File)

(Newser) – Education Secretary Betsy Devos was held in contempt of court and handed a $100,000 fine Thursday for violating a federal judge's order to stop collecting on certain student loans. The move came after the Education Department was told in May 2018 to stop collecting on the loans of more than 16,000 students who attended the for-profit Corinthian Colleges before the company closed in 2015 amid fraud accusations, reports Politico. But it did so anyway. Some borrowers paid up voluntarily when they were falsely told they owed money, while others had their wages and federal tax refunds seized by the government. "Loan servicers made an error on a small # of loans," DeVos tweeted Oct. 10. In court, the department admitted officials charged with overseeing the loan servicing companies had been "negligent."

"There have to be some consequences for the violation of my order 16,000 times," Magistrate Judge Sallie Kim said at a hearing earlier this month, per Politico. "I'm not sending anyone to jail yet, but it's good to know I have that ability." The department argued it had "been working diligently and in good faith to correct the errors," including by refunding at least 3,200 borrowers, but Kim described "only minimal efforts to comply" on Thursday. The judge said $100,000 to be paid by the government would go to a fund held by attorneys for the former Corinthian students to offset damages, including those who "suffered from the adverse credit reporting," per CBS News. The "disappointed" department didn't indicate if it would appeal the decision, which came as a top official in the federal student loan program resigned, calling the system "broken," per CBS. (Read more Betsy DeVos stories.)

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