US Secretary of Education Betsy DeVos (AP Photo/Mark Humphrey)
ASSOCIATED PRESS
A federal judge has now held US Education Secretary Betsy DeVos in contempt of court for violating her order.
Here’s what you need to know.
Betsy DeVos: student loans
US Magistrate Sallie Kim today held DeVos in civil court contempt of court and fined him $100,000 for violating an order to stop collecting student loan debt from students who attended Corinthian Colleges, a large, for-profit college that closed on April 27, 2015.
Kim followed through on his warning earlier this month to despise someone or impose sanctions. Today, Kim chose both.
“At best it’s gross negligence, at worst it’s willful disregard of my order,” Kim said earlier this month. Kim then threatened DeVos with possible jail time: “”I don’t know if it’s contempt or penalties. I’m not sending anyone to jail yet, but it’s good to know I have that ability. “
Kim is referring to her June 2018 decision in which she ordered the Ministry of Education to stop collecting debt from 16,000 former Corinthian students. The $100,000 fine will be paid by the federal government, not by DeVos personally, to attorneys representing borrowers in the class action lawsuit seeking, among other claims, cancellation of student loan debt.
What happened
Rather than comply with the judge’s order, the Ministry of Education rather did the following, according to the Project on Predatory Student Lending, part of the Legal Services Center at Harvard Law School:
- “The Department demanded an incorrect loan payment from 16,034 students
- Of these students, 3,289 student borrowers made one or more loan repayments due to these requests, which they were not supposed to pay.
- The Department still hasn’t confirmed 1,147 student loans are in good standing, leaving those students in limbo
- The Department harmed the credit of 847 non-defaulting students
- The Department has subjected 1,808 students to involuntary debt collections (garnished their wages or taken their tax refunds or benefits)”
Borrower’s Defense of Repayment Rule
The Borrower Defense Rule, an Obama-era student loan forgiveness rule, allows students to have their federal loan canceled student loans if a school employed illegal or deceptive practices to encourage students to incur debt to attend school.
Attorneys general from 19 states, plus the District of Columbia, have sued U.S. Secretary of Education Betsy DeVos and the U.S. Department of Education for delaying the borrower protection rule that was to take effect from 1 July. The lawsuit alleged that DeVos unlawfully delayed the implementation. from borrower defense to the repayment rule, which was intended by the Obama administration to facilitate debt cancellation for defrauded student borrowers.
Your next steps
If student loan forgiveness or automatic student loan discharge aren’t options for you, there are other proactive and immediate steps you can take regarding your student loans:
- Refinance student loans: student loan refinance is a smart way to lower your interest rate and repay student loans faster
- Additional student loan payment: make a additional student loan payment to reduce principal and lower interest costs
- Consolidate student loans: make student loan repayments more manageable.
