Betsy DeVos fined $100,000 over the Department of Education’s handling of student loans
You don't often see heads of federal agencies getting slapped with fines from judges, but that's just what happened to the Trump administration's Education Secretary, Betsy DeVos. Recently, DeVos was held in contempt of court and fined for violating a federal order regarding student loans. It's all part of a much larger issue with the department's handling of debt.
Earlier this month, U.S. Magistrate Judge Sallie Kim came down on the Education Department for trying to collect student loan payments from people who had attended the now-defunct Corinthian Colleges, Inc. The department was going against a May 2018 order from Kim to stop doing so.
On Thursday, Kim decided to hold DeVos in contempt of court and issue a $100,000 fine, writing "the evidence shows only minimal efforts to comply with the preliminary injunction". Although the fine will be paid by the government, Kim's decision is still sending a loud message that the Education Department's behavior will not be tolerated.
“It’s a rare and powerful action by the court to hold the secretary in contempt,” Toby Merrill, director of the Harvard Law School's Project on Predatory Student Lending, which represents the former students, said, according to Politico. “And it reflects the extreme harm that Betsy DeVos and the Department of Education have caused students who were already defrauded by a for-profit college.”
"We're disappointed in the court's ruling," the Education Department tweeted. "We acknowledge that servicers made unacceptable mistakes. [DeVos] directed FAFSA to take immediate action to help every impacted borrower. As of today, FAFSA has taken the actions needed to make every impacted borrower whole."
About 16,000 students and parents were billed despite the judge's orders. Kim noted that some borrowers were forced to repay through involuntary methods like offset tax refunds and wage garnishment. In addition, borrowers suffered from adverse credit reporting.
This comes alongside the the House Education and Labor Committee's investigation into the Education Department's handling of Dream Center Education Holdings, a Los-Angeles based Christian charity which purchased Illinois Institute of Art and the Art Institute of Colorado. Recent documents revealed that the Education Department provided nearly $11 million in loans to the two unaccredited for-profit colleges while aware that they didn't have accreditation, which is in violation of the law.
The House Education and Labor Committee's chair, Rep. Bobby Scott (D-Va.), warned DeVos that the next step is to issue a subpoena if the Education Department continues ignoring requests for information about its role in allowing the colleges to mislead students.
"The department's decision to work with Dream Center executives, while keeping students in the dark, left thousands of students with crushing debt and few options to finish their education or enter the workforce," Scott said, according to U.S. News.
Student loan debt is a growing issue in the United States with Americans now owing more than $1.5 trillion. The Education Department violating court orders to go after former Corinthian students for money and misleading other students regarding accreditation may be pointing to a disturbing trend regarding students' lack of relief.