Students ask judge to hold DeVos in contempt over debt collection

Students ask judge to hold DeVos in contempt over debt collection
© Greg Nash

Students from the now-defunct Corinthian College have asked a federal judge to hold Education Secretary Betsy DeVosElizabeth (Betsy) Dee DeVosOn The Money: Economy adds 266K jobs in strong November | Lawmakers sprint to avoid shutdown | Appropriators to hold crucial talks this weekend | Trump asks Supreme Court to halt Deutsche Bank subpoenas GOP set for all-out battle over Michigan Senate seat 'Can I get a ride?' Removing an obstacle for families using school choice MORE in contempt for pursuing their debts despite a court order prohibiting their collection, The Washington Post reported Friday.

According to the newspaper, the Education Department disclosed in a court filing last month that more than 16,000 former students of the for-profit Corinthian College “were incorrectly informed at one time or another … that they had payments due on their federal student loans."

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A federal judge had put a hold on those debt collections in May 2018.

Although the agency has reportedly stopped trying to collect their debt, almost 2,000 people lost wages or tax refunds because of the collection efforts.

The case started in late 2017 when DeVos decided to extend debt relief to former Corinthian students.

A 1995 law allows the Education Department to cancel the federal debt of students who were misled about rates of graduation or job placement by their colleges, according to the Post. Many Corinthian students qualified for debt forgiveness under the law since the college was shut down on charges of fraud and predatory lending.

However, the Education Department's process of calculating each student's debt forgiveness included earnings information that was collected under the gainful-employment regulation, which is generated by the Social Security Administration, the Post reported.

In March 2018, the Project on Predatory Student Lending at Harvard University, in collaboration with the Housing and Economic Rights Advocates, filed an injunction on behalf of the Corinthian College students to stop the Education Department from using that method, arguing it was illegal to access the earnings information.

Magistrate Judge Sallie Kim of the U.S. District Court agreed with the two advocacy groups and ordered the Trump administration to stop pulling earnings data to calculate debt forgiveness.

A hearing in the case is scheduled for Monday.

“Secretary DeVos continues to show that she thinks she and the Department of Education are above the law," Toby Merrill, director of the Project on Predatory Student Lending, told the Post. “Let’s be clear about the facts: The department admitted that it blatantly violated a court order that we won."

The Education Department did not immediately respond to a request for comment.