A federal judge in California has imposed a $100,000 fine on Education Secretary Betsy DeVos after ruling she was in contempt of court for continuing to collect on student loans even though a court order had prohibited her from doing so.
The proceeds from the fine will be put toward helping pay down the balances of former students from Corinthian College, a for-profit university that shut down in 2015 after allegations that it targeted low-income individuals by making false representations about job placement rates. Students were saddled with student loan debts that they could not afford to repay.
The Education Department conceded in a court filing last month that more than 16,000 former Corinthian students were told they had payments due on their student loans after a court-ordered prohibition went into effect in May 2018. Nearly 2,000 of those individuals had wages or tax returns garnished to collect on those unpaid student loans.
In a video posted to Twitter, Mark Brown, the chief operating officer of Federal Student Aid, said that those servicers who collected on loans improperly have been “formally reprimanded” and are working to address the issues that caused the collection efforts to continue.
It is rare for a cabinet secretary to face such a rebuke from a federal judge. DeVos’s contempt citation is the only the third time in the past 20 years where a cabinet secretary has been held in contempt and the other two cases were reversed on appeal.
Judge Kim decided to hold DeVos in contempt because “the evidence shows only minimal efforts to comply with the preliminary injunction,” to stop collecting on the loans in question.
