Betsy DeVos Held in Contempt of Court for Refusing to Stop Collecting Loan Payments From Defrauded Students

A federal judge on Thursday held President Donald Trump's billionaire Education Secretary Betsy DeVos in contempt of court for failing to comply with an order to stop collecting loan payments from former students of Corinthian Colleges, a defunct for-profit college company that defrauded tens of thousands of borrowers.

"If Betsy DeVos wants to work for predatory for-profit colleges, she should resign and find herself a new job."
--Sen. Elizabeth Warren

Judge Sallie Kim of the U.S. District Court in San Francisco also hit the Education Department with a $100,000 fine for violating the injunction.

"Money from the fine will be used to compensate the 16,000 people harmed by the federal agency's actions," the Washington Postreported. "Some former students of the defunct for-profit college had their paychecks garnished. Others had their tax refunds seized by the federal government."

The Education Department said in a statement that it made "mistakes" and did not intend to violate the order.

In her eight-page ruling (pdf), Kim said there is "no question that defendants' violations harmed individual borrowers who were forced to repay loans either through voluntary actions or involuntary methods (offset from tax refunds and wage garnishment) and who suffered from the adverse credit reporting."

"Defendants have not provided evidence that they were unable to comply with the preliminary injunction, and the evidence shows only minimal efforts to comply with the preliminary injunction," Kim wrote. "The court therefore finds defendants in civil contempt."

Kim warned that the court "will impose additional sanctions" if the Education Department continues to violate the injunction.

Toby Merrill, the director of Harvard Law School's Project on Predatory Student Lending, which represents the former Corinthian students, praised Kim's ruling in a statement to Politico.

"It's a rare and powerful action by the court to hold the secretary in contempt," said Merrill. "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."

After Kim warned DeVos earlier this month that she could be held in contempt for violating the court order to stop collecting loans from former students of Corinthian Colleges, Sen. Elizabeth Warren (D-Mass.) tweeted that DeVos would "rather risk sanctions or even jail than do her job to help America's students."

"The Department of Education needs to follow the law and cancel the student loans of scammed Corinthian Colleges students," said Warren, a 2020 Democratic presidential candidate. "And if Betsy DeVos wants to work for predatory for-profit colleges, she should resign and find herself a new job."