Last June, a judge ordered Betsy Devos and the Department of Education she runs to cease any collections of student debt on students that attended the large for-profit Corinthian Colleges Inc. The judge also ordered Devos to begin issuing refunds to students who never got the education they paid for.
Devos did none of that, and continues to attempt to collect student debts to this day. Devos’s department is going as far as to seize wages and even tax refunds from the ripped-off students.
Corinthian Colleges Inc. one of the nations largest for-profit colleges, filed for bankruptcy in 2015. The college filed in the middle of multiple investigations alleging systematic fraud and other misdeeds.
In the aftermath of the filing, the government granted over 335,000 former students the ability to cancel that debt and in some cases receive refunds by signing off on a form and checking a box. It now appears Betsy Devos and her department have by no means lived up to this arrangement.
The judge seems to be running out of patience, and if DeVos does not fully comply, she may be running the Department of Education from a jail cell.
From the LA Times:
“I’m not sure if this is contempt or sanctions,” U.S. Magistrate Judge Sallie Kim told lawyers for the Education Department at a hearing Monday in San Francisco. “I’m not sending anyone to jail yet, but it’s good to know I have that ability.”
The judge said she was “astounded” that the department violated her June order to stop collecting the debts from students, who had been promised refunds of their tuition.
“At best it is gross negligence. At worst it’s an intentional flouting of my order,” Kim warned lawyers for the department.
They add …
A report the department filed last month to show its compliance with the judge’s order to cease debt collections instead explained that the agency has seized tax refunds and wages from at least 1,808 students. Almost two years later, the department still hasn’t identified all the students in the lawsuit who are owed refunds, and it has processed refunds for only 10 of them, according to a court filing.
Reacting to the findings, Kim on Monday lifted a pause on the lawsuit against DeVos, ordering it to move “full-steam ahead” in tandem with a related suit filed by California despite the Education Department’s pending appeal of her rulings in the litigation.
“We think contempt is clear on the record presently before the court, and expect that the court will issue that finding, regardless of what sanctions are imposed,” said Eileen Connor, legal director at the Project on Predatory Student Lending at Harvard University, which represents the students.
Judge Kim will soon issue a final ruling after considering written arguments from both sides.
