Judge fines US education secretary over debt collection

A US judge escalated a confrontation with education secretary Betsy DeVos over student loan debt, holding her in contempt over her department’s persistent failure to help students of a failed for-profit institution.

Judge Sallie Kim of the federal district court in San Francisco also ordered Ms DeVos to pay a $100,000 (£78,000) fine, with the money designated to help the former students of the collapsed Corinthian Colleges chain.

The confrontation arose from a lawsuit filed on behalf of nearly 20,000 former Corinthian students seeking relief under a 1995 law that lets the Education Department forgive federally guaranteed student loans in cases where colleges misled them about graduation or job placement rates.

The Education Department under Ms DeVos has resisted, tying any forgiveness to a measure of whether the affected students were earning less than half that of students who attended similar vocational schools.

Judge Kim ordered the Education Department in May 2018 to stop collecting the federal debts of the former Corinthian students. The judge then expressed surprise earlier this month to hear that the department had not complied, and raised the prospect of jail time to get Ms DeVos and other department officials to change course.

The judge imposed the fine and contempt citation after taking two weeks to consider arguments by department officials that their failure to halt the loan collections was an administrative error involving outside loan-servicing companies.

The Washington Post reported that the Education Department has disciplined two of its employees in the case and reprimanded the loan servicers.

Elizabeth Warren, a leading Democratic candidate for president, earlier criticised Ms DeVos on Twitter for “refusing to follow the law” and being willing to “risk sanctions or even jail than do her job to help America’s students”. In a response, Ms DeVos acknowledged an error on a “small” number of the loans. “We know and we’re fixing it,” the secretary said.

A contempt citation can carry the risk of a jail sentence, although that is rare and is regarded by experts as especially unlikely in the case of Ms DeVos.

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