A federal court has found that the Department of Education and its secretary, Betsy DeVos, are in civil contempt of court for violating a judge’s order on student loans.
The department was slapped with a $100,000 fine to a fund for those affected, according to CBS News.
The contempt comes because U.S. Magistrate Judge Sallie Kim had previously ordered the department to stop collecting loan payments from student borrowers who were defrauded by now-defunct Corinthian Colleges, a for-profit institution. Despite that order, the Department of Education falsely told around 16,000 borrowers that they owed payment. Some of those payments were taken from the borrowers’ wages.
“Here, there is no question that defendants violated the preliminary injunction,” Kim wrote. “There is also 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.”
Mark Brown, chief operating officer for the Department of Education’s federal student aid office, acknowledged the issue and said that the department is working to fix the problem.
“Unfortunately, loan servicers mistakenly billed approximately 16,000 students and parents,” Brown said. “Although these actions were not done with ill intent, students and parents were affected, and we take full responsibility for that. We have taken swift action to correct the mistake.”
Kim threatened “additional sanctions” if DeVos and the Department of Education fail to comply with the order.
About 42 million people in the United States have student loan debt, with the average household owing a little less than $47,000.
