DeVos held in contempt of court in loan forgiveness dispute, Department of Education fined $100K

WASHINGTON D.C. - A federal judge has held Education Secretary Betsy DeVos in contempt of court for violating an order to stop collecting loans from thousands of former for-profit college students.

U.S. Magistrate Judge Sallie Kim issued the ruling Thursday in San Francisco. She also fined the Education Department $100,000.

Kim previously ordered DeVos to stop collecting federal loans from former Corinthian Colleges students who applied for loan forgiveness after the chain shut down in 2015 amid allegations of fraud.

The Obama administration sought to make it easier for defrauded students to get loans forgiven, but the Trump administration has worked to tighten the rules.

The Education Department acknowledged in September that it continued to collect loans from more than 3,000 former Corinthian students, prompting Kim's response.

The department did not immediately comment, however it did release a statement from Federal Student Aid COO Mark Brown via Twitter, in which Brown shifted blame from the Department of Education and onto federal loan servicers, before adding that the department has issued refunds to 99 percent of the borrowers affected and has also reprimanded the loan servicers and updated their entries on creditor records.

Sen. Elizabeth Warren called for DeVos to resign on Oct. 9, following Kim’s order to lift a pause on the lawsuit against DeVos after it was revealed that the Department of Education had not stopped collecting loan payments from those affected in the 2017 class-action lawsuit against the department.

Warren tweeted that DeVos “Is such a failure at the [U.S. Education Department] that she may be held in contempt for refusing to follow the law & stop punishing scammed students. Think about that: she'd rather risk sanctions or even jail than do her job to help America's students.”

In a follow-up tweet, she called for DeVos to resign over the matter, writing, “If [Betsy DeVos] wants to work for predatory for-profit college, she should resign and find herself a new job.”

This story was reported from Los Angeles.