Government backed student loans

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Related article:

https://www.thenation.com/article/universities-are-becoming-billion-dollar-hedge-funds-with-schools-attached/


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Oct 8, 2019, 09:32am
Judge Threatens Betsy DeVos With Jail In Student Loan Case
Adam Minsky

A federal judge has tacitly threatened Secretary of Education Betsy DeVos with jail for her ongoing failure (or refusal) to comply with court orders in a student loan case.

By way of background, in 2016 the Obama administration finalized rules for the Borrower Defense to Repayment program. This program was created to allow federal student loan borrowers to request loan forgiveness on the basis that their school engaged in unfair, deceptive, or illegal practices. When DeVos took over the U.S. Department of Education in 2017, she stopped processing Borrower Defense applications, and ordered the department to rewrite the rules governing the program, effectively gutting it.

Consumer advocates filed suit against her and the Department, and they won. As part of the 2018 court ruling on the collapse of for-profit college chain Corinthian Colleges, the federal judge ordered DeVos and the Department of Education to cease all collections activities on federal student loans used to attend Corinthian schools, given that they would likely be eligible for discharge under Borrower Defense to Repayment.

DeVos ignored the ruling, and the Department of Education continued to pursue defaulted former Corinthian students. The Department continued to garnish people's wages and intercept their federal tax refunds, depriving them of critical sources of income in direct violation of the 2018 court order.

This year, consumer advocates took DeVos back to court for the violations. The federal judge was not happy, saying she was "astounded" at the Department's ongoing violations of her very clear court order. "At best it is gross negligence, at worst it’s an intentional flouting of my order," said U.S. Magistrate Judge Sallie Kim. “I’m not sending anyone to jail yet, but it’s good to know I have that ability," she said.

An attorney for the Department of Education told Judge Kim that they would comply with the original court order. In the meantime, the Department has finalized a second rewrite of the Borrower Defense to Repayment rules, which would -- again -- significantly weaken the program.

https://www.forbes.com/sites/adamminsky/2019/10/08/judge-threatens-betsy-devos-with-jail-in-student-loan-case/#4f87dd0f51c0