DeVos Ordered To Stop Collecting Student Loans From Defrauded Students

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Rob Shimshock Education Reporter
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A federal judge ruled Tuesday that the Education Department must stop attempting to collect federal student loans granted to former students of a for-profit institution.

San Francisco District Court Magistrate Judge Sallie Kim passed down a decision that more strictly defined the scope of a May ruling, reported the Washington Post.

The DOE had interpreted the May ruling prohibiting the department from forgiving student loans based on earnings and stopping debt collection to apply only to the four plaintiffs in the lawsuit. Kim clarified that the ruling actually affects all borrowers who attended Corinthian, regardless of their stage in the loan forgiveness process.

Corinthian Colleges closed in 2015 amid allegations of fraud, deceitful marketing, and pushing students towards predatory loan programs. Defrauded students subsequently petitioned the DOE for debt relief. Education Secretary Betsy DeVos announced in December that the DOE had approved 12,900 applications for Corinthian debt relief and rejected 8,600 applications. The department has partially erased the debts of 9,000 former Corinthian students as of April, but some relief applicants have only had 10 percent of their debts eliminated.

“The Department of Education has now been rebuked in court not once, but twice for violating the rights of students it should be serving,” Project on Predatory Student Lending director Toby Merrill said. “Corinthian ripped off hundreds of thousands of students and the Department of Education is making it worse by collecting their illegal debts, prolonging their suffering.”

The DOE did not immediately respond to The Daily Caller News Foundation’s request for comment.

Merrill’s organization filed an injunction after the DOE announced its intent to dole out debt relief to students in proportion to those students’ earnings. The Project on Predatory Student Lending, part of Harvard University, as well as the Housing and Economic Rights Advocates argued that the DOE could not use the data, provided by the Social Security Administration, for anything other than reviewing vocational schools. (RELATED: DeVos Announces Rules Protecting Taxpayers From ‘Massive’ Student Loan Costs)

Kim’s ruling follows a New York Times investigation revealing that the DOE has largely reassigned members of an investigative team examining for-profit colleges.

“The Secretary is focused on weeding out bad actors in Higher Ed,” Education Department spokeswoman Liz Hill told TheDCNF. “Conducting investigations is but one way the investigations team contributes to the Department’s broad effort to provide oversight to [institutions of higher education] and others. In fact, a significant part of the team’s work is related to borrower defense claims.”

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