Secretary of Education Betsy DeVos and the Department of Education are currently facing 2 more lawsuits filed against them by 2 different student advocacy groups. One of which was filed by Harvard University’s “Project on Predatory Student Lending.” The other lawsuit filed by National Student Legal Defense Network, is also in behalf of students who were similarly misled by for-profit colleges operated by Dream Center Education Holdings.
Currently, the Dream Center Education Holdings is also the subject of investigations by a Congressional House Committee. Apparently, Dream Center was able to collect millions in financial aid and student loan proceeds, by accepting enrollees who were made to believe that 2 of its institutions still possessed the appropriate accreditation to offer college education. The House Committee on Education wants to find out the role played by Ms. DeVos and the Department of Education, in allowing a similar case as that of Corinthian Colleges, to recur.
About the Lawsuit Filed by “Project on Predatory Student Lending”
This early, Federal Judge Sallie Kim of the U.S. District Court in San Francisco issued a civil contempt order against Ms. DeVos. She also sanctioned the Department of Education with a $100K fine for failing to comply with the order to submit up to date monthly reports of student loans from which payments were continuously collected; nor has the department submitted an explanation on why they should not be cited for contempt and sanction.
Judge Kim’s order is in light of findings related to the class action suit filed by the “Project on Predatory Student Lending Department of Education” of Harvard University. The latter filed a lawsuit on behalf of students defrauded by the for-profit Corinthian Colleges, which offered college education and collected tuition payments despite the institution’s lack of accreditation from the U.S. Department of Education.
In a ruling, Judge Kim wrote that the defendants, Ms. DeVos and the Department of Education, are in clear violation of the preliminary injunction order not to collect on those debts. The federal judge also ruled that such violation caused further harm to individual borrowers who were still forced to pay loans either voluntarily or involuntarily. The involuntary method was carried out, either by way of wage garnishments or reduction of tax refunds, which has an adverse impact, as far as a student borrower’s credit rating is concerned.
The up to date reports on student loans were required in order to confirm the current status of the debts.
According to Director Toby Merrill of the Project on Predatory Student Lending, the department collected incorrect loan payments from 16,034 students, 1808 of whom involuntarily paid by way of wage and/or benefits garnishment, or through the application of their tax refund. Some 3,289 student borrowers claim that the education department collected loan payments for which they had no obligation to pay.