It’s been a bad few weeks for Betsy DeVos.
The Secretary of Education is battling multiple lawsuits brought by student loan borrowers, and she just suffered major setbacks in two of the cases.
Both of the lawsuits involve a program called Borrower Defense to Repayment. The program was formalized in 2016 under the Obama administration to provide student loan borrowers who were defrauded by their schools with a pathway to relief and possible student loan forgiveness. The process involves completing an application and submitting it to the Dept. of Education, along with supporting documentation and records. While the applications are pending, collections activities (such as wage garnishments or seizures of federal tax refunds) on the underlying student loans are supposed to be paused.
When DeVos took over the U.S. Department of Education in 2017, her administration tried to rewrite the rules governing Borrower Defense to Repayment, and stopped processing applications, leaving around 160,000 borrowers in limbo. In some cases, the Department of Education continued to illegally seize borrowers’ wages and tax refunds to satisfy defaulted student loans, even though collections was supposed to cease pending the outcome of Borrower Defense to Repayment applications.
In her first loss during the last few weeks, a federal judge ruled that DeVos was in contempt of court for ignoring a prior court order. That order required the Department of Education to stop seizing the wages and tax refunds of borrowers who had applied for Borrower Defense to Repayment. DeVos’s attorneys had argued that this was simply a minor oversight. The judge disagreed, and fined the Department of Education $100,000. Further sanctions could follow if DeVos continues to not comply. And the Department of Education is now conceding that it still may not be complying with the court order.
In her second loss, a federal court certified class action status of the tens of thousands of student loan borrowers whose Borrower Defense to Repayment applications have been ignored or stalled, in some cases for years. The Department of Education’s objections were overruled. This allows the lawsuit to proceed as a class action case.
Both lawsuits were brought by the Project on Predatory Student Lending, based in Boston, Massachusetts.
These cases follow several other recent legal victories in court involving student loan borrowers. Will the string of wins continue? Stay tuned.