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Department of Education Ignores a Judge’s Order

Judge

When a judge issues an order to do or to stop doing something, you obey the judge’s order, and appeal his or her decision if you don’t agree with it. That’s how we have an organized system of justice, and maintain respect for courts and judges. Most of us understand that, but it seems like the Department of Education may not. 

Court Orders Department to Stop Collections

In June, a federal court judge ordered that the Department of Education stop collecting on student loans from consumers who were defrauded by for-profit college Corinthian College. Now defunct, Corinthian was the largest for profit school in the nation in its heyday.

Eventually, Corinthian was sued for fraud, and was eventually found to have manipulated post graduate employment figures in order to entice people to pay tuition and to increase enrollment.

As a result, more than 300,000 debtors of Corinthian were permitted to swear under oath that they had incurred loans from Corinthian, and upon doing so, could stop paying these loans. The forgiveness, instituted under Obama, were limited under the Trump administration, but the Court ruled that the Department’s and Trump administration’s attempt to only provide “partial credit” was illegal, and that full forgiveness as was ordered under Obama had to be provided.

Order is Ignored

To effectuate its ruling, the Court ordered in June that the Department of Education cease collecting on student loans paid to Corinthian, which included ceasing the sending of letters trying to collect these student loans.

Despite that June order, the Department of Education admitted it has been sending out collection letters, and trying to collect on these loans, actions that the Department admits were done in error.

The Department recently admitted that as many as 16,000 letters went out, and that it received about 3,000 payments. Wages or tax refunds were garnished from 1,800 borrowers, and the Department reported negative credit information on 800 consumers. All are violations of the Court’s order.

The Court found that the Department made “minimal efforts” to comply, noting that The Department provided a three sentence email to companies servicing these loans instructing them to cease communications with borrowers, and the Department sent only short emails to the borrowers themselves instructing them of their rights. The Court  fined the Department, and ordered that it submit monthly reports to the Court, demonstrating its future compliance with the Court’s order.

Loan Forgiveness for All?

Numerous ideas have been floated to waive or excuse student loan debt, with some plans calling for taxes on corporations to help pay for excusing the loans. Some have also questioned whether the government should have any role at all in making student loans.

Get help with your student loan problems. There are programs available that can help you with your student loan debt and payment amounts. Contact Jacobs Legal to speak with one of our Miami consumer rights attorneys today.

Resources:

post-gazette.com/news/education/2019/10/26/Betsy-DeVos-student-loans-held-contempt-court-Education-Department-official/stories/201910260081

startribune.com/devos-held-in-contempt-of-court-in-loan-forgiveness-dispute/563853202/

https://www.jakelegal.com/debt-collection-industry-is-upset-over-recent-ruling/

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