U.S. Education Secretary Betsy DeVos (AP Photo/Mark Humphrey)

ASSOCIATED PRESS

A federal judge has now held U.S. Secretary of Education Betsy DeVos in contempt of court for violating her order.

Here's what you need to know.

Betsy DeVos: Student Loans

U.S. Magistrate Sallie Kim today held DeVos in civil contempt of court and fined her $100,000 for violating an order to cease collecting student loan debt from students who attended Corinthian Colleges, a large for-profit college that closed on April 27, 2015.

Kim followed through with her warning earlier this month to hold someone in contempt or impose sanctions. Today, Kim chose both.

"At best it is gross negligence, at worst it's an intentional flouting of my order," Kim said earlier this month. Kim then threatened DeVos with possible jail: ""I'm not sure if this is contempt or sanctions. I'm not sending anyone to jail yet, but it's good to know I have that ability."

Kim is referring to her June 2018 ruling in which she ordered the Education Department to stop collecting debt from 16,000 former Corinthian students. The $100,000 fine will be paid by the federal government, not DeVos personally, to the attorneys who represent borrowers in the class action lawsuit who are seeking student loan debt forgiveness, among other claims.

What Happened

Rather than comply with the judge's order, the Education Department instead did the following, according to the Project on Predatory Student Lending, which is part of the Legal Services Center of Harvard Law School:

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  • "The Department demanded incorrect loan payment from 16,034 students
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  • Of those students, 3,289 student borrowers made one or more loan payments because of these demands, which they were not actually supposed to pay
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  • The Department has still not confirmed that 1,147 students' loans are in the correct status, leaving those students in limbo
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  • The Department has harmed the credit of 847 non-defaulted students
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  • The Department subjected 1,808 students to involuntary debt collections (garnished their wages or taken their tax refunds or benefits)"
Borrower Defense To Repayment Rule

The Borrower Defense To Repaying rule, an Obama-era student loan forgiveness rule, allows students to have their federal student loans forgiven if a school employed illegal or deceptive practices to encourage the students to borrow debt to attend the school.

Attorneys general from 19 states, plus the District of Columbia, sued U.S. Secretary of Education Betsy DeVos and the U.S. Department of Education for delaying the borrower protection rule that was scheduled to take effect beginning July 1. The lawsuit alleged that DeVos illegally delayed the implementation of the borrower defense to repaying rule, which was intended by the Obama administration to make it easier for defrauded student loan borrowers to receive student loan debt forgiveness.

Your Next Steps

If student loan forgiveness or automatic student loan discharge are not options for you, there are other proactive, immediate steps you can take regarding your student loans:

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  1. Refinance student loans: student loan refinancing is a smart way to lower your interest rate and pay off student loans faster
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  3. Extra student loan payment: make an extra student loan payment to lower principal and save interest costs
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  5. Consolidate student loans: make student loan payments more manageable.
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