Trump administration reveals that far more Corinthian Colleges students faced debt collection in violation of a court order

The Boston Globe 1 week ago

The Education Department revealed in a court filing this week that it identified an additional 29,000 former Corinthian Colleges students who were pursued for federal student loan payments, despite a court order barring collection.

A federal judge held Education Secretary Betsy DeVos in contempt and fined the department $100,000 in October after the agency said it attempted to collect payments from 16,000 former students of the defunct for-profit college in violation of the order.

Magistrate Judge Sallie Kim of the US District Court in San Francisco requested monthly status reports on the department’s efforts to rectify the harm it inflicted upon borrowers, some of whom had their wages garnished or tax refunds seized. In its latest report, the department said it discovered far more people were affected by its actions.

Of the 29,000 newly identified borrowers, 550 lost wages or tax refunds because of the collection practice, while 5,000 were hit with negative marks on their credit reports. The Education Department has yet to refund all the money collected, according to the court filing.

In the court report, the department said a more thorough review ‘‘revealed that an isolated miscommunication between [the Federal Student Aid office] and its [loan] servicers and other logistical issues caused this underestimate in the number of impacted borrowers.’’

The Federal Student Aid office, according to the report, ‘‘has corrected the miscommunications with the loan servicers and developed systems to ensure borrowers stay in the correct repayment status.’’

Attorneys for the borrowers are livid over the department’s latest revelation, with lawyers continuing to receive stories from former Corinthian students about how the collection has affected their lives.

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