Devos halts policy after judge slams procedures

WASHINGTON — Education Secretary Betsy Devos has temporarily halted relieving the debt of some student borrowers who were defrauded by the now-defunct Corinthian Colleges, after a federal judge found her department misused earnings data to calculate loan forgiveness.

In response to a court order last week, the Education Department said it would grant a temporary postponement of loan payments for Corinthian students in lieu of federal debt-relief claims. It also said it would stop collection payments for four students who sued the department over its new formula for determining how much debt they would have to repay.

The halt came after Magistrate Judge Sallie Kim of U.S. District Court in San Francisco found that the department had violated the Privacy Act by sharing student borrower information, such as Social Security numbers and birth dates, with the Social Security Administration to obtain earnings data. The judge ordered the Education Department to end the practice and its collection of Corinthian student debts.

In December, Devos announced a new system to manage the thousands of students who filed so-called borrower-defense claims after several for-profit colleges began imploding in scandal in 2015, leaving students saddled with debt and tarnished degrees. The department began dividing borrowers according to a tiered system of debt relief, based on whether they had gone on to find gainful employment.

Kim’s ruling resulted from a class-action lawsuit filed by the Project on Predatory Student Lending of the Legal Services Center of Harvard Law School and the group Housing and Economic Rights Advocates, which challenged Devos’ partial-relief system shortly after it was announced. They argued that the new policy was arbitrary, capricious and illegal.