'Exceptional circumstances': Judge orders Betsy DeVos to testify in student loan forgiveness lawsuit

A federal judge ordered former Education Secretary Betsy DeVos to testify in a lawsuit related to her role in how the Education Department (ED) handled debt relief for students who felt they were defrauded.

United States District Judge William Alsup wrote in a 12-page ruling, first reported by Politico, that the motion to quash a subpoena for her deposition is denied and that "extraordinary circumstances warrant the deposition of Secretary DeVos for three hours, excluding breaks."

The class action lawsuit, filed in June 2019, stems from around 160,000 former students of now-defunct for-profit colleges suing the Education Secretary to spur the borrower defense process.

“Plaintiffs’ demand for a former Cabinet official’s deposition is extraordinary, unnecessary, and unsupported,” DeVos’ personal attorney and Justice Department lawyers previously argued in a court filing. “It is a transparent attempt at harassment — part of a PR campaign that has been central to Plaintiffs’ litigation strategy from the outset.”

U.S. citizens and eligible non-citizens with federally-backed student debt can apply for borrower defense if their college or career school education misled them "or engaged in other misconduct in violation of certain state laws," according to the ED's Federal Student Aid office.

Education Department (ED) data previously obtained by Yahoo Finance detailed a backlog of claims from U.S. college students who felt defrauded, underscoring the Trump administration's deregulatory actions toward U.S. higher education.

Borrower defense applications surged after the Obama administration cracked down on predatory for-profit colleges in 2015 and created new regulations, but the mechanism for defrauded borrowers seeking debt relief broke down during the Trump administration.

Judge Alsup, a Clinton appointee, noted DeVos "moved to rein in" loan forgiveness for defrauded borrowers, approving some claims under a new partial relief methodology (that has now been rescinded by the Biden administration) while denying others. There was then an 18-month delay in the process, followed by a flurry of systematically denials during the final year of the President Trump's term.

Judge Alsup noted that "class counsel are entitled to probe matters broadly related to the actual cause for the challenged eighteen-month delay, the development, approval, and use of the form-denial letters, and the Secretary’s involvement in clearing the backlog of our classmembers’ borrower-defense claims."

DeVos resigned in January, shortly before Trump's term ended, and was subpoenaed four days later.

Alsup noted that while the deposition of a former cabinet secretary is "rare," U.S. presidents going back 200 years have been required to answer to subpoenas.

“Even assuming Secretary DeVos retains some measure of executive prerogative, she must answer an appropriately issued subpoena," the order stated. "Judicial process runs even to unwilling executives. Chief Justice Marshall first ruled that a subpoena could require a president’s production of documents material to the defense when presiding over Vice President Burr’s treason trial. For the same reasons, in 1818, President Monroe answered written interrogatories on summons by the defense in a court martial. In 1974, a unanimous Supreme Court ordered President Nixon’s compliance with a subpoena for the White House tapes. President Clinton twice gave videotaped testimony for criminal proceedings and, most famously, sat for deposition in a civil suit regarding his conduct as governor of Arkansas. If judicial process runs to presidents, it runs to cabinet secretaries — especially former ones."

The judge added that there was "personal involvement" of DeVos in the borrower defense process, since lower-level officials like Federal Student Aid COO Mark Brown or Under Secretary Diane Jones said they were not the decision-makers on this issue.

"To wit, if an order came from above, it came from the Secretary," Alsup wrote. "Beyond illuminating her involvement, these material gaps at the highest rungs of the Department’s decision making record reveal the necessity of Secretary DeVos’s testimony for an independent reason. We lack an official and contemporaneous justification for the eighteen month delay because this suit concerns agency inaction, and not the usual agency action."

The judge put a stay on the order for 14 days in case of an appeal, and also set another hearing in the case for June 3.

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Aarthi is a reporter for Yahoo Finance. She can be reached at aarthi@yahoofinance.com. Follow her on Twitter @aarthiswami.

Read more:

• Education Department throws out Trump-era rule for defrauded students

• Betsy DeVos unveils new student loan forgiveness 'methodology.' Critics call it 'bad math' and 'mystifying.'

• Read the latest financial and business news from Yahoo Finance

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