The Biden administration announced Wednesday it canceled $6 billion in student debt for borrowers who attended the Art Institutes between January 2004 and October 2017.
Numerous legal actions accused the U.S. college chain of using ‘pervasive’ methods to entice students, including using one-time student Serena Williams ‘ multi-million dollar salary as a means to skew the average wage of alumni.
President Joe Biden’s latest handout brings the total forgiveness to $160 billion for 4.6 million borrowers ahead of November’s election. It doubles-down on Biden’s promise to wipe out student debt after the Supreme Court ruled he could not take the sweeping action he wanted earlier in his administration.
‘This institution falsified data, knowingly misled students, and cheated borrowers into taking on mountains of debt without leading to promising career prospects at the end of their studies,’ the president said in a statement on the most recent wave of student loan relief.
Biden’s Education Department will automatically erase loans for 317,000 people who attended any Art Institute campus between Jan. 1, 2004, and Oct. 16, 2017.
Those who attended the Art Institutes between January 2004 and October 2017 will see their student debt erased. People walk past the Art Institute of Philadelphia operated by the Education Management Corporation on Nov. 16, 2015, in Philadelphia
The Biden administration on Wednesday said it will cancel $6 billion in student loans for people who attended the Art Institutes, a system of for-profit colleges that closed the last of its campuses in 2023 amid accusations of fraud
The latest action comes after the Department reviewed evidence from the attorneys general of Massachusetts, Iowa and Pennsylvania, which all previously investigated complaints of fraud and sued the for-profit chain.
According to the department’s findings, the chain misled students about the success of graduates and about employment partnerships that would help students find jobs post-graduation.
The chain told prospective students that more than 80 percent of graduates found jobs in their fields of study, but that was largely based on doctored data, the Education Department said. The true employment rate was below 57 percent.
Campuses also advertised graduate salaries that were based on fabricated data and included extreme outliers to make averages look better, the department said.
Tennis icon Williams studied fashion at an Arts Institute campus in Florida.
The chain’s tactics led borrowers to borrow high amounts of debt for programs that didn’t pay off, the department said.
‘The Art Institutes preyed on the hopes of students attempting to better their lives through education,’ said Richard Cordray, chief operating officer of the Education Department’s Federal Student Aid office.
‘We cannot replace the time stolen from these students, but we can lift the burden of their debt.’
On Wednesday, the Education Department will start emailing borrowers who will get their loans canceled. They won’t need to take any action, and payments already made on the loans will be refunded.
At its height, the chain had dozens of campuses across the country, including in New York, Chicago, Miami and Los Angeles. It was operated for decades by Education Management Corp., which collapsed in 2018 after years of legal trouble.
Numerous legal actions have accused the college of using ‘pervasive’ methods to entice students, including using one-time student Serena Williams’ multi-million dollar salary as a means to skew the average wage of alumni
The company reached a $95.5 million settlement with the Justice Department in 2015 over allegations of illegal recruiting tactics. Soon after, it began closing campuses and later sold the remainder to another company.
The final eight campuses were shuttered last year.
‘While my predecessor looked the other way when colleges defrauded students and borrowers, I promised to take this on directly to provide borrowers with the relief they need and deserve,’ Biden said in a statement on Wednesday morning, taking a swipe at former President Donald Trump.
‘Over the last three years, my Administration has approved nearly $29 billion in debt relief for 1.6 million borrowers whose colleges took advantage of them, closed abruptly, or were covered by related court settlements, compared to just 53,500 borrowers who had ever gotten their debt cancelled (sic) through these types of actions before I took office,’ he continued.
‘And in total, we have approved debt cancellation for nearly 4.6 million Americans through various actions.’
The Biden administration has continued to cancel student loans through several existing programs even as it pursues a wider plan for one-time cancellation. That plan is a follow-up to one that the Supreme Court rejected last year.
In total, the Democratic administration says it has approved the cancellation of almost $160 billion in student loans, including through programs for public workers and those defrauded by their schools.
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