The Biden administration has announced its plan to forgive $6.1 billion in student debt for 317,000 people who attended The Art Institutes, a for-profit chain of schools that shut down last fall due to allegations of fraud. This forgiveness is part of President Biden’s larger effort to address the nation’s $1.7 trillion in student debt, following the Supreme Court blocking his administration’s previous plan for broad-based college loan forgiveness. The Art Institutes, which had branches in cities like Atlanta, Fort Worth, New York, and Tampa, were found to have misrepresented employment rates and salaries of graduates, leading many students to take out loans and receive little in return. Education Secretary Miguel Cardona emphasized the need to protect borrowers from predatory institutions and create a more affordable higher education system.
The Biden administration has previously forgiven $29 billion in debt for 1.6 million students who were taken advantage of by their colleges, closed abruptly, or were covered by court settlements. Along with the newly announced debt relief for The Art Institutes, the administration has forgiven over $160 billion for nearly 4.6 million borrowers. The Education Department’s investigation into The Art Institutes found that the company had falsely claimed that 80% of graduates found jobs in their field of study within six months of graduation, when in reality, the figure never rose above 57%. The school also manipulated graduates’ earnings and included misleading data in their calculations, such as including tennis star Serena Williams’ income in determining graduate’s average income.
Students who borrowed money to attend any Art Institutes campus from January 1, 2004, through October 16, 2017, are automatically eligible for loan forgiveness. Borrowers do not need to take any action, as the Education Department will begin notifying eligible borrowers on May 1 that their debt will be discharged. Loans identified for discharge will be immediately paused, meaning borrowers do not need to continue making payments. This pause ensures that borrowers will not face any further financial demands from these loans during the processing of their discharges. The closure of The Art Institutes in September impacted 1,700 students and came after a $95.5 million settlement with federal regulators over fraud allegations.
The Art Institutes’ closure last fall was the result of allegations of fraud and misrepresentation of graduates’ employment rates and salaries. The Education Department’s investigation found that the company had misled students about job prospects and incomes, leading many to take out student loans for degrees that did not provide the expected return on investment. The Biden administration’s forgiveness of $6.1 billion in student debt for those who attended The Art Institutes is part of a larger effort to address the growing student debt crisis in the U.S. This forgiveness will provide relief for hundreds of thousands of borrowers who were taken advantage of by the for-profit school and struggled to repay their loans.
It is important to continue to protect borrowers from predatory institutions and work towards a higher education system that is affordable for students and taxpayers, as emphasized by Education Secretary Miguel Cardona. The forgiveness of $6.1 billion in student debt for The Art Institutes’ attendees is a crucial step towards addressing the broader issue of student debt in the U.S. The automatic forgiveness of loans for eligible borrowers will provide much-needed relief for those who were victims of the school’s fraudulent practices and will ease the financial burden on thousands of students who were left with loans and degrees of questionable value. The Biden administration’s ongoing efforts to address student debt and protect borrowers from deceptive practices in the for-profit education sector are essential to creating a more equitable and accessible higher education system for all.
