The Biden administration has announced the forgiveness of $6.1 billion in student debt for 317,000 people who attended The Art Institutes, a for-profit chain of schools that closed last fall due to allegations of fraud. This move is part of President Biden’s plan to address the nation’s $1.7 trillion student debt crisis, after his previous plan for broad-based college loan forgiveness was blocked by the Supreme Court. The Art Institutes, which operated in several cities across the country, were found to have misrepresented employment rates and salaries of their graduates, leaving students with little but lies in return.
Education Secretary Miguel Cardona emphasized the need to protect borrowers from predatory institutions and create a higher education system that is affordable for students and taxpayers. President Biden also highlighted the administration’s forgiveness of $29 billion in debt for 1.6 million students who were taken advantage of by their colleges, abruptly closed, or were covered by related court settlements. With the latest announcement, the administration has now forgiven over $160 billion in debt for nearly 4.6 million borrowers.
The Education Department’s investigation into The Art Institutes found that the company falsely claimed high job placement rates for its graduates, when in reality the figure was much lower. The school also misrepresented graduates’ earnings by including data from individuals like tennis star Serena Williams in their calculations. The sudden closure of The Art Institutes in September impacted 1,700 students, following a settlement with federal regulators for fraud. This forgiveness of student debt applies to those who borrowed money to attend any Art Institutes campus between January 1, 2004, and October 16, 2017.
Eligible borrowers for this student loan forgiveness do not need to take any action, as the Education Department will automatically discharge their debt. Borrowers will be notified starting on May 1 and should not make any additional payments, as the department will pause loans identified for discharge. This measure aims to ensure that borrowers do not face further financial demands related to these loans during the discharge process. The forgiveness of student debt for those who attended The Art Institutes is part of a broader effort by the Biden administration to address the challenges faced by millions of borrowers burdened by student loans.
