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Students 'cheated' by Art Institutes will have their loans forgiven, Biden says

The cancellation will affect 317,000 borrowers who attended any of the Art Institute campuses between Jan. 1, 2004, and Oct. 16, 2017.
The Art Institute of Philadelphia
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The Biden administration is canceling $6.1 billion in student loan debt for borrowers who attended the Art Institutes, which closed its campuses last fall amid allegations of fraud.

“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,” President Joe Biden said in a statement Wednesday.

The cancellation will affect 317,000 borrowers who attended any of the Art Institute campuses between Jan. 1, 2004, and Oct. 16, 2017.

The U.S. Department of Education said an investigation into the for-profit chain of schools and its parent company, Education Management Corporation, found they misled students about the success of its graduates, postgrad salaries and career services.

Based on evidence provided to the department by attorneys general offices of Iowa, Massachusetts and Pennsylvania, which brought lawsuits against the Art Institutes, the schools advertised an 82% postgraduate employment rate when in reality it was around 57%.

Former school officials testified that school personnel also made up graduate salaries and earnings that were advertised to potential students, the department said.

The Art Institutes also exaggerated its partnerships with employers, according to the department, and evidence showed companies generally did not want to hire its graduates because of the school's negative reputation.

"The Art Institutes preyed on the hopes of students attempting to better their lives through education," said Federal Student Aid Chief Operating Officer Richard Cordray in a statement. "We cannot replace the time stolen from these students, but we can lift the burden of their debt."

President Joe Biden

Politics

Biden admin. announces another round of student loan cancellation

Emily Grossberg

Last month the Biden administration canceled student loan debt for another 206,000 borrowers as part of its updates to the SAVE Plan, which allowed more people to become eligible for forgiveness a decade sooner than previous terms.

Nearly $29 billion of the total $160 billion in student debt relief approved by the Biden administration has been for borrowers “whose colleges took advantage of them, closed abruptly, or were covered by related court settlements,” the president said.