The Biden administration on Wednesday canceled more than $6 billion in student debt for 317,000 people who attended the Art Institutes, a now-defunct chain of for-profit colleges that President Biden said “knowingly misled” students.
After a review of lawsuits filed by state attorneys general against the schools and their parent company, Education Management Corporation, the Department of Education found that the Art Institutes falsified job placement numbers in advertisements and deceived prospective students with inflated salary expectations.
In one case highlighted by the department, an Art Institute campus in Florida appeared to have included tennis star Serena Williams’ annual income in its postgraduate salary projections after she attended classes there.
“This institution falsified data, knowingly misled students, and tricked borrowers into taking on mountains of debt without leading to promising career prospects at the end of their studies,” President Biden said in a statement.
He also attacked former President Donald J. Trump, whom he accused of ignoring the influence of predatory for-profit schools on students seeking what they believed were significant academic credentials.
“While my predecessor turned a blind eye when colleges defrauded students and borrowers, I promised to take it on directly to provide borrowers the relief they need and deserve,” Biden said.
The president’s decision to cancel student debt was another step in his quest for student loan forgiveness in the year since the Supreme Court struck down a much more ambitious plan to pay off more than $400 billion in debt.
Biden said last month he would make another attempt at large-scale debt forgiveness for more than 25 million people, despite opposition from Republicans who say it would be unfair to borrowers who have struggled to pay off their student debt without assistance.
Meanwhile, the administration forgave about $160 billion in debt for 4.6 million borrowers, correcting and streamlining existing programs that have been plagued by bureaucratic and other problems for years.
The action covers students who attended Art Institute schools between Jan. 1, 2004, and Oct. 16, 2017. The department said borrowers will be notified starting Wednesday that they have been approved and will have their debts automatically canceled.
Forgiving federal student loans for borrowers who the administration determined were victimized by their schools emerged as a part of the administration’s student debt relief strategy, using its authority under an existing program known as borrower defense to repayment. . To date, the administration has approved $28.7 billion in debt forgiveness for approximately 1.6 million borrowers whose institutions have engaged in deceptive practices or closed.
“In addition to providing critical help to students, we need to hold offenders accountable – otherwise executives will continue to exploit students for their own benefit,” said Aaron Ament, president of the National Student Legal Defense Network, which has represented former Artists. Institute students since 2018.
