President Biden just announced yet another wave of student loan cancellations for former students who attended the Art Institutes — the controversial for-profit chain that closed the last of its campuses in 2023 amid shrinking enrollment and sordid legal troubles.
The president says these 317,000 borrowers were “cheated” into taking on hefty student loans after being misled by promising career prospects that never materialized.
"For more than a decade, hundreds of thousands of hopeful students borrowed billions to attend The Art Institutes and got little but lies in return," said Secretary of Education Miguel Cardona in a press release.
Thanks for subscribing!
The money news that actually matters.
By signing up, you accept Moneywise Terms of Use, Subscription Agreement, and Privacy Policy.
"We must continue to protect borrowers from predatory institutions — and work toward a higher education system that is affordable to students and taxpayers."
Falsifying data, skewing statistics
The education department says it reviewed data provided by the attorneys general offices of Iowa, Massachusetts and Pennsylvania, which investigated and brought lawsuits against The Art Institutes and its parent company, Education Management Corporation.
It found the chain got crafty when it came to making “pervasive and substantial misrepresentations” to potential students about post-graduation employment rates and average salaries by using flawed or made-up data.
A former employee even divulged one Art Institute campus included alumnus and professional tennis player Serena Williams' yearly income to "skew the statistics and overinflate potential program salaries."
The Art Institutes also offered ongoing post-graduation career services, claiming it had a positive relationship with employers despite its negative reputation.
Must Read
- Jeff Bezos backs a platform that lets anyone invest in rental homes for as little as $100 — 6 ways to build wealth like a landlord without actually being one
- The tax breaks in Trump's 'big beautiful bill' expire after 2028. Here are 4 moves to make before the window closes
Who’s eligible for relief?
This latest round of forgiveness brings the administration’s total to nearly $29 billion for some 1.6 million borrowers “whose colleges took advantage of them, closed abruptly, or were covered by related court settlements,” Biden said in the White House press release.
Borrowers who attended any of the Art Institutes’ campuses between Jan. 1, 2004 and Oct. 16, 2017 are eligible for automatic relief and do not need to take any action, according to the education department.
The department notes it will be pausing any loans identified for discharge and will be refunding payments on any related federal student loans that former students have made.
Eligible borrowers will start receiving notifications today.
“In addition to providing critical relief to students, we need to hold wrongdoers accountable — otherwise, executives will continue to exploit students for their own benefit,” says Aaron Ament, the president of the National Student Legal Defense Network, which has represented former Art Institute students since 2018, reports The New York Times.
You May Also Like
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- A single line on your car insurance policy could be inflating your premium by up to 30% — here's what to change
Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.
