The Biden administration announced on Wednesday the approval of canceling over $6.1 billion in student loan debt held by 317,000 borrowers who previously attended The Art Institutes, a network of for-profit colleges that are now defunct. This decision comes after the Department of Education found that the schools had misled prospective students about job placement rates and average salaries of graduates.
Utilizing its authority under the borrower defense to repayment program, the administration is providing debt relief to borrowers who have been defrauded by their colleges. President Joe Biden emphasized the administration's commitment to addressing student loan issues, contrasting it with the previous administration's approach.
Since taking office, President Biden has overseen the cancellation of almost $160 billion in student loan debt for nearly 4.6 million borrowers, representing 10% of all outstanding federal student loan debt. The recent announcement marks one of the largest group discharges under the borrower defense program.
The Department of Education will automatically apply the relief to eligible borrowers who were enrolled at any Art Institute campus between January 1, 2004, and October 16, 2017. The department will also pause impacted loans to allow for the discharge processing and remove the debt from borrowers' credit reports.
Despite the Supreme Court striking down Biden's signature student loan forgiveness program, the administration continues to provide debt relief through existing programs targeting specific borrower groups. The SAVE (Saving on a Valuable Education) plan, launched last year, offers generous terms for low-income borrowers and cancels outstanding debt after 10 years of payments.
Additionally, the Department of Education is working on new proposals to deliver relief to certain borrower groups, including potentially wiping away accumulated interest for those with loan balances exceeding the initial amount borrowed. These proposals are expected to be finalized soon, with some potentially taking effect this fall.
