The Biden administration announced on Wednesday its decision to cancel $6 billion in student loans for individuals who attended the Art Institutes, a chain of for-profit colleges that closed its last campus in 2023 amidst allegations of fraud. The Education Department cited the chain's use of deceptive practices to lure students, leading to a significant financial burden without promising career prospects.
President Joe Biden condemned the institution for falsifying data, misleading students, and burdening borrowers with substantial debt. The Education Department will automatically eliminate loans for 317,000 individuals who attended any Art Institute campus between January 1, 2004, and October 16, 2017.
Overall, the administration has approved the cancellation of nearly $160 billion in student loans through various programs, with $28.7 billion specifically for those who were victims of college fraud or sudden campus closures. The decision follows investigations by the attorneys general of Massachusetts, Iowa, and Pennsylvania, revealing the chain's misleading practices.
The Art Institutes misrepresented graduate success rates and employment partnerships, providing inflated data to attract students. The department found that the actual employment rate was below 57%, significantly lower than the advertised rate of over 80%. Additionally, campuses manipulated salary data, including outliers like tennis star Serena Williams, to present a false picture of average salaries.
The Education Department emphasized that the Art Institutes exploited students' aspirations for a better future through education. Richard Cordray, the department's Chief Operating Officer, acknowledged the irreparable harm caused to students but highlighted the importance of relieving them from the burden of debt.
Starting Wednesday, the Education Department will notify borrowers eligible for loan cancellation via email, with no action required from recipients. Any payments made towards the loans will be refunded. The Art Institutes, once a widespread chain with campuses across the U.S., faced legal challenges leading to its closure in 2018.
The Biden administration's ongoing efforts to cancel student loans aim to address injustices and provide relief to affected individuals. Despite facing setbacks in broader cancellation plans, the administration remains committed to supporting borrowers and rectifying past wrongs.
