May 2, 2024
The Biden administration announced forgiveness of $6.1 billion in student debt for 317,000 borrowers who attended The Art Institutes.
The Biden administration announced forgiveness of $6.1 billion in student debt for 317,000 borrowers who attended The Art Institutes, a chain of schools that closed in fall 2023 after fraud allegations.
In a memo released from the White House on May 1, President Joe Biden backed up his promise to fight for the students and borrowers who attended defrauded colleges. “While my predecessor looked the other way when colleges defrauded students and borrowers, I promised to take this on directly to provide borrowers with the relief they need and deserve,” the memo read.
“Today’s announcement builds on all we’ve done to fix broken student loan programs and bring higher education more in reach.”
On X, formerly known as Twitter, Biden alluded to more coming announcements in addition to what his administration has already done. Under Biden’s leadership, close to $29 billion in debt relief has been secured for 1.6 million borrowers whose institutions took advantage of their students and closed doors abruptly. During President Donald Trump’s reign, a little over 50,000 borrowers with similar circumstances had their debt canceled.
“This is the latest – but not the last – step to hold bad actors accountable and get relief to folks who need it,” the president tweeted.
My Administration is cancelling $6.1 billion in debt for 317,000 borrowers who attended the Art Institutes, an institution that falsified data and cheated borrowers.
This is the latest – but not the last – step to hold bad actors accountable and get relief to folks who need it.
According to CBS News, the Art Institutes, with operating branches in Atlanta, New York, Fort Worth, and Tampa, permanently shut down in September 2023 following an investigation from the Department of Education. The finding included that the schools misrepresented graduate employment rates and salaries. The company allegedly falsely claimed that 80% of its graduates found jobs in their fields of study six months after graduation when the accurate number never increased past 57%.
In a statement from U.S. Secretary of Education Miguel Cardona, he said hundreds of thousands of students took out loans worth billions to attend the schools but “got little but lies in return.” “We must continue to protect borrowers from predatory institutions — and work toward a higher education system that is affordable to students and taxpayers,” Cardona said.
The recent efforts follow Biden’s plan to tackle the $1.7 trillion in student debt after the Supreme Court blocked his broad-based college loan forgiveness plan in 2023. Since taking office, the Biden administration has fixed the Public Service Loan Forgiveness and Income-Driven Repayment for “borrowers get the relief they are entitled to under the law” as well as implemented the SAVE Plan, described as “the most affordable repayment plan ever.”
For borrowers who qualify, the Education Department will automatically forgive student debt for people who borrowed money to attend any Art Institutes campus between Jan. 1, 2004, and Oct. 16, 2017. While borrowers don’t need to fill out any applications for the process, eligible borrowers started receiving notice of forgiveness on May 1.
All loans will be immediately paused, meaning borrowers should not have to make additional payments.
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