Biden Cancels $6.1 Billion in Debt for Former Art Institute Students

Admin

May 1

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 network of for-profit colleges that President Biden said "knowingly misled" students.

After a review of lawsuits brought by state attorneys general against the schools and their parent company, Education Management Corporation, the Education Department found that the Art Institutes falsified job placement figures in advertisements and misled prospective students with inflated salary expectations.

In one case the department highlighted, an Art Institute campus in Florida appeared to have included the tennis star Serena Williams's annual income in its graduate salary projections after she had attended classes there.

"This institution falsified data, knowingly misled students and cheated 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 took a swipe at former President Donald J. Trump, whom he accused of ignoring the influence of predatory for-profit schools on students seeking what they believed were meaningful academic credentials.

"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," Mr. Biden said.

The president's decision to cancel the student debt was another step in his pursuit of student loan forgiveness in the year since the Supreme Court struck down a far more ambitious plan to wipe out more than $400 billion in debt.

Mr. Biden said last month that 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 struggled to pay off their student debt without assistance.

In the meantime, the administration has forgiven about $160 billion in debt for 4.6 million borrowers by fixing 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 would be notified starting on Wednesday that they had been approved and would see their debt canceled automatically.

Forgiving federal student loans for borrowers who the administration has determined were preyed on by their schools has emerged as one 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 some 1.6 million borrowers whose institutions engaged in misleading practices or shut down.

"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," said Aaron Ament, the president of the National Student Legal Defense Network, which has represented former Art Institute students since 2018.