Department of Education Cancels Loans for 39,000 Students
President Biden has approved $6.1 billion in debt relief for former students of the now-defunct Art Institute chain of for-profit colleges. The Department of Education’s action will cancel the federal student loans of 39,000 borrowers and partially discharge the debt of 18,000 others.
Art Institute’s History of Deception and Fraud
The Art Institute system, which operated nearly 50 campuses across the country, was accused of misleading students about job prospects and graduates’ earning potential. In 2019, the Education Department began investigating the chain’s marketing practices and found evidence of widespread fraud.
Deceptive Marketing Tactics
Department of Education’s Response
The Department of Education’s investigation led to the closure of several Art Institute campuses and the revocation of the chain’s accreditation. The department also determined that the school had engaged in egregious misconduct that had left students with mountains of debt and few job prospects.
Eligibility for Debt Relief
To be eligible for complete debt cancellation, a borrower must meet the following criteria:
- Have attended an Art Institute campus that closed before September 2022
- Have a loan that was disbursed before June 2023
- Have not transferred to another school and completed a program there
Borrowers who meet these criteria can expect to have their federal student loans automatically discharged within the next few months.
Partial Discharge for Other Borrowers
Borrowers who attended an Art Institute campus that remained open after September 2022 or who completed a program at another school after transferring may be eligible for partial debt relief. The amount of relief will be determined based on factors such as the length of time spent at an Art Institute campus and the amount of debt incurred.
Impact of Debt Relief
The $6.1 billion in debt relief will provide a significant financial lifeline to former Art Institute students who have been struggling with student loan payments. For many, it will eliminate their debt entirely, while others will see their monthly payments reduced.
Next Steps
The Department of Education is encouraging former Art Institute students to visit its website for more information and to submit a claim for debt relief if they believe they are eligible. Borrowers with questions can also contact the department’s Federal Student Aid Information Center at 1-800-4-FED-AID (1-800-433-3243).
This debt relief action is a significant victory for students who have been deceived and defrauded by for-profit colleges. It is also a reminder that the Department of Education is committed to protecting students and ensuring that they have access to quality education.
Kind regards,
M. Davis
