The recent announcement from the Biden administration reveals a move to forgive $6.1 billion in student debt for 317,000 individuals who were enrolled at The Art Institutes. This for-profit chain of schools ceased operations last autumn amidst accusations of fraud.
President Joe Biden's initiative aims to address the country's staggering $1.7 trillion student debt burden, especially after facing setbacks when the Supreme Court blocked a previous broad loan forgiveness plan.
The Art Institutes had campuses in various cities like Atlanta, Fort Worth, New York, and Tampa before closing down permanently in September. The Department of Education's investigation revealed that the institutions had falsified data regarding graduates' employment rates and earnings. U.S. Secretary of Education Miguel Cardona remarked that the students who took out loans to attend these schools received "little but lies in return" in a statement issued on Wednesday.
"We must continue to shield borrowers from exploitative institutions and strive for a higher education system that is financially feasible for both students and taxpayers," Cardona emphasized.
In a separate declaration, President Biden disclosed that his administration has already pardoned $29 billion in debt for 1.6 million students who were victims of colleges that exploited them, abruptly closed down, or were part of related legal settlements.
In a move to provide relief, the Biden administration has announced the forgiveness of over $160 billion in student debt for nearly 4.6 million borrowers. This forgiveness includes today's announcement.
As part of this initiative, an investigation by the Education Department revealed that The Art Institutes had falsely claimed that 80% of its graduates secured jobs in their fields of study within six months of graduation. However, the actual figure never exceeded 57%, according to the department.
Furthermore, the school was found to have misrepresented its graduates' earnings by including the estimated incomes of graduates in temporary positions. In a bizarre instance, the annual income of tennis star Serena Williams, who had briefly attended the Art Institute of Fort Lauderdale, was factored into the calculation of graduates' average income, the department disclosed.
The sudden closure of The Art Institutes in September affected 1,700 students, as reported by the New York Times. This closure followed a $95.5 million settlement with federal regulators over fraud accusations. Additional campuses under the school's operation had already shut down in 2019 or earlier, as indicated on The Art Institutes' website.
Who is eligible for this student loan forgiveness program?
The Education Department has confirmed the automatic forgiveness of $6.1 billion in student debt for 317,000 individuals who took out loans to attend any Art Institutes campus between January 1, 2004, and October 16, 2017.
Is any action required from borrowers?
No, borrowers are not required to take any action, as per the Education Department's announcement.
Starting on May 1, the department will begin notifying eligible borrowers that their debt will be discharged.
Do borrowers need to continue making payments?
The Education Department has stated that it will immediately halt payments on loans slated for discharge. This means that borrowers are not expected to make any further payments.
The agency emphasized, "This measure ensures that borrowers will not face any additional financial obligations related to these loans while their discharges are being processed."
