WASHINGTON (CN) — The Biden administration is forgiving $6.1 billion in student debt for 317,000 people who attended the for-profit Art Institutes.
President Joe Biden announced the action on Wednesday, saying the college lied to students about their future job prospects, salaries and career services.
“We will never stop fighting to deliver relief to borrowers, hold bad actors accountable, and bring the promise of college to more Americans,” Biden said in a statement.
The decision comes after an investigation by the U.S. Department of Education for people who were enrolled at any Art Institute campus from Jan. 1, 2004, to Oct. 16, 2017. At the time, the institute was owned by Education Management Corp., which had more than 150,000 students at 106 campuses in 32 states before going out of business. Some of the schools were sold off, but they all closed by late 2023.
The Education Department said the Art Institutes made “pervasive and substantial misrepresentations to prospective students about postgraduation employment rates, salaries and career services.”
One of the cited misrepresentations was advertisements that more than 80% of graduates were employed in their field of study within six months of graduation when the number was actually 57%.
School officials also falsified salary data to pad the numbers they could advertise and didn’t return graduates’ phone calls for career services.
"For more than a decade, hundreds of thousands of hopeful students borrowed billions to attend The Art Institutes and got little but lies in return," Education Secretary Miguel Cardona said in a news release. "We must continue to protect borrowers from predatory institutions — and work toward a higher education system that is affordable to students and taxpayers."
Federal investigators reviewed evidence compiled by attorneys general in Iowa, Massachusetts and Pennsylvania, which conducted investigations and brought lawsuits against the institution.
On Wednesday, the Education Department will start emailing people who will get their loans canceled. Borrowers won’t have to take any action to receive the forgiveness. Payments made on forgiven loans will also be refunded.
"The Art Institutes preyed on the hopes of students attempting to better their lives through education," Richard Cordray, Federal Student Aid’s chief operating officer, said in a news release. "We cannot replace the time stolen from these students, but we can lift the burden of their debt. We remain committed to working with our federal and state partners to protect borrowers."
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