William Simpson
The Biden administration is forgiving $6.1 billion in student debt for 317,000 people who attended The Art Institutes, a chain of for-profit schools that closed last fall amid allegations of fraud.
The latest effort represents President Joe Biden’s plan to tackle the country’s problem US$1.7 trillion in student debt after Supreme Court last year blocked his administration’s plan for broad college loan forgiveness.
The Art Institutes, which operated branches in cities including Atlanta, Fort Worth, New York and Tampa, closed permanently in September after the Department of Education found it had misrepresented the employment rates and salaries of its graduates. Hundreds of thousands of students took out billions in loans to attend schools but “received little but lies in return,” U.S. Education Secretary Miguel Cardona said in a statement. declaration on Wednesday.
“We must continue to protect borrowers from predatory institutions – and work toward a higher education system that is affordable for students and taxpayers,” Cardona added.
In a separate declaration, Biden said his administration has forgiven $29 billion in debt for 1.6 million students “whose colleges took advantage of them, closed abruptly or were covered by related lawsuit settlements.”
In conjunction with your previously announced debt reliefThe Biden administration said it has forgiven a total of more than $160 billion to nearly 4.6 million borrowers, a number that includes today’s announcement.
In the case of The Art Institutes, the Department of Education’s investigation found that the company falsely claimed that 80% of its graduates found employment in their fields of study within six months of graduation. In reality, the number never rose above 57%, the department said.
The school also allegedly misrepresented the earnings of its graduates and annualized the estimated earnings of graduates who held temporary jobs. For example, One campus included the annual income of tennis star Serena Williams, who had participated the Art Institute of Fort Lauderdale in calculating the average income of graduates, the department said.
Art Institutes closed suddenly in September, impacting 1,700 students, according to the New York Times. The closure occurred after the organization was content with $95.5 million with federal regulators, who accused him of fraud. Other school-operated campuses closed in 2019 or earlier, according to the Art Institutes website.
Who qualifies for this student loan forgiveness?
The Department of Education said it is automatically forgiving $6.1 billion in student debt for 317,000 people who borrowed money to attend any Art Institutes campus from January 1, 2004, through October 16, 2017.
Do borrowers need to take any action?
No, borrowers don’t need to do anything, the Department of Education said.
The department will begin notifying eligible borrowers on May 1 that they have been approved for debt discharge.
Do borrowers need to continue making payments?
The Department of Education said it will immediately suspend loans identified for discharge, meaning borrowers should not have to make additional payments.
“This ensures that they will not face any other financial demands arising from these loans during the time it takes to process their repayments,” the agency added.
