The Biden administration announced Wednesday, May 1, that it will be canceling $6.1 billion in student loan debt for 317,000 people. The debt forgiveness targets people who attended the now-defunct for-profit Art Institutes.
In a statement President Joe Biden said the Art Institutes “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.”
“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.
The Education Department said the Art Institutes lied to students by falsifying the average salaries of graduates. The Art Institutes’ parent company, the Education Management Corporation, sold its schools in October 2017 and filed for bankruptcy in 2018.
The remaining Art Institutes colleges stayed open under new management until September 2023.
In 2022, the U.S. Supreme Court rejected Biden’s first attempt to cancel $400 billion in student debt for 43 million Americans through executive action.
Since that time, his administration has attempted to forgive student loans using a more targeted approach, attempting to circumvent legal challenges.
In this case, the Biden administration is using the Borrower Defense Loan Discharge Program, making borrowers eligible for relief if they’ve been defrauded by their university.
To qualify for forgiveness, borrowers must’ve been enrolled at any Art Institutes school between Jan. 1, 2004, and Oct. 16, 2017. Eligible borrowers won’t have to take any action the debt will be forgiven automatically.
About 43 million borrowers owe $1.7 trillion in student loan debt, according to the Education Data Initiative.
