Biden administration doling out another $6.1B in student debt forgiveness — plus why they say these students were ‘cheated’ into taking on hefty loans
President Biden just announced yet another wave of student loan cancellations for former students who attended the Art Institutes — the controversial for-profit chain that closed the last of its campuses in 2023 amid shrinking enrollment and sordid legal troubles.
The president says these 317,000 borrowers were “cheated” into taking on hefty student loans after being misled by promising career prospects that never materialized.
Don't miss
These 5 magic money moves will boost you up America's net worth ladder in 2024 — and you can complete each step within minutes. Here's how
Jeff Bezos told his siblings to invest $10K in his startup called Amazon, and now their stake is worth over $1B — 3 ways to get rich without having to gamble on risky public stocks
'It's not taxed at all': Warren Buffett shares the 'best investment' you can make when battling rising costs — take advantage today
"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," said Secretary of Education Miguel Cardona in a press release.
"We must continue to protect borrowers from predatory institutions — and work toward a higher education system that is affordable to students and taxpayers."
Falsifying data, skewing statistics
The education department says it reviewed data provided by the attorneys general offices of Iowa, Massachusetts and Pennsylvania, which investigated and brought lawsuits against The Art Institutes and its parent company, Education Management Corporation.
It found the chain got crafty when it came to making “pervasive and substantial misrepresentations” to potential students about post-graduation employment rates and average salaries by using flawed or made-up data.
A former employee even divulged one Art Institute campus included alumnus and professional tennis player Serena Williams' yearly income to "skew the statistics and overinflate potential program salaries."
The Art Institutes also offered ongoing post-graduation career services, claiming it had a positive relationship with employers despite its negative reputation.
Read more: The 5 most expensive mistakes in options trading and how to avoid them
Who’s eligible for relief?
This latest round of forgiveness brings the administration’s total to nearly $29 billion for some 1.6 million borrowers “whose colleges took advantage of them, closed abruptly, or were covered by related court settlements,” Biden said in the White House press release.
Borrowers who attended any of the Art Institutes’ campuses between Jan. 1, 2004 and Oct. 16, 2017 are eligible for automatic relief and do not need to take any action, according to the education department.
The department notes it will be pausing any loans identified for discharge and will be refunding payments on any related federal student loans that former students have made.
Eligible borrowers will start receiving notifications today.
“In addition to providing critical relief to students, we need to hold wrongdoers accountable — otherwise, executives will continue to exploit students for their own benefit,” says Aaron Ament, the president of the National Student Legal Defense Network, which has represented former Art Institute students since 2018, reports The New York Times.
What to read next
Car insurance premiums in America are through the roof — and only getting worse. But 5 minutes could have you paying as little as $29/month
Thanks to Jeff Bezos, you can now use $100 to cash in on prime real estate — without the headache of being a landlord. Here's how
Suze Orman says Americans are poorer than they think — but having a dream retirement is so much easier when you know these 3 simple money moves
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
