Biden Administration Forgives $6.1B in Loans to Former Art Institute Students

The Biden Administration will forgive $6.1 billion in student loan debt to nearly 317,000 borrowers who enrolled at the Art Institute between 2004 and 2017 as it has been determined that the school made “pervasive and substantial misrepresentations” about career prospects.

The Art Institute, often referred to as AI, was a for-profit system of schools in the United States that focused on art-based careers including photography degrees. At its height, the Art Institute operated 50 campuses and had roughly 80,000 enrolled students per year. But through the 2010s, the schools were enveloped in a major controversy as it was found that it used deceptive marketing techniques to lure in prospective students with grossly exaggerated job placement figures.

The school would settle lawsuits and close 19 locations as enrollment dipped. The school was sold to the Dream Center Foundation, a Los Angeles-based Pentecostal organization, in 2017. Multiple campuses lost accreditation with the Higher Learning Commission in 2018 but the school did not inform students, despite being required to, for six months. 23 more campuses were closed.

The school traded ownership a few more times over the next couple of years, but the problems did not cease. Finally, in September of last year, the Art Institute website noted that all schools would be closed by September 30, 2023.

But students who took out loans to attend the Art Institutes were, up until this week, still on the hook for any loans they took out to attend the defunct school.

Now the Biden administration is stepping in to relieve a massive 317,000 former students who attended the school before it was sold to the Dream Center Foundation, which is between the years of 2004 and 2017.

“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. That ends today—thanks to the Biden-Harris Administration’s work with the attorneys general offices of Iowa, Massachusetts, and Pennsylvania,” U.S. Secretary of Education Miguel Cardona says. “We must continue to protect borrowers from predatory institutions—and work toward a higher education system that is affordable to students and taxpayers.”

According to the Department of Education, it reviewed evidence presented by the attorneys general offices of Iowa, Massachusetts, and Pennsylvania, all of which conducted multi-year investigations into, and brought lawsuits against, The Art Institutes. The evidence provided puts context behind the exaggerations the school published about its graduates.

For example, the school claimed that 80% of graduates obtained employment related to their fields of study within six months of graduation when the true number was no higher than 57%. The school also published inaccurate average salaries for graduates and one campus even included professional tennis player Serena Williams’ annual income to “skew the statistics and over-inflate potential program salaries,” when some graduates were earning as little as $8,000 per year.

This group discharge will provide relief automatically to borrowers harmed by The Art Institutes’ actions, including borrowers who have not yet applied for borrower defense, the Biden Administration says. The Department of Education says it will begin notifying eligible borrowers today that they are approved for loan forgiveness. Former students do not need to take any action and steps are also being taken to pause current loans so borrowers don’t need to make any further payments. The Biden Administration has set up a web page to provide additional information as well.

The total amount of student relief approved by the Biden-Harris Administration has reached almost $160 billion across nearly 4.6 million borrowers.