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Good news for student loan borrowers: The Biden administration approved student loan relief for 317,000 people. The cancellation of debt for Art Institute students totals up to $6.1 billion. The for-profit chain of schools shut down last fall amid allegations of fraud.
“The Art Institutes preyed on the hopes of students attempting to better their lives through education,” said Federal Student Aid Chief Operating Officer Richard Cordray. “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.”
This is one of the Education Department’s largest federal student loan group discharges. The decision applies to people enrolled at any Art Institute campus from Jan. 1, 2004, to Oct. 16, 2017, when Education Management Corp. (EDMC) owned the chain of schools.
The Biden administration is cracking down on predatory institutions, bringing down student loan debt.
It’s no secret that student loan debt has affected many people’s financial status. Many student loan companies have been criticized for shady practices. That said, the Biden administration is committed to helping students.
“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 U.S. Secretary of Education Miguel Cardona via a press release. “That ends today—thanks to the Biden-Harris Administration’s work with the attorneys general offices of Iowa, Massachusetts, and Pennsylvania. We must continue to protect borrowers from predatory institutions—and work toward a higher education system that is affordable to students and taxpayers.”
Before shuttering last fall, the EDMC was one of the largest for-profit college chains in the country. Spread over 106 locations in 32 states and Canada, the colleges had over 150,000 students.
Throughout the 2020s, the borrower defense to repayment statute has allowed the Education Department to approve relief. So far, 1.6 million students will have $29 billion forgiven. The statute permits the agency to cancel federal student loans when colleges violate students’ rights and state law.
“While my predecessor looked the other way when colleges defrauded students and borrowers, I promised to take this on directly to provide borrowers with the relief they need and deserve,” President Biden said in a statement. “Over the last three years, my administration has approved nearly $29 billion in debt relief for 1.6 million borrowers whose colleges took advantage of them, closed abruptly, or were covered by related court settlements, compared to just 53,500 borrowers who had ever gotten their debt canceled through these types of actions before I took office. And in total, we have approved debt cancellation for nearly 4.6 million Americans through various actions.”
In May 2024, the Education Department announced that more than 160,000 additional borrowers would receive relief. Public service workers enrolled in the SAVE Plan received, on average, $35,000 in debt cancellation. Workers, such as teachers, nurses, and law enforcement officials, are receiving a total of $7.7 billion in relief.
While the Art Institute student debt cancellation plan is in progress, Americans still suffer. The Biden administration will now forgive $167 billion in student loans for 4.75 million people. That’s just a 9% cancellation of the total student debt. With over 44 million Americans owing $1.6 trillion in student loan debt, many more are hoping for relief.