By Megan Sayles
AFRO Business Writer
msayles@afro.com
The Biden-Harris administration is canceling more than $6.1 billion in student loans for nearly 317,000 individuals who attended Art Institutes, a private, for-profit system of art schools that permanently closed in 2023.
The announcement came on May 1 after an investigation by the U.S. Department of Education (USED) revealed that the institutes and its parent company, Education Management Corporation (EDMC), fabricated post-graduation employment rates, salaries and career services to prospective students.
“This institution 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,” wrote President Joe Biden in a statement.
Students who attended an Art Institutes school on or after Jan. 1, 2004 through Oct. 16, 2017 will receive automatic relief. In total, the Biden-Harris administration said it has approved $160 billion in student debt relief to nearly 4.6 million borrowers—$29 billion of which has been deployed to students who were deceived by their colleges or whose colleges closed suddenly.
“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,” wrote U.S. Secretary of Education Miguel Cardona in a statement. “We must continue to protect borrowers from predatory institutions and work toward a higher education system that is affordable to students and taxpayers.”
Attorneys general offices in Iowa, Massachusetts and Pennsylvania led multi-year investigations and lodged lawsuits against The Art Institutes and EMC after fraud accusations. The information that was gathered included internal employment data, admissions training manuals, institutions’ employment advertisements, records of graduate employment outcomes and statements from former students and staff.
After reviewing the evidence, the USED determined that The Art Institutes participated in rampant, pervasive falsifications that exaggerated the value students would get out of the schools.
The system broadcasted that more than 80 percent of graduates secured employment relevant to their areas of study within six months of graduation. The Art Institutes internal records revealed this was an overestimate. The USED estimated that the in-field employment rate could be no higher than 57 percent.
Salaries were also misrepresented on school advertisements. According to the USED, employees of The Art Institutes manufactured graduates’ pay and annualized the income of those working in temporary roles. They also included top-earning outliers in averages and forged incomes reported for graduates.
The USED began notifying eligible borrowers that they’ve been approved for debt cancellation on May 1.
“The Art Institutes preyed on the hopes of students attempting to better their lives through education,” wrote Federal Student Aid Chief Operating Officer Richard Cordray in a statement. “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.”
Megan Sayles is a Report for America corps member.
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