Former students of the for-profit Art Institutes are approved for $6 billion in loan cancellation

FILE – People walk past the Art Institute of Philadelphia operated by the Education Management Corporation on Nov. 16, 2015, in Philadelphia. The Biden administration on Wednesday said it will cancel $6 billion in student loans for people who attended the Art Institutes, a system of for-profit colleges that closed the last of its campuses in 2023 amid accusations of fraud. (AP Photo/Matt Rourke, File)
WASHINGTON – The Biden administration on Wednesday said it will cancel $6 billion in student loans for people who attended the Art Institutes, a system of for-profit colleges that closed the last of its campuses in 2023 amid accusations of fraud.
Saying the chain lured students with “pervasive” lies, the Education Department is invoking its power to cancel student loans for borrowers who were misled by their colleges.
Recommended Videos
“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,” President Joe Biden said in a statement.
The Education Department will automatically erase loans for 317,000 people who attended any Art Institute campus between Jan. 1, 2004, and Oct. 16, 2017.
The department says it’s taking action after reviewing evidence from the attorneys general of Massachusetts, Iowa and Pennsylvania, which previously investigated complaints of fraud and sued the for-profit chain.
According to the department’s findings, the chain misled students about the success of graduates and about employment partnerships that would help students find jobs.
The chain told prospective students that more than 80% of graduates found jobs in their fields of study, but that was largely based on doctored data, the Education Department said. The true employment rate was below 57%.
Campuses also advertised graduate salaries that were based on fabricated data and included extreme outliers to make averages look better, the department said.
One campus included the annual salary of tennis star Serena Williams to skew the average salary, investigators found. Williams studied fashion at the Art Institute of Fort Lauderdale, Florida.
The chain’s tactics led borrowers to borrow high amounts of debt for programs that didn’t pay off, the department said.
“The Art Institutes preyed on the hopes of students attempting to better their lives through education,” said Richard Cordray, chief operating officer of the Education Department’s Federal Student Aid office. “We cannot replace the time stolen from these students, but we can lift the burden of their debt.