The Biden administration has announced a plan to forgive over $6.1 billion in student debt for 317,000 former students of The Art Institutes, a once large chain of for-profit schools. The relief is for borrowers who attended any of the Art Institute campuses between January 1, 2004 and October 16, 2017. The U.S. Department of Education, after reviewing evidence provided by the attorneys general of Iowa, Massachusetts, and Pennsylvania, found that the schools and its parent company, EDMC, had made significant misrepresentations to students regarding post-graduation employment rates, salaries, and career services. Secretary of Education Miguel Cardona stated that students received little but lies in return for borrowing billions of dollars over the past decade to attend The Art Institutes.
The Education Department revealed that The Art Institutes had falsified average salaries among graduates and engaged in other deceptive practices. For example, one campus reportedly included professional tennis player Serena Williams’ annual income in the statistics to inflate potential program salaries. Eligible borrowers will receive debt forgiveness automatically, regardless of whether they had applied for loan relief due to being defrauded by the schools. EDMC, the parent company of The Art Institutes, sold its remaining campuses in 2017, with all existing schools closing under separate ownership in 2023. EDMC filed for bankruptcy in 2018, with Goldman Sachs owning a significant share of the company at one point. However, a spokesperson for Goldman Sachs has stated that they exited the investment over a decade ago.
This announcement highlights the issue of predatory practices within the for-profit education sector, where students may have been misled about the outcomes and benefits of attending certain institutions. The decision to forgive student debt for Art Institute students is part of an effort to protect borrowers from such institutions and work towards a higher education system that is more affordable and transparent for students and taxpayers. The Education Department’s findings indicate a systemic pattern of misrepresentation by The Art Institutes and its parent company, leading to significant financial harm for thousands of former students who were promised opportunities that were not delivered.
The relief provided to former Art Institute students is a significant step towards addressing the consequences of predatory practices in the for-profit education industry. The forgiveness of over $6 billion in student debt will provide much-needed financial relief to hundreds of thousands of borrowers who were misled by the schools’ false advertising and deceptive practices. The automatic forgiveness of loans for eligible borrowers, regardless of whether they had previously applied for relief, streamlines the process and ensures that those affected by the misconduct of The Art Institutes and EDMC can access the debt relief they deserve.
This development underscores the importance of oversight and accountability in the education sector, particularly for for-profit institutions that may prioritize profits over the well-being of students. By holding The Art Institutes and EDMC accountable for their actions, the Biden administration is sending a clear message that deceptive practices and fraud will not be tolerated in higher education. Moving forward, it will be essential to continue monitoring and regulating for-profit schools to prevent similar instances of exploitation and protect students from financial harm. The decision to forgive student debt for former Art Institute students serves as a critical step towards addressing the injustices caused by predatory practices in the education industry and working towards a more equitable and transparent higher education system.
