The Biden administration on Wednesday announced that it would forgive more than $6.1 billion in student debt for 317,000 former students of The Art Institutes, the once giant chain of for-profit schools.
The relief will go to borrowers who enrolled at any of the dozens of Art Institute campuses across the country between Jan. 1, 2004 and Oct. 16, 2017.
The U.S. Department of Education, which reviewed evidence provided by the attorneys general of Iowa, Massachusetts and Pennsylvania, concluded that the schools and its parent company, the Education Management Corporation, or EDMC, made “pervasive and substantial” misrepresentations to prospective students about post-graduation employment rates, salaries and career services.
“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,” U.S. Secretary of Education Miguel Cardona said 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,” Cardona added.
More from Personal Finance:
Treasury Department announces new Series I bond rate
Why new home sales inch higher despite 7% mortgage rates
Don’t believe these money misconceptions
The Education Dept. said The Art Institutes falsified average salaries among graduates, among other abuses.
“For example, according to a former employee, one Art Institute campus included professional tennis player Serena Williams’ annual income to ‘skew the statistics and overinflate potential program salaries,'” the department said.
Eligible borrowers will get the forgiveness automatically, whether or not they went through the formal process for loan relief for defrauded borrowers.
EDMC sold its remaining Art Institute campuses in Oct. 2017, and all existing schools closed under separate ownership in Sept. 2023, the Education Dept. said.
EDMC filed for bankruptcy in 2018. At one point, Goldman Sachs owned a large share of EDMC.
In response to a request for comment on the news, a spokesperson for Goldman Sachs said that it exited the investment more than 10 years ago.
This is breaking news. Please check back for updates.
Read the full article here
