Move FM Global News

WASHINGTON, D.C.: This week, the administration of President Joe Biden said it will cancel student loans worth US$6 billion for graduates of a system of a for-profit chain of colleges that fully closed in 2023 amid accusations of fraud, known as the “Art Institutes.”

The Education Department said the chain lured students with “pervasive” lies and is invoking its power to cancel student loans for misled borrowers.

In a statement, Biden said, “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.”

The Education Department will automatically cancel the loans of 317,000 people who attended any Art Institute campus between January 1, 2004, and October 16, 2017.

The administration said that it approved the cancellation of almost $160 billion in student loans through various existing programs, with $28.7 billion being canceled for those who were cheated by their colleges or went to campuses that suddenly closed.

It acted after reviewing evidence from the attorneys-general of Massachusetts, Iowa, and Pennsylvania, who investigated complaints of fraud and sued the chain, the department added.

The department further added that the chain misled students about the success of graduates and employment partnerships that it claimed would help students find jobs. Prospective students were told that more than 80 percent of graduates found jobs in their fields of study, but that was largely based on doctored data.

The department noted that the true employment rate was below 57 percent, stressing that the chain’s campuses also advertised graduate salaries based on false data and including extreme outliers to make averages look better.

The department said the chain’s tactics led borrowers to borrow large amounts of debt for programs that they did not pay off.

Richard Cordray, chief operating officer of the Education Department’s Federal Student Aid office, said, “The Art Institutes preyed on the hopes of students attempting to better their lives through education.”