On May 1, President Biden continued his efforts to address student debt by forgiving more than $6 billion in student debt for a certain group of students.
The debt forgiveness affects students who took on student loans to attend The Art Institutes, a private art school system in the U.S. that closed its doors last year.
Relief Comes to The Art Institute Students
Students who were enrolled in The Art Institutes between January 1, 2004, and October 16, 2017, will receive the relief. The private art school, which offered programs at the certificate, associate’s, bachelor’s, and master’s levels, had about 50 campuses with roughly 80,000 enrolled students by 2012.
These institutions operated from 1969 until 2023. The closure happened suddenly, with an announcement made less than a week before the school shut its doors to its 1,700 students.
Students Claimed Fraud
Facing accreditation and legal issues, student loan debtors appealed to the U.S. government to cancel their debt by lodging defense to repayment claims, alleging that they were defrauded (via CNBC).
The student debt group “I Am Ai,” behind this push, has acted as a support group for students and alumni of The Art Institutes, offering advice about debt cancellation.
The Department of Education Makes a Decision
In May, the U.S. Department of Education found that The Art Institutes made “pervasive and substantial misrepresentations to prospective students about post graduation employment rates, salaries, and career service during that time.
“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,” Biden said in a statement.
Who Does It Affect?
Borrowers who are eligible for forgiveness will be notified by the DOE in the upcoming days, including those who have not formally applied for borrower defense.
Previous loan payments made by The Art Institute borrowers will also be refunded. NPR reports that the total available averages about $19,000 per borrower.
Protecting Students and Taxpayers from “Predatory Institutions”
“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,” said U.S. Secretary of Education Miguel Cardona.
Cardona continues: “We must continue to protect borrowers from predatory institutions—and work toward a higher education system that is affordable to students and taxpayers.”
Biden’s Student Debt Relief Reaches $160B
This latest round in Biden’s student loan forgiveness plan brings the total approved by the Biden Administration to almost $160 billion for nearly 4.6 million borrowers. This is an average of nearly $35,000 in relief for student loan borrowers.
“We will never stop fighting to deliver relief to borrowers, hold bad actors accountable, and bring the promise of college to more Americans,” Biden said.
Criticism Towards Biden’s Aid
Those affected have praised Biden’s plan to cancel student loans, but many taxpayers worry about the burden will endure as taxpayers.
Others are drawing attention to the fact that this new relief plan could put the U.S. in more debt while excluding borrowers who could largely benefit from debt relief.
Biden Ignores the Criticism
However, the Biden Administration remains unmoved by the criticism as it continues to push for more relief for more Americans. Cardona has argued that the president’s policies are still sound and will “give hard working Americans some breathing room.”
Cardona said the administration “will remain relentless in our pursuit to bring relief to millions across the country.”
Plans That Have Help
Some plans, like the SAVE (Saving on a Valuable Education) Plan, have helped borrowers find payments that align with their current income status.
More than 7.5 million borrowers have enrolled in this repayment plan, and many are eligible for $0 payments if they earn less than the federal poverty limit.
Biden’s Previous Wave of Student Loan Forgiveness
In Biden’s last student debt relief plan, his administration announced forgiveness of $1.2 billion in student loan debt for 153,000 borrowers.
These borrowers were those who were part of the SAVE repayment plan, had been repaying their loans for at least ten years, and had less than $12,000 left to pay.
No Complaints from Affected Borrowers
Biden’s push to forgive student loan debt positively impacts borrowers who have no complaints. While the pool of affected borrowers is small, many are patiently waiting to see what relief will come their way.
“We don’t want our loans dictating our life choices, and us not being able to do other things because we’re paying so much money. The SAVE plan is definitely a game changer for us,” said Lauran Michael, an interior designer in Raleigh, North Carolina.
