The Biden administration recently announced a monumental decision to forgive over $6.1 billion in student debt for more than 300,000 former students of The Art Institutes. This move comes after a thorough review of evidence provided by the attorneys general of Iowa, Massachusetts, and Pennsylvania, which highlighted the deceptive practices carried out by the schools and its parent company, the Education Management Corporation (EDMC).
The U.S. Department of Education discovered that The Art Institutes and EDMC engaged in pervasive and substantial misrepresentations regarding post-graduation employment rates, salaries, and career services. This included falsifying average salaries among graduates and even incorporating professional athlete Serena Williams’ income into the statistics to inflate potential program salaries. This deceitful behavior left hundreds of thousands of students burdened with billions in debt and little to show for their investment in education.
One significant aspect of the debt forgiveness announcement is that eligible borrowers will receive the relief automatically, without having to navigate the often complex and lengthy process of applying for loan forgiveness as defrauded borrowers. This streamlined approach ensures that those who were misled by The Art Institutes and EDMC can finally break free from the financial shackles imposed on them.
The aftermath of the scandal involving The Art Institutes and EDMC has been far-reaching. While EDMC sold its remaining campuses in 2017 and filed for bankruptcy in 2018, the impact on students lingers. The closure of all existing schools under separate ownership in 2023 further underscores the severity of the situation. Additionally, the fact that a major financial institution like Goldman Sachs had a significant stake in EDMC raises questions about accountability and oversight in the for-profit education sector.
The decision to forgive student debt for former Art Institute students is a crucial step towards rectifying the injustices perpetrated by the institution and its parent company. It serves as a stark reminder of the importance of protecting students from predatory practices in the education sector and underscores the need for a more affordable and transparent higher education system.
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