Feds announce student loan relief for former Art Institute students

The White House announced Wednesday the approval of more than $6.1 billion in automatic student loan relief to nearly 317,000 borrowers who enrolled at any Art Institute campus between January 2004 through October 2017.

The U.S. Department of Education found that The Art Institutes and its parent company, Education Management Corporation, “made pervasive and substantial misrepresentations to prospective students about postgraduation employment rates, salaries, and career services during that time.”

Federal officials said they found the Art Institutes advertised that more than 80 percent of graduates obtained employment related their fields of study within six months of graduation, but the school’s own records demonstrate that it inflated advertised employment rates. They said the school exaggerated its relationships with employers and displayed inaccurate average salaries that graduates earned from their in-field positions.

The Art Institutes offered studies in graphic, fashion and interior design; media and culinary arts; and photography, among other subjects.

“The Art Institutes preyed on the hopes of students attempting to better their lives through education,” Federal Student Aid Chief Operating Officer Richard Cordray said in a statement. “We cannot replace the time stolen from these students, but we can lift the burden of their debt. We remain committed to working with our federal and state partners to protect borrowers.”

The Department of Education said it will begin notifying eligible borrowers that they are approved for discharges. Borrowers do not need to take any action. The department said it will work to pause loans identified for discharge so borrowers do not make further payments. When their discharges are processed, borrowers will see any remaining loan balances adjusted and credit trade lines deleted. Payments borrowers made to the department on their related federal student loans will also be refunded.