People walk past the Art Institute of Philadelphia operated by the Education Management Corp. on Nov. 16, 2015, in Philadelphia. The Biden administration on Wednesday said it will cancel $6 billion in student loans for people who attended the Art …The Biden administration announced Wednesday it’s canceling $6.1 billion in student debt for 317,000 borrowers who attended the Art Institutes, a defunct, for-profit art school that shuttered its campuses last year.
However, a series of legal challenges, including a $95 million settlement with the Obama-era Justice Department after fraud allegations in 2015 and a loss of accreditation by the Education Department, led to shuttering 20 locations in 2018. Low enrollment and other problems beset the school, forcing it to close the remaining locations in September 2023.
The rule was set to take effect in July 2017, but an industry group for the for-profit college sector filed a lawsuit with the Education arguing the regulation was outside the government’s authority. Under his latest effort, which is also facing court challenges, borrowers are eligible for cancellation if they went to a for-profit college that the administration has deemed “low-value.” That would apply to the Art Institutes, which has been accused of misleading students.
Almost half of voters, roughly 48%, said canceling student loan debt is an important issue to them in the presidential election, according to a poll last month by SocialSphere, a research and consulting firm. Mr. Biden’s latest proposals are based on a 1965 law, known as the Higher Education Act, that authorizes the Education secretary to waive or release some borrowers’ education debt. Several groups, including Attorneys General from Republican states, have already launched legal challenges against it.
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