A general view of the atmosphere during The Art Institute of Atlanta commencement ceremony at Riverside EpiCenter on June 17, 2022 in Austell, Georgia.
- The Biden administration announced that it would forgive more than $6.1 billion in student debt for 317,000 former students of The Art Institutes, the once-giant chain of for-profit schools.
- The U.S. Department of Education concluded that the schools and its parent company, the Education Management Corp., or EDMC, made "pervasive and substantial" misrepresentations to prospective students about post-graduation employment rates, salaries and career services.
- Eligible borrowers will get the forgiveness automatically, whether or not they went through the formal process for loan relief for defrauded borrowers.
The Biden administration on Wednesday announced that it would forgive more than $6.1 billion in student debt for 317,000 former students of The Art Institutes, the once-giant chain of for-profit schools.
The relief will go to borrowers who enrolled at any of the dozens of Art Institute campuses across the country between Jan. 1, 2004, and Oct. 16, 2017.
The U.S. Department of Education, which reviewed evidence provided by the attorneys general of Iowa, Massachusetts and Pennsylvania, concluded that the schools and its parent company, the Education Management Corp., or EDMC, made "pervasive and substantial" misrepresentations to prospective students about post-graduation employment rates, salaries and career services.
Get a weekly recap of the latest San Francisco Bay Area housing news. Sign up for NBC Bay Area’s Housing Deconstructed newsletter.
"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," U.S. Secretary of Education Miguel Cardona said in a statement.
"We must continue to protect borrowers from predatory institutions — and work toward a higher education system that is affordable to students and taxpayers," Cardona added.
More from Personal Finance:
Treasury Department announces new Series I bond rate
Why new home sales inch higher despite 7% mortgage rates
Don't believe these money misconceptions
Money Report
The Education Department said The Art Institutes falsified average graduate salaries, among other abuses.
"For example, according to a former employee, one Art Institute campus included professional tennis player Serena Williams' annual income to 'skew the statistics and overinflate potential program salaries,'" the department said.
Eligible borrowers will get the forgiveness automatically, whether or not they went through the formal process for loan relief for defrauded borrowers.
EDMC sold its remaining Art Institute campuses in October 2017, and all existing schools closed under separate ownership in September 2023, the Education Department said.
EDMC filed for bankruptcy in 2018. At one point, Goldman Sachs owned a large share of EDMC.
In response to a request for comment on the news, a spokesperson for Goldman Sachs said it exited the investment more than 10 years ago.
