Biden Administration to Cancel $6.1 Billion Art Institutes Student Loan Debt

On May 1, 2024, the Biden Administration announced that it will cancel $6 billion in student loans for alumni of the now-defunct Art Institutes, a network of 45 for-profit universities in North America that taught the visual arts and the culinary arts.

Many alumni complained that the Art Institutes falsely represented its educational services and failed to set them up for success. Facing accusations of fraud, the remaining eight colleges permanently closed on September 30, 2023.

How did the Art Institutes mislead students?​

In 2010, Education Management Corp. (EDMC), a for-profit education company that owned the Art Institutes, sold its subsidiaries to private equity firms and Goldman Sachs for $3.4 billion. The deal placed profit over purpose and the quality of education further declined.

In 2015, EDMC faced a 95 million-dollar lawsuit for failing to comply with Title IV of the Higher Education Act (HEA), a provision for the authorization of student loans and grant programs. The lawsuit zeroed in on the college chain’s unethical recruiting tactics with the primary goal to enroll as many students as possible, regardless of their qualifications.

In 2017, EDMC sold the Art Institutes, along with its subsidiaries South University and Argosy University, to Dream Center Education Holdings, a Los-Angeles based nonprofit connected to a religious charity run by Brent Richardson, former CEO of for-profit giant Grand Canyon University. The last-ditch effort to save the college chain failed: A year later, EDMC filed for Chapter 7 bankruptcy, resulting in the closure of 20 Art Institutes campuses.

EDMC claimed to hold less than $50,000 in assets while owing between $500 million and $1 billion in debt to various lenders, including political campaigns. By 2018, former students filed a class-action lawsuit after several Art Institutes campuses hid that they lost accreditation, claiming that the colleges withheld critical information to keep charging tuition.

In 2023, the Art Institutes abruptly shuttered its remaining eight campuses in Atlanta, Georgia; Austin, Texas, and several other major U.S. cities. Read the complete list of Art Institutes locations no longer in operation.

What options do former Art Institutes students and alumni have?​

Former students of the last remaining campuses had until the end of 2024 to complete their degrees. If you attended the Art Institutes, you can request your official transcript online. For more information about student loan debt forgiveness, visit the U.S. Department of Education official website.
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Alexa P.
Alexa Pellegrini (she/her) is a freelance copywriter, editor, poet, and essayist. Keep up with her latest musings on Twitter.


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