Biden Approves $6.1 Billion in Student Debt Cancellation for More Than 300,000 Americans

President Joe Biden delivers remarks at the Interior Department in Washington, on March 21, 2023. Kevin Dietsch/Getty Images

President Joe Biden will forgive approximately $6.1 billion in student debt for more than 300,000 former students at The Art Institutes, the White House announced on May 1.

The debt relief will apply to borrowers who enrolled at any of the campuses belonging to The Art Institutes, a private for-profit system of art schools across the country, between Jan. 1, 2004, and Oct. 16, 2017, according to a White House statement.

The administration is using its authority under an existing federal student loan program, known as Borrower Defense to Repayment, to wipe out the loans on the basis that borrowers were defrauded by their college.

All relief will be automatically applied to the students, regardless of whether or not they have applied for borrower defense, the administration said.

The billions of dollars in automatic student loan relief are being granted following a review of the now-defunct network of for-profit colleges by the Department of Education (DOE).

Officials examined evidence provided by the attorney general offices of Iowa, Massachusetts, and Pennsylvania, all of whom had bought lawsuits against The Art Institutes and its parent company, Education Management Corporation (EDMC), according to a statement from the department.

DOE officials ultimately found that the institute and its parent company “engaged in widespread and pervasive substantial misrepresentations that deceived students about the value they would be receiving from their education” and made “pervasive and substantial misrepresentations to prospective students about postgraduation employment rates, salaries, and career.”

School ‘Falsified Data, Knowingly Misled Students’

Specifically, the DOE said the now-defunct chain of schools advertised that more than 80 percent of its graduates obtained employment related to their fields of study within six months of graduation, but records show that The Art Institutes had drastically inflated its advertised employment rate.

Elsewhere, advertisements containing fake employment rates also displayed “inaccurate average salaries” that graduates earned from their in-field positions, which the DOE said was based on flawed data.

The Art Institutes also “exaggerated” its partnerships with employers in order to entice students and in fact had a “negative reputation” the DOE said.

“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. “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.”

In October 2017, EDMC sold its remaining Art Institute campuses and filed for bankruptcy in 2018. All existing schools closed down under separate ownership in September, the department said.

In a statement announcing the latest debt relief, President Biden said The Art Institutes and its parent company had “falsified data, knowingly misled students, and cheated borrowers into taking on mountains of debt without leading to promising career prospects at the end of their studies.”

The Democrat also used the announcement to criticize his predecessor and Republican presidential rival, former President Donald Trump, whom he accused of having “looked the other way when colleges defrauded students and borrowers.”

Former President Donald Trump speaks to the media outside Manhattan Criminal Court in New York City on April 30, 2024. Eduardo Munoz/Getty Images

Biden Takes Aim at Trump

President Biden went on to tout his work to wipe out student debt. Nearly $160 billion in student loan debt has been canceled for nearly 4.6 million borrowers during his time in office.

That marks roughly 10 percent of all outstanding federal student loan debt, CNN reports.

The May 1 announcement marks one of the largest group discharges made under the borrower defense program, according to CNN.

In August 2023, the DOE used the Borrower Defense to Repayment program to grant nearly $72 million in student loan forgiveness to students who were defrauded by the California-based online school Ashford University.

A month later, the administration used it to cancel nearly $37 million of student loan debt for borrowers who it said were deceived by the University of Phoenix in Arizona.

The debt relief programs have come despite concerns among Republican lawmakers who fear they may have wider economic implications and effectively “mortgage our children’s future.”

As a result, the debt relief plans have faced a multitude of lawsuits. In June 2023, the Supreme Court blocked a broader initiative to cancel up to $20,000 of student debt per student, or $430 billion in student loan debt in total.

In announcing the latest debt relief on May 1, President Biden said it builds on the work his administration has done to “fix broken student loan programs and bring higher education more in reach.”

“We will never stop fighting to deliver relief to borrowers, hold bad actors accountable, and bring the promise of college to more Americans,” he said.