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President Biden forgives $6bn in loans for students of defunct Art Institutes

The eight art and design colleges closed without warning last September

Carlie Porterfield
3 May 2024
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Students who attended the Art Institute of Atlanta, one of the final Art Institute campuses, may have their student loans cancelled. Photo by Thomson200, via Wikimedia Commons

Students who attended the Art Institute of Atlanta, one of the final Art Institute campuses, may have their student loans cancelled. Photo by Thomson200, via Wikimedia Commons

US president Joe Biden announced Wednesday (1 May) that his administration has approved $6.1bn in student debt cancellation for students who took out loans to attend the Art Institutes, a network of for-profit art and design colleges that closed down suddenly last year.

Around 317,000 students who attended an Art Institutes campus between 1 January 2004 and 16 October 2017 will have their federal student loans cancelled, according to the US Department of Education. During that time, Art Institutes “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”, according to Biden’s statement.

The system’s eight remaining campuses closed in September, leaving 1,700 students scrambling. The locations—in Austin, Dallas, Houston, Atlanta, Miami, San Antonio, Tampa and Virginia Beach—were all that remained after a decade of legal issues. At the height of the Art Institutes’ success, the network of colleges included more than 40 campuses in the US and Canada and was considered a respected and more affordable alternative to a programme at a four-year institution.

The original Art Institute of Pittsburgh was founded in 1921. In 1970, the school was acquired by the Education Management Corporation (EDMC), which expanded its scope to culinary arts, audio production, fashion design and more, and by 2010 the company was making $2.5bn a year, thanks to $1.5bn in student loans and federal grants from the Department of Education.

Even before the final locations were shuttered last year, the Art Institutes lost accreditation in 2018 and in 2015 parent company EDMC paid $95m in a fraud settlement with the Justice Department. Two years later, the company sold the Art Institutes to Dream Center Educational Holdings, a faith-based non-profit. The onset of the Covid-19 pandemic and falling enrollment rates battered the college's bottom lines.

Former Art Institutes students are among the 1.6 million borrowers to have debt relief approved by Biden because their colleges were found to have taken advantage of students, closed without warning or were covered by court settlements, according to the White House.

Art educationJoe BidenArt studentsDebtArt schools
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