Biden administration cancels $6 billion in student debt

Art Institute, Biden Administration, student debt

The Biden administration announced cancellation of $6.1 billion in student debt for 317,000 borrowers who attended The Art Institutes.

The Biden administration announced forgiveness of $6.1 billion in student debt for 317,000 borrowers who attended The Art Institutes, a chain of schools that closed in the fall of 2023 after allegations of fraud.

In a memo released by the White House on May 1, President Joe Biden backed his pledge to fight for the students and borrowers who attended colleges that were defrauded. “While my predecessor looked the other way as colleges defrauded students and borrowers, I pledged to take this on head-on to provide borrowers with the relief they need and deserve,” the memo said.

“Today’s announcement builds on everything we’ve done to fix broken student loan programs and make higher education more accessible.”

On X, formerly known as Twitter, Biden hinted at more upcoming announcements in addition to what his administration has already done. Under Biden’s leadership, nearly $29 billion in debt relief has been secured for 1.6 million borrowers whose institutions took advantage of their students and abruptly closed their doors. During President Donald Trump’s administration, just over 50,000 borrowers with similar circumstances had their debt forgiven.

“This is the latest – but not the last – step to hold bad actors accountable and get help to people who need it,” the president tweeted.

According to CBS News, the Art Institutes, with locations in Atlanta, New York, Fort Worth and Tampa, were permanently closed in September 2023 following an investigation by the Department of Education. The finding included that the schools misrepresented graduate employment rates and salaries. The company allegedly falsely claimed that 80% of graduates found jobs in their field six months after graduation, while the true number never rose above 57%.

In a statement from U.S. Secretary of Education Miguel Cardona, he said hundreds of thousands of students have taken out loans worth billions to attend schools but “received little in return but lies.” “We must continue to protect borrowers from predatory institutions – and work toward a higher education system that is affordable for students and taxpayers,” Cardona said.

The recent efforts follow Biden’s plan to tackle $1.7 trillion in student debt after the Supreme Court blocked his broad student loan forgiveness plan in 2023. Since taking office, the Biden administration has expanded public loan forgiveness and income-driven repayment for “borrowers to get the relief they are entitled to under the law” and implemented the SAVE plan, described as “the most affordable repayment plan ever.”

For eligible borrowers, the Department of Education will automatically forgive student debt for people who borrowed money to attend an arts institute campus between January 1, 2004 and October 16, 2017. While borrowers do not have to fill out an application for During the process, eligible borrowers received a notice of forgiveness on May 1.

All loans will be canceled immediately, meaning borrowers will not have to make any additional payments.

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