Biden grants pupils in the Art Institute $6.1 billion in debt relief from their school loans

The Art Institutes, a for-profit art school that closed its doors last year, was one of 317,000 borrowers whose student debt totaled $6.1 billion that the Biden administration revealed on Wednesday it was canceling.

The scheme provides for the forgiveness of debt for borrowers who enrolled at any Art Institute campus between January 1, 2004, and October 6, 2017.

Founded in 1969, the institution provided graphic design degrees and certificates among other areas. By 2012, it has expanded to about 50 locations nationwide with 80,000 enrolled students.

But a string of legal issues resulted in the closure of 20 campuses in 2018—including a $95 million settlement with the Obama-era Justice Department following fraud claims in 2015 and a loss of accreditation by the Education Department. The school’s low enrollment and other issues forced it to close its remaining campuses in September 2023.

President Biden released a statement saying, “This institution 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.”

Under a rule signed by President Obama in 2016, borrowers who enrolled in the school were expected to have their government loans canceled if the school turned out to be predatory. That would have included students enrolled at Art Institutes, whose debtors have been demanding loan forgiveness ever before the deal was reached in 2015.

The regulation was scheduled to go into effect in July 2017, but a for-profit college industry group filed a complaint with the Education Department, claiming the government lacked the jurisdiction to implement it.

Following the lawsuit, the Obama administration announced that it was delaying certain of the regulation’s requirements. However, these measures were never implemented by the Trump administration.

Through a plan he unveiled last month, Mr. Biden is canceling the loan for Art Institute students as a workaround after a U.S. Supreme Court decision ruled that his initial attempt to eliminate student loan debt was unconstitutional.

Borrowers who attended a for-profit institution that the administration has determined to be of low value may be eligible for cancellation under his most recent initiative, which is also being challenged in court. This would be true for the Art Institutes, who have been charged with deceiving pupils.

This is his most recent attempt to win over young people who might turn against him in November due to his advanced age, his support for the TikTok ban, and the Gaza conflict.

In a head-to-head comparison among young voters between the ages of 18 and 34, Mr. Biden behind presumed GOP contender and former president Donald Trump by 11 percentage points, according to a CNN poll released on Monday. More than any other age group, younger voters—68% of whom participated in the same poll—see Mr. Biden’s presidency as a “failure.”

A survey conducted last month by the research and consulting firm SocialSphere revealed that nearly half of voters, or around 48%, stated that they considered eliminating student loan debt to be a crucial issue in the presidential race.