May 2nd 2024.
In a move that brought relief to many, the Biden administration recently announced the forgiveness of $6.1 billion in student debt for 317,000 borrowers who had attended The Art Institutes. This chain of schools had closed its doors in fall 2023 after facing allegations of fraud. The decision, which was made public through a memo released from the White House on May 1, was a fulfillment of President Joe Biden's promise to fight for the rights of students and borrowers who had been taken advantage of by defrauded colleges.
The memo, which highlighted the previous administration's lack of action in addressing the issue, stated, "While my predecessor looked the other way when colleges defrauded students and borrowers, I promised to take this on directly to provide borrowers with the relief they need and deserve." President Biden also took to Twitter, formerly known as X, to allude to more upcoming announcements in addition to the measures already taken by his administration. Under his leadership, close to $29 billion in debt relief has been secured for 1.6 million borrowers who were victims of fraudulent institutions that abruptly shut down. In comparison, during the previous administration, only a little over 50,000 borrowers in similar circumstances had their debt canceled.
In his tweet, President Biden reiterated that this was not the last step in holding bad actors accountable and providing relief to those in need. The announcement came as a welcome relief to the 317,000 borrowers who attended The Art Institutes, an institution that has been found guilty of falsifying data and cheating its borrowers. According to CBS News, the schools, with branches in Atlanta, New York, Fort Worth, and Tampa, were found to have misrepresented graduate employment rates and salaries, with their claims of 80% of graduates finding jobs in their fields of study being far from the truth.
U.S. Secretary of Education Miguel Cardona also released a statement, expressing his disappointment in how thousands of students had been deceived and misled into taking out loans worth billions of dollars. He stated, "We must continue to protect borrowers from predatory institutions – and work towards a higher education system that is affordable to students and taxpayers." These efforts by the Biden administration are in line with their plan to tackle the staggering $1.7 trillion in student debt, which had faced a setback when the Supreme Court blocked their broad-based college loan forgiveness plan in 2023.
Since taking office, the Biden administration has made significant strides in addressing the issue of student debt. They have fixed the Public Service Loan Forgiveness and Income-Driven Repayment plans to ensure that borrowers receive the relief they are entitled to under the law. They have also introduced the SAVE Plan, which has been described as the most affordable repayment plan ever. Under this plan, eligible borrowers will automatically have their student debt forgiven if they borrowed money to attend any Art Institutes campus between January 1, 2004, and October 16, 2017. There is no need for them to fill out any applications, and eligible borrowers have already started receiving notices of forgiveness since May 1.
Furthermore, all loan payments will be immediately paused, providing some much-needed financial relief to borrowers. This move by the Biden-Harris administration has been praised by many, with some even calling it a step in the right direction towards addressing the issue of student debt in the country. As the government continues to work towards a more affordable higher education system, this latest announcement brings hope to many borrowers who have been struggling with the burden of student loans.
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