Biden cancels debt for students of defunct Art Institute of Wisconsin

The Department of Education announced on May 1 that $6.1 billion in student loans would be forgiven for 317,000 people who were enrolled at affiliates of the now-defunct Art Institutes.

“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,” President Joe Biden said in a statement.

The department said that it would begin notifying borrowers that their loans have been discharged and that they do not need to take any additional actions to benefit from the decision. Payments that have been made to the Department of Education against federal student loans related to the Art Institutes will be refunded.

In Wisconsin, the school operated as the Art Institute of Wisconsin, which was located in Milwaukee.

The Department of Education said its investigation into the Art Institutes’ practices found a pattern of repeatedly exaggerating employment rates for its graduates. The department noted that in one instance, the school included the annual income of tennis player Serena Williams, who attended the company’s school in Ft. Lauderdale, Florida, in its calculations, skewing the statistics on the types of salaries students could expect to earn.

Under the Biden administration, nearly $160 billion in student debt forgiveness has been approved for 4.6 million borrowers.

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

The administration of former President Donald Trump, under the leadership of Education Secretary Betsy DeVos, was more skeptical of efforts to relieve student debt.

In a reversal of steps taken by the Obama administration, Trump’s team stopped processing loan forgiveness claims from students who said they had been defrauded by schools. The Trump administration also narrowed eligibility rules, which limited the number of students who could be helped.

Trump has continued to oppose student debt relief. In July 2023, he praised a ruling by the conservative majority on the Supreme Court that struck down a Biden administration student debt forgiveness plan that would have helped a projected 43 million people.

“Today, the Supreme Court also ruled that President Biden cannot wipe out hundreds of billions, perhaps trillions of dollars, in student loan debt, which would have been very unfair to the millions and millions of people who paid their debt through hard work and diligence; very unfair,” Trump said in a statement.