Pa. Attorney General’s Investigation Assisted U.S. Department of Education with $6.1 Billion Discharge Action Nationwide
HARRISBURG – Attorney General Michelle Henry announced that nearly 18,000 Pennsylvania students who attended The Art Institute between 2004 and 2017 will receive discharges of loan balances — as part of a recent federal action to discharge more than $6 billion in student loan debt nationwide.
Altogether, the federal action involves more than $6.1 billion in automatic student loan relief to nearly 317,000 borrowers who were enrolled at any Art Institute campus on or after January 1, 2004 through October 16, 2017.
Impacted Pennsylvania students will receive more than $345 million of that relief.
The U.S. Department of Education found that The Art Institutes and its parent company, Education Management Corporation, made pervasive and substantial misrepresentations to prospective students about post-graduation employment rates, salaries, and career services during that time.
In October 2017, EDMC sold its remaining Art Institute campuses, and all existing Art Institute campuses closed under separate ownership in September 2023.
“For-profit colleges have a long history of misleading students for a dollar,” Attorney General Michelle Henry said. “The Art Institutes burdened thousands of students in Pennsylvania with over $300 million in debt, based on promises of lucrative job opportunities. I am grateful for the work of our federal partners, and was pleased that my office’s investigative work assisted in this massive debt relief that will help hundreds of thousands of people.”
The announcement is another example of the strong partnership between the Department of Education and the Pennsylvania Office of Attorney General and their shared commitment to protecting student loan borrowers from predatory schools.
The Pennsylvania Office of Attorney General, along with Iowa and Massachusetts, provided evidence to the U.S. Department of Education.
“The Art Institutes lured students into expensive degree programs with false promises of employment opportunities. Thanks to the diligent work of the Pennsylvania Attorney General’s Office in collaboration with the U.S. Department of Education, those borrowers will finally receive the student loan relief they deserve,” said Federal Student Aid Chief Operating Officer Richard Cordray.
The investigation into the Art Institutes found widespread and pervasive misrepresentations to students about the value that they would be receiving from their education. The Art Institutes advertised that more than 80 percent of graduates obtained employment in their field of study within six months of graduation, but the school’s own records demonstrate that it inflated advertised employment rates.
The Art Institutes also represented to prospective students that it had partnerships with employers and offered ongoing post-graduation career services. However, the evidence showed that The Art Institutes exaggerated its relationships with employers. In fact, the school had a negative reputation, so companies generally did not want to hire its graduates. Former employees and borrowers also described that graduates did not have access to ongoing career services after leaving school. School staff would not return the phone calls of any students who had graduated.
The school’s misconduct burdened borrowers with high amounts of debt without the advertised employment opportunities or salaries necessary to pay.
This group discharge will automatically provide relief to borrowers harmed by The Art Institutes’ actions, including those who have not yet applied for borrower defense. The DoE began notifying eligible borrowers this week that they are approved for a loan discharge. Borrowers do not need to take any action. The DoE will take immediate action to pause loans identified for discharge so borrowers do not need to make further payments. When the discharges are processed, borrowers will see any remaining loan balances adjusted and the associated credit lines deleted. Payments eligible borrowers made to the DoE on their related federal student loans will also be refunded.
Borrowers who want to learn more about borrower defense can do so at StudentAid.gov/borrower-defense.
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