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Biden announces student debt cancellation for borrowers who attended “predatory” institutions

Federal Issues Biden Student Lending Consumer Protection Consumer Finance

Federal Issues

On May 1, the Biden Administration announced the approval of $6.1 billion in student debt cancellation for 317,000 borrowers who attended a system of art schools, which the Administration accused of engaging in deceptive practices and leaving students with significant debt and poor job prospects.

The U.S. Department of Education found the system of art schools and its parent company guilty of significant misrepresentations about the educational value and career prospects following graduation on websites, in print material, and through misleading information from school personnel to prospective students. The school advertised an employment rate of 82 percent within six months of graduation within the field of study; however, a review of the school's records by the Department of Education alleged that graduates were inaccurately counted as employed in their study fields, inflating the figures by as much as 25 percent. Additionally, the school advertised inflated average salaries based on the same incorrect data, with testimonies indicating that school officials fabricated graduates’ earnings. All campuses of the school system closed under separate ownership in September 2023.