Education Department Could Flag Up to 5 Million Student Loan Relief Applications for Review — What to Do If Yours Is Among Them
The Biden administration approved over $80 million in debt relief on Wednesday to more than 3,500 Massachusetts borrowers who attended the Art Institutes, including the New England Institute of Art in Brookline.
The federal debt relief for Bay Staters is part of a $6.1 billion student loan relief package to 317,000 borrowers who attended Art Institute campuses around the country.
U.S. Education Secretary Miguel Cardona said the relief is targeted to borrowers who were "cheated by their college."
"Schools that use flashy marketing materials and high-pressure recruiting tactics to sell higher education is equivalent to snake oil," he said on a press call. "Art Institute engaged in widespread and sustained practices that misled borrowers about the value of their degree, their ability to find jobs."
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Cardona said Art Institute advertised that over 80% of graduates got jobs in their field, though they "knew that wasn't true."
"They also lied about the salaries that graduates earned. School staff admitted to making up salary information," he said. "They used the earnings of celebrities whose millions had nothing to do with Art Institute to their averages, including the income of tennis great Serena Williams."
Students and parents of students who enrolled in Art Institutes on or after Jan. 1, 2004 through Oct. 16, 2017 are eligible for debt relief.
The announcement follows a 2018 lawsuit filed by Massachusetts' attorney general’s office, which alleged, among other things, that New England Institute of Art and owner Education Management Corporation violated the Massachusetts Consumer Protection Act by misrepresenting the likelihood of job placement to prospective students in order to induce enrollment.
In 2019, Suffolk Superior Court entered final judgment against NEIA and EDMC, ordering them to pay restitution of approximately $60 million plus interest based on the amount of tuition paid by NEIA students. They were also ordered to pay $11,765,000 in penalties. EDMC and NEIA filed for bankruptcy in 2018.
The relief represents one of the largest group discharges of student loans across the country to date, adding to the nearly $29 billion in debt relief the Biden administration has granted so far over the last three years.
"In Massachusetts alone, 930,000 borrowers owe nearly $32.5 billion in federal student loan debt; approximately 40 percent of these borrowers are 35 or older," Attorney General Andrea Campbell said. "Even more alarming is the fact that many borrowers owe more today than they did when they originally borrowed, for instance of borrowers who first entered college in the 2003-2004 academic year, more than one third had a higher balance in 2015 than what they did when they originally borrowed."
The group discharge will provide debt relief automatically to borrowers starting Wednesday. Borrowers do not need to take any action.
