Biden to cancel $6billion in student loans for those who attended Art Institutes after college chain closed amid fraud claims with some left facing 'mountains of debt'

The Biden administration announced Wednesday that it has canceled $6 billion in student debt owed by those who attended the Art Institute chain of colleges across the US between January 2004 and October 2017.

Numerous legal actions have accused the college of using 'pervasive' methods to entice students, including using one-time student Serena Williams' multi-million dollar salary as a means to skew the average wage of alumni.  

'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 Education Department will automatically erase loans for 317,000 people who attended any Art Institute campus between Jan. 1, 2004, and Oct. 16, 2017.

The department says it's taking action after reviewing evidence from the attorneys general of Massachusetts, Iowa and Pennsylvania, which previously investigated complaints of fraud and sued the for-profit chain.

According to the department's findings, the chain misled students about the success of graduates and about employment partnerships that would help students find jobs.

The chain told prospective students that more than 80% of graduates found jobs in their fields of study, but that was largely based on doctored data, the Education Department said. The true employment rate was below 57%.

Campuses also advertised graduate salaries that were based on fabricated data and included extreme outliers to make averages look better, the department said.

Tennis icon Williams studied fashion at an Arts Institute campus in Florida. 

The chain's tactics led borrowers to borrow high amounts of debt for programs that didn't pay off, the department said.  

'The Art Institutes preyed on the hopes of students attempting to better their lives through education,' said Richard Cordray, chief operating officer of the Education Department's Federal Student Aid office. 

'We cannot replace the time stolen from these students, but we can lift the burden of their debt.'

On Wednesday, the Education Department will start emailing borrowers who will get their loans canceled. They won't need to take any action, and payments already made on the loans will be refunded.

At its height, the chain had dozens of campuses across the country, including in New York, Chicago, Miami and Los Angeles. It was operated for decades by Education Management Corp., which collapsed in 2018 after years of legal trouble.

The company reached a $95.5 million settlement with the Justice Department in 2015 over allegations of illegal recruiting tactics. Soon after, it began closing campuses and later sold the remainder to another company.

The final eight campuses were shuttered last year.

The Biden administration has continued to cancel student loans through several existing programs even as it pursues a wider plan for one-time cancellation. That plan is a follow-up to one that the Supreme Court rejected last year.

In total, the Democratic administration says it has approved the cancellation of almost $160 billion in student loans, including through programs for public workers and those defrauded by their schools.