18,000 PA Residents To Receive Student Loan Discharge Due To Misconduct

Pennsylvania Attorney General Michelle Henry announced that nearly 18,000 Pennsylvania students who attended The Art Institute from 2004 to 2017 will have their student loan balances discharged.

The move is part of a broader federal initiative led by President Joe Biden and the U.S. Department of Education, which will see more than $6 billion in student loan debt forgiven nationwide.

The relief involves more than $345 million for affected Pennsylvania students and comes as a response to findings that The Art Institutes and its parent company, Education Management Corporation (EDMC), engaged in deceptive practices regarding post-graduation outcomes, officials said.

“For-profit colleges have a long history of misleading students for a dollar,” 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 federal investigation revealed that the institutions made exaggerated claims about employment rates and salaries post-graduation, and misrepresented the level of career services available to students. These findings led to the closure of existing Art Institute campuses in September 2023 after the sale of EDMC’s remaining campuses in October 2017, the attorney general’s office said.

The Art Institutes had falsely advertised successful employment placement rates of over 80% within six months post-graduation, a stark contrast to the school’s internal records, authorities said.

The school was found to have exaggerated its connections with potential employers, with many companies reportedly reluctant to hire its graduates due to the institution’s negative reputation, the attorney general’s office said.

The Pennsylvania Office of Attorney General, along with Iowa and Massachusetts, provided evidence to the U.S. Department of Education.

The U.S. Department of Education began notifying eligible borrowers this week that they are approved for loan discharge, which does not require any action on their part. The automatic discharge will also include refunds for payments already made on these loans.

“Borrowers do not need to take any action,” the attorney general’s office said.

Borrowers seeking more information about borrower defense can visit StudentAid.gov/borrower-defense.