Biden administration forgives $6.1 billion in student debt for 317,000 former Art Institute students The decision covers people who were enrolled at any Art Institute campus from Jan. 1, 2004, to Oct. 16, 2017, a period in which Education Management Corp. (EDMC) owned the chain of schools. Today, the Education Department will begin notifying eligible borrowers, who are not required to take action. The agency said it also will refund payments that former students have made on loans that are earmarked for forgiveness. (CNBC)
"The Art Institutes launched in 1970 when the Education Management Corporation purchased the Art Institute of Pittsburgh. The system continued to grow in the ensuing years, largely through additional acquisitions. In 2001, the Art Institutes owned 20 campuses; by 2012, there were 50." (
Artnet) After much
legal wrangling, the eight remaining
schools permanently closed on September 30, 2023. Some 1,700 students were given a week's
notice of the closures.
"
Over the last three years, my Administration has approved nearly $29 billion in debt relief for 1.6 million borrowers whose colleges took advantage of them, closed abruptly, or were covered by related court settlements, compared to just 53,500 borrowers who had ever gotten their debt cancelled through these types of actions before I took office. And in total, we have approved debt cancellation for nearly 4.6 million Americans through various actions." -
Whitehouse.gov statement.
2015:
EDMC to Pay $95.5 Million to Settle Claims of Illegal Recruiting, Consumer Fraud and Other Violations
2011:
U.S. Files Complaint Against Education Management Corp. Alleging False Claims Act Violations
2010: A
whistleblower alleged EDMC
paid recruiters illegal bonuses to lure students to its schools through fraudulent means, and paid recruiters to falsify job placement data to entice students to choose EDMC colleges. Jason Sobek, the former recruiter for EDMC's South University who filed the lawsuit,
also alleged that EDMC deliberately targeted students who were vulnerable and unlikely to succeed in college, including students who were mentally ill or homeless. Sobek claimed that EDMC trained and encouraged its recruiters to prey on these vulnerable students.
2007: The initial
qui tam False Claims Act lawsuit against EMDC was
filed by whistleblower Lynntoya Washington (formerly an assistant director of admissions at the Art Institute of Pittsburgh Online Division) — who later filed an amended complaint,
jointly with Michael T. Mahoney (formerly director of training for director of training for Education Management's online higher education division).
Last week, the DOJ announced a new whistleblower initiative,
the Criminal Division's Voluntary Self-Disclosures Pilot Program for Individuals, to combat corporate crime:
Sometimes, the best evidence of corporate wrongdoing involves a company insider. Our experience shows that individuals who are involved in criminal conduct and are willing to accept responsibility and cooperate with us are critical sources of information. [...] Under this pilot program, individuals with criminal exposure—not including CEOs, CFOs, high-level foreign officials, domestic officials at any level, or individuals who organized or led the criminal scheme—who come forward and report misconduct that was otherwise unknown to the department will be eligible to receive a non-prosecution agreement (NPA) if they meet certain criteria.
NPAs have been a part of the federal criminal system for decades, and prosecutors have long exercised discretion to offer NPAs as an essential tool to get culpable individuals in the door. Our new individual self-disclosure pilot program, which provides clear guidelines and threshold criteria, builds on the department's longstanding practice to advance our fight against complex corporate crime. At bottom, making NPAs available to individuals who come forward to report corporate crime and cooperate allows us to prosecute more culpable individuals and to hold companies to account.
Under the new program, culpable individuals will receive an NPA if they (1) voluntarily, (2) truthfully, and (3) completely self-disclose original information regarding misconduct that was unknown to the department in certain high-priority enforcement areas, (4) fully cooperate and are able to provide substantial assistance against those equally or more culpable, and (5) forfeit any ill-gotten gains and compensate victims. The pilot program is designed to provide predictability and certainty by offering a pathway for culpable individuals to receive an NPA for truthful and complete self-disclosure to the department.
A few previouslies on U.S.
education debt,
for-profit colleges,
and student-loan forgiveness.
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