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Art Institute debt relief affects 3,500 in Mass. – NBC Boston

The Biden administration on Wednesday approved more than $80 million in debt relief for more than 3,500 Massachusetts borrowers who attended art institutions, including the New England Institute of Art in Brookline.

Federal debt relief for Bay Staters is part of a $6.1 billion student loan relief package for 317,000 borrowers who attended arts college campuses nationwide.

U.S. Education Secretary Miguel Cardona said the relief is aimed at borrowers who have been “defrauded by their college.”

“Schools that use flashy marketing materials and high-pressure recruiting tactics to sell higher education are tantamount to snake oil,” he said in a press briefing. “The Art Institute engaged in widespread and persistent practices that misled borrowers about the value of their degrees and their ability to find work.”

Cardona said the Art Institute advertised that over 80% of graduates had jobs in their field, even though they “knew that wasn't true.”

“They also lied about graduate salaries. School staff admitted to fabricating salary information,” he said. “They used the earnings of celebrities whose millions had nothing to do with Art Institute for their averages, including the earnings of tennis legend Serena Williams.”

Students and parents of students who enrolled at art institutions between January 1, 2004 and October 16, 2017 are eligible for debt relief.

The announcement follows a 2018 lawsuit from the Massachusetts Attorney General's Office that alleged, among other things, that the New England Institute of Art and owner Education Management Corporation violated the Massachusetts Consumer Protection Act by advertising the likelihood of job placement misrepresented potential students in order to induce enrollment.

In 2019, the Suffolk Superior Court entered final judgment against NEIA and EDMC, ordering them to pay approximately $60 million in restitution, plus interest, based on tuition paid by NEIA students. They were also ordered to pay a fine of $11,765,000. EDMC and NEIA filed for bankruptcy in 2018.

The relief represents one of the nation's largest group student loan repayments to date, adding to the nearly $29 billion in debt relief the Biden administration has provided so far over the past 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 years old or older,” said Attorney General Andrea Campbell. “Even more worrying is the fact that many borrowers now owe more than they did when they originally took out the loan. For example, more than a third of borrowers who first started college in the 2003-2004 academic year had a larger balance in 2015 than they did when they originally borrowed.”

As a result of the group relief, borrowers will automatically receive debt relief starting Wednesday. Borrowers do not need to take any action.

Anna Harden

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