Art Institute Student Loan Forgiveness: How to Get It

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Updated on June 14, 2023

Former Art Institute students are eligible for loan forgiveness under different programs. No matter which campus you attended, you have various paths to consider:

  1. Borrower Defense to Repayment: Born from the Sweet v Cardona lawsuit settlement, which wiped out $6 billion of federal student loan debt for borrowers who attended mostly for-profit schools, this might be your choice if you believe your school misled or defrauded you. Examples of bad acts include untruthful representations of the school’s selectivity in admitting students, job placement and earnings outcomes of prior graduates, and so on.

  2. Closed School Discharge: If your school folded while you were enrolled or soon after you left, this path is for you. You could see your federal student loans discharged if the closure prevented you from finishing your education.

A glance at the journey toward loan forgiveness reveals key milestones:

  • 2015 Settlements: Education Management Corp., the former parent company of the Art Institute chain, was hit with a $95 million settlement for fraudulent practices and illegal marketing and enrollment activities. You may see this referred to as the “Art Institute Accreditation Lawsuit.” That same year, an extra $100 million settlement was reached with attorneys general from several states. These actions resulted in significant loan forgiveness for thousands of students nationwide. These settlements might have already benefited you if you attended one of the Art Institute campuses.

  • 2022 Navient Settlement: Accused of unfair loan servicing practices, Navient had to pay out $1.85 billion in relief to settle a class action lawsuit filed by dozens of state attorney generals. For many of you, this might have cleared your subprime private student loan balances. Here’s a breakdown of the Navient lawsuit.

Importantly, these settlements and discharges have already been applied.

So if you’re still dealing with student debt from the Art Institute, it might be because you’re awaiting the benefits of a new Borrower Defense application or the automatic forgiveness from the Sweet v Cardona lawsuit.

Furthermore, being a former Art Institute student, there’s a chance that you might be eligible for these federal student loan forgiveness programs:

  • Public Service Loan Forgiveness (PSLF): This program forgives the remaining balance on your Direct Loans after 120 qualifying payments under a qualifying repayment plan while working full-time for a qualifying employer.

  • Income-Driven Repayment (IDR) Waiver: Set to kick off in spring 2023, this game-changer offers automatic relief for those who’ve been making federal student loan payments for 20 years or more. IDR bases your payments on your income, not the balance owed, and the coming policy shift could drastically cut your journey to loan forgiveness.

As for any private student loans you have, if you’re still grappling with those, explore refinancing, negotiating a settlement, or considering student loan bankruptcy.

Related: How to Get Rid of Private Student Loans

Billions of Dollars Wiped Out By Old Borrower Defense Claims

The Sweet v Cardona lawsuit led to the cancellation of $6 billion in federal loans for nearly 200,000 former students, including many former Art Institute students, who submitted borrower defense claims alleging their schools defrauded them.

Predominantly, these schools are for-profit colleges and vocational programs. Notably, this settlement overturned 128,000 denial notices issued when the Trump administration oversaw the Borrower Defense process.

Key points in this settlement include:

  • The list of schools named in the class-action lawsuit, many now defunct, includes the Art Institutes, campuses run by the Dream Center, and those owned by Career Education.

  • Active colleges such as the University of Phoenix, Grand Canyon University, Argosy University, and DeVry University are also part of the settlement.

  • The settlement cancels loans, refunds any payments made, and removes the loans from their credit reports.

This settlement marks an important chapter in years of regulatory action against for-profit colleges.

The Obama administration established the Borrower Defense program, designed to forgive loans for students at schools that broke state consumer protection laws or committed other serious misdeeds. But the program was put on hold under the Trump administration’s Education Secretary, Betsy DeVos, leading to a backlog of claims.

The Biden administration reactivated the Borrower Defense program, eliminating nearly $6 billion in loans for students who attended institutions like Corinthian Colleges, notorious for its illegal recruiting tactics.

The relief extends to those who submitted a Borrower Defense application by June 22, 2022.

The Education Department still needs to decide on approving future claims from students who attended the named schools.

Who Benefits From the Sweet v Cardona Settlement?

The Sweet v. Cardona settlement primarily affects two groups:

  1. Those who attended a school named in the lawsuit (approximately 200,000 individuals) and submitted a borrower defense claim before the settlement was announced. They are eligible for full loan discharge and refunds of any payments already made.

  2. Those who applied for borrower defense but didn’t attend a listed school (approximately 64,000 individuals). They will receive decisions on a rolling basis from the Department of Education.

If you applied between June 22 and November 16, 2022, you’ll receive a decision within three years and full relief if the department misses that deadline. Notifications for eligible borrowers started in late April 2023. Further information is available on and through The Project on Predatory Student Lending.

Related: Full Sail University Loan Forgiveness

Who Qualifies For Closed School Discharge?

Closed school discharges are a provision by the U.S. Department of Education (ED) that helps students who could not complete their education due to their school’s closure. This program extends to students who were attending the school or were on an approved leave of absence or withdrew shortly before the institution’s closure.

In November 2019, the department expanded this program for students of 24 schools owned by Dream Center Education Holdings (DCEH) that closed in 2018. This expansion includes automatic loan cancellations for students from five specific DCEH-owned schools and the restoration of Federal Pell Grants eligibility for students who received them at these closed schools.

Originally, the closed-school discharge program only applied to students who had withdrawn or had been attending their school within 120 days of its closure. But the department made special allowances for DCEH-owned schools, extending this eligibility period to June 29, 2018, and later to January 20, 2018, for certain institutions.

Students who believe they qualify under these circumstances should contact their federal loan servicer or visit the Federal Student Aid website at for more information about the closed school loan discharge eligibility requirements and application process. All completed discharge applications must be returned to the loan servicer for processing.

Other Options For Debt Relief

As a former Art Institute student, if the Borrower Defense or Closed School Discharge programs don’t apply to your situation, don’t despair. There are still several options you can explore for student loan debt relief:

  • Public Service Loan Forgiveness: This program is specific to federal loans. It forgives the remaining balance of Direct Loans after 120 qualifying payments while working full-time for a qualifying employer, typically a government or nonprofit organization.

  • Income-Driven Repayment Plan: For borrowers experiencing financial hardship, IDR plans cap your monthly payments based on your income and family size. If a remaining balance exists after 20-25 years of payments, it’s forgiven. This is referred to as IBR loan forgiveness.

  • Negotiating settlements: Primarily applicable to private loans, this method involves agreeing with your lender on a lower payoff amount. Not every lender is willing to negotiate student loan settlements. But if they are, it can lead to significant savings for some.

  • Filing for bankruptcy: Though a last resort and challenging, it’s not impossible to discharge student loans through bankruptcy. Filing student loan bankruptcy means proving “undue hardship” in a separate legal process called an adversary proceeding.

Each option carries its own eligibility requirements and potential impacts on your credit score and taxes. Therefore, thorough research or consultation with a financial advisor is advised to understand which avenue best fits your circumstances.

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When did the Art Institute lose its accreditation?

The Art Institute lost its accreditation in June 2016. The U.S. Department of Education stripped the Accrediting Council for Independent Colleges and Schools (ACICS) of its accrediting power, which impacted the Art Institute.

Is there a lawsuit against the Art Institute?

Yes, there was a lawsuit against the Education Management Corporation, which operated the Art Institute campuses. The federal Department of Justice and four states initiated this lawsuit, seeking multibillion-dollar damages. That case has been settled.

What accusations have been made against the Art Institute?

The Art Institute has been accused of several illegal activities, including misleading marketing strategies, false statements about the value of their education, and applying high-pressure sales tactics on unsuitable students. These allegations have sparked several lawsuits from ex-students and consumer protection groups.

Does the Art Institute qualify for borrower defense?

Yes, the Art Institute may qualify for borrower defense. You should review the specific terms of your loan and explore the options available to you for a definitive answer.