U.S. Department of Education discharges loans for New England Institute of Art students

About 3,500 Massachusetts borrowers who attended for-profit school system The Art Institutes will see a total $80 million in student debt relief under a new plan jointly announced by the Biden administration and Massachusetts Attorney General Andrea Campbell Wednesday morning.

The U.S. Department of Education said it plans to cancel more than $6.1 billion of student debt for roughly 315,000 borrowers nationwide who attended The Art Institutes between 2004 and 2017. The agency said the private, for-profit network of art schools "knowingly misled students" with false claims about post- graduation employment rates and exaggerated industry relationships.

Many of the Massachusetts borrowers eligible for loan relief attended The New England Institute of Art in Brookline, which closed in 2017.

"We're providing this relief because we found that The Art Institutes engaged in widespread and sustained practices that misled borrowers about the value of their degree," U.S. Secretary of Education Miguel Cardona said during a call with reporters.

The New England Institute of Art (NEIA) — formerly known as the Massachusetts Communications College — offered associate's and bachelor's degrees in areas like media arts, fashion and design. Along with NEIA parent company Education Management Corporation, the school was the subject of a 2018 consumer protection lawsuit filed by then-Massachusetts Attorney General Maura Healey over claims it deceived and misled prospective students to boost enrollment.

Many NEIA students incurred heavy debt paying for school and were unable to find employment to pay off loan debt, the lawsuit argued. The cost of an associate's degree averaged around $49,000 and a bachelor's degree around $95,000. The average student debt load was about $53,000.

In 2019, a Massachusetts judge ordered NEIA and its parent company to pay $60 million in restitution.

The legal action taken by officials in Massachusetts, along with their counterparts in Iowa and Pennsylvania, laid the groundwork for the federal debt cancellation plan involving Art Institutes students nationally, according to the U.S. Department of Education.

"This meaningful relief is truly significant," Campbell said. "It will help advance the economic mobility, livelihood and opportunity for those who have been harmed by the predatory tactics by these for-profit schools."

According to a U.S. Department of Education press release, the states' investigations found that The Art Institutes falsely advertised that 80% of students found a job in their field within six months of graduating. The school network's actual in-field employment rate was no higher than 57%, according to the DOE.

The Biden Administration has so far approved almost $160 billion in loan relief affecting nearly 4.6 million borrowers, according to the press release.