Federal government to offer Art Institute alumni a new loan forgiveness opportunity
The ruling stems from a lawsuit filed in October by former students of the Art Institute of Colorado and the Illinois Institute of Art against the department and secretary of education Betsy DeVos. The plaintiffs accuse the agency of providing loans even though education ministry officials knew the schools were not accredited and, therefore, could not receive such assistance. The former students argued that they should not be forced to repay loans that were issued illegally.
“Extension of the eligibility period to January  means justice for more students, ”said Eric Rothschild, lawyer with the National Student Legal Defense Network which represents students, on Thursday. “The Illinois Institute of Art and the Art Institute of Colorado have been lying to students since they lost their accreditation in January 2018, and students deserve relief that reflects the full extent of this deception.”
Documents released in October by the House Education Committee show that the department provided $ 10.7 million in federal aid to students at the two sites of the Art Institute of Colorado, the Art Institute of Michigan, and the Illinois Institute of Art in Chicago and Schaumburg for the 2018 spring semester. None of these campuses was fully accredited at the time.
Dream Center Education Holdings, which owns the Art Institutes and the University of Argosy, has kept students in the dark about the schools’ status despite instructions to spread the word, according to the Higher Education Commission, its accreditation. The Higher Education Commission had raised concerns about the quality of teaching on campuses and downgraded their status for up to four years while considering the Dream Center’s 2017 acquisition of the Art Institute and of Argosy campuses.
The Higher Education Commission issued a public notice in January 2018 and notified its decision to state education agencies and the Department of Education. Still, the federal agency continued to provide loans to Art Institute students, even though for-profit colleges must be fully accredited to participate in federal student aid programs.
The declassified designation of for-profit schools as “pre-accredited” institutions barred them from receiving federal student aid, although nonprofit schools with the same status could benefit from it. According to letters obtained by the House committee, the education department in May 2018 retroactively designated schools as nonprofits effective January 20, 2018, when they lost their accreditation. This means that they could receive federal student aid.
Education Department spokeswoman Angela Morabito said Thursday the agency maintains schools remained accredited thanks to the change in ownership.
“Because [the Higher Learning Commission] appears to have violated her own policies and regulations, and harmed students by claiming that these schools were not accredited, the secretary used her discretion to extend the period of retrospective, ”Morabito said.
The commission said the accreditation status applied to Dream Center schools has been in place since 2009.
Weeks after the House committee’s revelations, DeVos said the ministry would provide debt relief to 1,500 students who took out loans to attend the Art Institute’s campuses between January 20, 2018 and January 14, 2018. December 2018. The secretary also extended the closed school leave window to six months for students at 24 other Dream Center schools – including Argosy sites – which have closed. The extension benefited less than 300 students.
The education department estimates this week’s decision to further expand eligibility could help more than 790 students.
The latest extension is still a long way from what attorneys general and liberal lawmakers have called for. A bipartisan group of attorneys general from 25 states and the district this week urged DeVos cancel federal loans for all students who attended Dream Center schools that closed in 2018 and 2019.
Lawyers made a similar argument to what Congressional Democrats made in March when they asked DeVos to extend the deadline until October 2017, when the ministry approved the Dream Center acquisition of the schools. Lawmakers argue students shouldn’t be at the mercy of loans given since, as the ministry withdrew its approval after learning the Dream Center abused millions of dollars in federal student aid to cover operating expenses .