Loan debt discharged for thousands of Mass. borrowers who attended ‘predatory’ art colleges, AG says

BROOKLINE, Mass. — More than $80 million in federal student loan debt will be discharged for over 3,500 former Massachusetts borrowers who attended “predatory” art colleges, including the New England Institute of Art, Attorney General Andrea Joy Campbell and the U.S. Department of Education announced Wednesday.

The relief for Bay Staters who attended NEIA, a Brookline-based “predatory for-profit school,” comes as the Department of Education discharged more than $6.1 billion in automatic student loan relief to nearly 317,000 borrowers nationwide who enrolled at The Art Institutes, Campbell’s office said in a news release.

The Massachusetts AG’s office played a significant role in the investigations and litigations leading to the loan discharges. A 2018 lawsuit filed by the AG’s office alleged that NEIA and its operator, Education Management Corporation, violated the Massachusetts Consumer Protection Act by misrepresenting the likelihood of job placement to prospective students to induce enrollment.

The now-discharged debt was incurred by students and parents of students who enrolled in Art Institutes on or after January 1, 2004, through October 16, 2017.

In 2019, Suffolk Superior Court entered final judgment against NEIA and EDMC, ordering them to pay restitution of about $60 million plus interest based on the amount of tuition paid by students, Campbell’s office noted. They were also ordered to pay $11,765,000 in penalties.

EDMC and NEIA filed for bankruptcy in 2018.

In a statement, Campbell said, “These predatory for-profit schools harmed vulnerable students for their own financial gain, leaving student borrowers burdened with debt and without viable job or financial prospects. Thanks in part to the diligent work of my office, I, alongside the Department of Education, am tremendously proud to announce meaningful debt relief for former students of The Art Institutes and help advance consumer and economic justice for these struggling borrowers.”

This group discharge will provide relief automatically to borrowers and the Department of Education will begin notifying eligible borrowers today that they are approved for discharges. Borrowers do not need to take any action.

The Department of Education also noted that it will take immediate steps to pause loans identified for discharge, so borrowers do not make further payments. When their discharges are processed, borrowers will see any remaining loan balances adjusted and credit trade lines deleted.

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