Art Institute Lawsuit And Loan Forgiveness
Art Institute student loans are a nightmare. Dont get us wrong. Student loans can be an excellent investment for your future, or an outright burden for the rest of your life. If it were not for the Art Institute lawsuit, thousands of people would be paying their student loan debt for their entire career.
Student debts have reached a peak in the US. An estimated 40 million people owe on an average balance of $29,000, according to credit reporter, Experian. Another report by the National Association of Realtors in 2018, said that 83% of people aged 22 to 35 with student debts blamed the cause on student loans.
That same year in October, there was an Art Institute lawsuit by former students from Art Institute of Colorado and Illinois Institute of Art against the department and Education Secretary Betsy DeVos. They accused the agency of providing loans, although the Education Management Corporation, a company that owns Art Institutes, knew they were not eligible to pay. But the arrival of the Art Institute lawsuit has given a voice to the Art Institute students and enabled them to progress in life.
If you have an Art Institute student loan, you should know that youll be making payments for the rest of your life . One way to get rid of the debt is to apply for Art Institute student loan forgiveness. Dont worry this article will guide you through the process to help you pay off your debt safely.
The Art Institutes Lawsuit
In 2012 Senate investigation into The Art Institutes found enough evidence of fraud, including tremendous tuition pricing hikes that forced students to either cough up more money or lose their chance to graduate. The Art Institutes also kept a lopsided employee ratio of five recruiters for every member of their student services staff.
Followinf the investigation The Department of Justice charged the former owner of The Art Institutes, Education Management Corp, with $11 billion in federal funding fraud. Education Management Corp agreed to settle for $95 million to prevent further action against alleged consumer fraud and illegal recruiting tactics.
Along with the settlement 39 states and the District of Columbia secured $102.8 million in student loan forgiveness for approximately 80,000 former students of The Art Institutes. Federal loans are another matter, and the Trump administration continues to collect from former students. In some cases, this means seizing tax refunds and garnishing wages
Here are some of the things The Art Institutes was found guilty of doing
This will cost The Art Institutes almost $100 million to pay back these students federal and private loans.
Private Student Loan Consolidation Programs
Private student loan consolidation is not new, but its gotten much better in recent years.
While I used to advise everyone to totally avoid consolidating their private loans, now I feel better about the process, and I no longer think its the worst idea in the world .
For people absolutely buried in way too much private student loan debt, or with loans that have terrible terms , a private consolidation may be the best option for generating some real financial relief.
If you need to combine your loans for any reason , then you definitely do want to consider a private consolidation.
For details on how it all works, please visit my page on Private Student Loan Consolidation Programs.
You May Like: Usaa Credit Score For Mortgage
Former Students Of The Shuttered Art Institutes Given Chance At Loan Forgiveness
The Art Institute of Colorado
Last year, a university franchise that operated 40 colleges across the United States shuttered its campuses abruptly and left thousands of students with crushing student loan debt and axed academics plans. Now, following a lawsuit filed in October of 2019, some of these students are getting a chance at loan forgiveness.
More than 26,000 students were enrolled in the college network owned by the Christian nonprofit Dream Center Education Holdings. The nonprofits holdings included Argosy University, South University, and the Art Institutes.
In the new agreement, some Art Institute students will have their debts canceled through the Education of Departments closed-school discharge program, the Washington Post reports. Borrowers are normally eligible to ask for debt forgiveness if they were enrolled, on approved leave, or had withdrawn within four months of their college closing. But in todays announcement, the department guaranteed that this time frame will be extended to nearly a year.
The school network began to crumble in the summer of 2018, when the nonprofit announced the sudden closure of 18 Art Institutes, nine Argosy University sites, and three South University campuses. By the end of the year, Dream Center faced eviction on at least nine campuses and owed creditors more than $40 million.
Now, with the new extension, 790 more students are expected to be relieved of their debts.
The Pay As You Earn Student Loan Forgiveness Program
Part of the Obama Loan Forgiveness Program, Pay As You Earn is one of the best income-based Federal Student Loan Repayment Plans available this year, and its only downside is that its only available to people who took out loans on or after October 1st, 2007.
It works the same way as Obama Loan Forgiveness, in that it sets your monthly student loan payments to an amount based on your annual income , but it offers complete Federal student loan forgiveness benefits after youve made a certain number of payments: 240 payments, or 20 years worth of payments.
Abbreviated PAYE, this is one of the most powerful Federal forgiveness programs on the market, and one that you should definitely look into if your loans were taken out after 2007, because it is the most widely available forgiveness benefit, and one of the easiest to qualify for.
For details on how PAYE forgiveness works, please visit my page about the Pay As You Earn Student Loan Repayment Plan.
Read Also: Car Loan Calculator Usaa
Can I Get My Money Back From The Art Institute
If you have taken any loans for the Art Institute, you should see this as good news. Reason being that this opens up doors for you to apply for the Borrowers Defense Against repayment program that can help you get the money back. It is possible for you to eradicate the loans you took to attend the school.
How Does It Work
The PSLF program is quite simple. If you agree with the terms and conditions to work in any of the jobs listed above and pay your full student loan payment on time for ten years, then the Federal Government will cancel your remaining debt. You can easily qualify for the program without any difficulties in your employment status.
Recommended Reading: How Do Mortgage Loan Officers Make Money
The Itt Tech Student Loan Discharge Program
ITT Tech is another For-Profit industry giant who ended up collapsing under its own weight, probably due to spending so much money on advertising and enrolling anyone with a heartbeat, including millions of students who ended up defaulting on their loans.
This is another school Im glad to see gone, as I dont think they were doing a good job of providing valuable educational services to their students, and it seems like the marketplace agrees, as ITT Tech has completely ceased operations, making all loans related to the school eligible for the Federal Closed School Discharge Program.
If you attended ITT Tech, then theres a pretty good chance that youll qualify for a Discharge, especially if you never graduated, and were still a student around the time that the school shuttered its doors.
To find out if you qualify for a discharge for your ITT Tech loans, please visit my page on the ITT Tech Student Loan Forgiveness Program.
Where Can You File Your Bdar Application
The United States government has an official website regarding Borrowers defence to the repayment program. By entering that site, you can attach your BDAR claim and wait for results. Side note for these issues is that you should never provide any information about your case to their party companies or individuals. Whether it is student loan consolidation or loan forgiveness, keep your application safe and do not submit it on any other platform than the official one. The industry is full of student loan scams. Those criminals can steal your sensitive information and sell it to other companies. That is why it is best to approach this case very carefully.
Also Check: How Long For Prosper Loan Approval
Should You Pay Someone To Help
One big decision youll need to make is whether you want to tackle your loans entirely on your own, or with the assistance of a Student Loan Relief Company.
But youll need to be extremely careful about who you choose to work with, because there are literally thousands of Student Loan Forgiveness Scams in operation across the country now, and you definitely dont want to fall into line with one of them.
The benefits of hiring a Student Loan Debt Relief Agency are that they can save you time, money, and stress by making sure that youre aware of all the opportunities available for reducing or eliminating your debt, and by protecting you from making any mistakes with your applications to available debt forgiveness and discharge programs.
And that may seem like no big deal, but when its taking over a year to hear back from the Department of Education on the status of Borrowers Defense Against Repayment Applications, that means youve got THOUSANDS of reasons to get it right the first time around!
The Art Institutes Illegal Marketing Activities
A complaint filed in the New York County Supreme Court alleges that EDMC:
- Used high-pressure sales tactics on students that they knew werent right for the school.
- Falsely claimed that certain programs had the accreditation necessary for licensure.
- Misrepresented both their graduation and their job-placement rates.
Did the Art Institute do any of these things to you? Did you experience any of their marketing or advertising campaigns which made false promises, talked about graduation rates, job-placement rates, or accreditation for licensure that wasnt actually true? If so, you can use this illegal behavior as your reason for filing a Borrowers Defense Claim, stating that it was this illegal activity that convinced you to borrow money to attend the school. For additional ideas and more information about all the ugly details of what the school did wrong, be sure to read the official US government press release here.
Below Are The Steps To Apply
Step 1Submit the filled form to your loan servicer. Step 4 In case you dont know who your loan servicer is, it is the same company that you make your monthly student loan payments to. Remember, every student loan servicer may have their procedures in place for working on your Closed School Discharge application. Therefore remember to contact them for more information and clarification on the matter. For students who do not qualify for art institute loan forgiveness under this program, consider the Borrowers Defense Against Repayment. You can find the details below.
Make Your 120 Payment Under A Qualified Payment Plan
To get your PSLF, you must make your 120-qualifying payment. The qualifying payment is one where:
- The full amount of money is owed
- Made after October 1, 2007
- At the very latest 15 days past your deadline
- Made while under the qualifying repayment plan
However, you dont need to pay your due consecutively. Lets say you made 70 payments from a qualifying job, you resigned from the position and started work at another place for some years, and then started a new qualifying job. The original payments will still add to your total. Now, you begin from where you stopped.
In essence, it might take more than ten years to get a Public Service Loan Forgiveness. But you can fill the application form when you make the 120 payments.
You have to know that for you to get the best Public Service Loan Forgiveness, you need to have an income-driven repayment plan. You can complete it in 10 years, if youre consistent with the standard repayment plan. The income-driven repayment plan has lower payments, which are deemed as qualifying. You will probably pay above ten years.
Recommended Reading: Usaa Vehicle Loan Rates
What About Utilizing Closed School Loan Discharge As The Second Option
If you belong to the segment of students who thinks that they chose the Art Institute on their own and external factors such as fraudulent actions of the university did not intervene in their decision-making process, then it is okay. There is another option that you can use to get rid of the loan debt. As we all know, the Art institute closed its campuses and operations after the settlement in lawsuits against the university. As a matter of fact, the former students can use student loan discharge for closed schools in this particular case. It is the best way to maximize your chances of receiving the Art institute student loan forgiveness. But what about eligibility requirements? Who can apply for this program? Lets discuss that.
Student Loan Discharge Criteria via Closed School Program
You may get the full loan consolidation if you own
- Or FFEL
Besides, these conditions should be met to become eligible.
If you were studying in times when the school got closed
If the university got closed during a period of 120 days after your graduation
The last criteria are if you took the academic leave during the time when the university got closed
Certain criteria can make you ineligible to get approval for the Art Institute Loan Forgiveness
In case if you:
- left the school more than 120 days before it closed
- transferred your credits to another university at that time
- used the teach-out method
If you can meet these requirements, you can apply for the program and wait for approval.
Will I Owe Taxes On Forgiven Debt
Unfortunately, yes. The IRS considers any discharged student loan debt as taxable income. This means that if your student loans are forgiven you will then be left with a big payout to the Internal Revenue Service. For details on how this works, visit my page about Student Loan Forgiveness and Taxable Income.
In a nutshell, if you got $100,000 in debt forgiven and your taxable income was 30%, you wouldnt ever have to pay another student loan payment, but you would owe $30,000 to the IRS, and itd be due all at once unless you worked out a payment plan with them. Ouch.
Because most people who have their student loans forgiven arent going to have that kind of cash laying around, I have started another site to help people better understand and get rid of their IRS debt, called Forget Tax Debt, which you can find here.
If youre having problems with taxes, be sure to visit Forget Tax Debt, or simply check out my pages about Filing and Paying IRS Back Taxes, IRS Tax Debt Settlements, IRS Tax Debt Forgiveness, and The IRS Fresh Start Program.
Read Also: Usaa Auto Loan Process
Which Program Fits Best For You
Its not an easy answer. But well recommend choosing the Closed School Discharge program because the Borrower Defense to Repayment program takes a lot of time before getting approved. But the decision is in your hands. Read all the information provided on this page and choose the one that best fits your situation.
What Other Options Do I Have
As a result of the Art Institute Lawsuit, you can be eligible for Borrowers Defense to Repayment and Closed School Discharge. If you do not qualify, you can check other loan forgiveness programs such as Public Service Loan Forgiveness. Besides, you can benefit from consolidation, refinancing, or settlement with private lenders. These options will not discharge the debt, but they will help to manage the loan effectively. Plus, you can take advantage of different Repayment plans to be able to meet the debt obligations with the current level of income.
You May Like: Will Va Loan On Manufactured Homes
Are There Legitimate Student Loan Forgiveness Programs
There are legitimate government programs, such as Public Service Loan Forgiveness, that can reduce or eliminate federal student loans after a certain amount of time. Borrowers on income-driven repayment plans can get their remaining loans forgiven after they make payments for 20 or 25 years, depending on the plan.
Which Program Is The Best Borrower Protection Or Eviction From Closed Schools
It is hard to say. Both programs pay off outstanding student loan debt and both can give you back the money you already paid for the loan balance, but if I have to choose one, I would recommend moving to a closed eviction from school as it probably has a faster turnaround time. to confirm.
The most important thing to consider is that you cannot apply for both. You must choose one of them. So, assuming that you meet both criteria, I recommend switching to the Closed School Loan Program as it takes a very long time to process applications for the Borrower Protection Program.
You May Like: How To Get Approved For Capital One Auto Loan
Why The Art Institute Got Closed
According to the attorney general of Iowa state-Tom Miller, the Art Institute got closed because of their fraudulent actions that included lying to students about job placements of former students and the cost of their programs. Besides them, the Art institute did other illegal activities such as charging students for vocational programs and selling the accreditation for those students who were unable to get it through studying.
The National Collegiate Trust Student Loan Forgiveness Program
The National Collegiate Trusts deserve a special place in hell, as this company is best known for aggressively pursuing private student loan defaulters, taking them to court and pressing for legal and financial recompense against the defaulted debters, while they cant even prove that they own these loans!
And while that sounds ridiculous, the fact is that the National Collegiate Trust appears to have lost the paperwork for over $5,000,000,000 dollars worth of loans, and they may end up having to completely forgive all that debt since they cant prove that they really down own it.
Thats right if your loans have anything to do with the National Collegiate Trust, then youve got a pretty dang good chance at qualifying for a complete and total discharge, and soon.
To find out how you could take advantage of National Collegiates ridiculous mistake, please visit my page about National Collegiate Trusts Student Loan Forgiveness.
You May Like: Becu Ppp Forgiveness