Art Institute Lawsuit and Loan Forgiveness

Art Institute student loans are a nightmare. Don’t 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 you’ll be making payments for the rest of your life (unless you manage to pay off the debt). One way to get rid of the debt is to apply for Art Institute student loan forgiveness. Don’t worry; this article will guide you through the process to help you pay off your debt safely.

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Let’s Start With Some Good News

If you’re part of the Art Institute student loan forgiveness program, there’s a strong possibility that you’ll be debt-free. Recently, the Education Department agreed to extend the period of eligibility to cancel the former Art Institute students’ debts. Previously, it was a four-month period. Now, they’ve decided to extend the period close to a year.

If you’ve applied to the Art Institute Discharge, this is good news for you. Remember that you are eligible if you enrolled in the Art Institute, were on approved leave, or you withdrew within four months before the college shut down.

If you are yet to apply, get an application before it’s too late. Get a free consultation with the Art Institute student loan forgiveness specialist right now!

The Reason For This Guide

In this guide, we will explain the qualifications you need to receive Art Institute loan forgiveness. There will also be simple steps on how you can apply and submit The Borrower Defense to Repayment program or the Closed School Discharge program

Furthermore, we will delve into various things required to improve your chances of getting your application approved by the authorities. Are you a former Art Institute student? Do you want to pay off your loan debt? Then, you are in the right place. 

The Art Institute Loan forgiveness is entirely legit. If you qualify for one of the government programs mentioned above, then you have an excellent chance to get rid of your student loan completely.

Before We Begin

A bit of advice: since the Art Institute lawsuit began, lots of debt forgiveness agencies have sprung up. Most of these are scammers looking for a way to drain your time and money. So do your research well before you proceed.  

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Art Institute Lawsuit

The Education Management Corporation (EDMC) has been in the headlines for many years. The corporation owns the Art Institutes, and it’s well-known for fraudulent practices. For years, the corporations had students obtain loans to attend their institutes through marketing strategies.

They were caught and accused in 2015 for violating the US protection laws against consumers. In response, they agreed to pay the student loan debt of $103 million. Also, the EDMC paid $95.5 million for using an illegal strategy to recruit students that were against US federal law.

However, the Education Management Corporation never acknowledged any lawsuits held against them. But they paid about $200 million to make the trials disappear. Even though it may seem like bad news to them (not really), it is good news for you.

With the government’s help, you still have a good chance of paying off your student loan. 

You can now apply for Art Institute student loan forgiveness. In this case, you have two options:

  1. Closed School Discharge Program
  2. Borrower Defense to Repayment Program

With all the advantages present, the sad thing is that you can only apply for one program. So, you have to determine which best fits your situation, and has a higher chance of paying off your debt. Let’s take an in-depth look at the two programs below.

2 Ways To Apply For Art Institute Discharge

The unfortunate incident of Educational Management Corporation caused a great deal of stress on student’s financial conditions. The Art Institute lawsuit has made way for you to receive your loan forgiveness under the following programs:   

Closed School Discharge Program

The program operates under the federal government’s persistent involvement for students whose colleges closed down before they finished their degree. That is, you are eligible for the program if, for one or two reasons, your school closed down before you completed your education. With this program, you should have been a student before it closed or had stopped the school within 120 days before it was closed.

These are the two general requirements you can use to apply for loan forgiveness.

Who is Eligible to Apply?

There is tons of information online about the Closed School Discharge Program. You might feel overwhelmed and get lost in all the information they give you. So, we have made the information easy to digest so that you can determine which benefits are right for you.

As said earlier, you can cancel your Art Institute student debt if you meet two criteria:

1. If you were a former student at the Art Institute before it closed down

2. If you finished your degree or left not exceeding 120 days until it shut down

Aside from these two, there are two minor requirements you’re required to meet before you can apply:

  • If you are currently studying in another institute with your credits transferred from the institute, you don’t qualify.
  • If you already completed your course before the school closed, but haven’t received your certificate, you are not qualified.

With these requirements, you can determine if you are eligible to apply for the program. We recommend that you use it early and benefit from the student loan forgiveness program.

How To Apply For Closed School Discharge Program

Before you apply, you have to get the necessary documents ready and visit the Federal Student Aid official website.

Note: The link above will take you to the official Federal Student Aid website. Remember to look out for scams and fraudulent websites. Only use this website to apply!

Follow these procedures to apply:

  1. Download the online application form from the website
  2. Complete the form by filling out the correct information. Be sure to provide only accurate information. Any false information documented can lead to imprisonment.
  3. Submit the form to your loan service supplier. Your loan supplier is the place where you contribute your student loan payments monthly.

There is a bit of difference when it comes to processing the application form. So it’s best if you contact the service supplier for any assistance. If you don’t qualify for Closed School Discharge Program, you can try Borrower Defense to Repayment Program.

2. Borrower Defense to Repayment Program

The Art Institute broke the law by deceiving students to get loans to enroll in their institutions. Because of this, the program was created to redeem these students of their loan debt. The program offers complete debt-freedom within the Art Institute student loan forgiveness program. 

Thousands of students went for loans, hoping for quality education. Now, all these students, including you, are qualified for this program. 

But there are some essential things you must know before you apply. You should connect your student loan to the Art Institute lawsuit so that you can benefit from the program. There is a need to provide facts that prove the Art Institute committed fraud. After that, you connect the Art Institute lawsuit with the school’s fraudulence to qualify for the program. 

Here’s how to go about it: 

  • Add details of the Art Institute lawsuit to the Borrower’s Defense Repayment application form. 
  • Include links to reputable sources with information about the Art Institute lawsuit and the agreed settlement. 
  • Provide other useful details to help you build a strong case against the institution 
  • Don’t forget to add financial settlement details

Look at it this way: you are building a complaint against the school, and if you win, you will get rid of all your student debt. So make sure you fill your application form with caution to avoid any mistakes. The process involved in the application isn’t complicated, but it has to proceed with caution.  

Thankfully, many students have been compensated through this program. So there’s hope for you too. 

Filing A Claim

To file a complaint with success, you must clearly state how the institution went against the law by their conduct. Communicate how you ended up in the school due to illegal marketing strategies. The claim should be detailed, making sure every area is covered, or they will deny your application. Take your time to research and come up with a clear and concise story about what the school did. 

If you are not aware or don’t have the specific details of what the Art Institute did, here’s a detailed explanation of what exactly happened. 

The Art Institute Lawsuit: What Are They Accused Off?

In 2015, the Education Management Corporation (EDMC), which owns Art Institutes, received a lawsuit for violating protection laws against consumers. The accusation resulted in a settlement in which they agreed to forgive nearly $103 million in student loan debt. They also agreed to pay $95.5 million in violation of the federal law. 

Even though the EDMC never admitted to doing anything wrong, they agreed to pay 200 million dollars, which, in a way, they are saying they are guilty. You can use this for your argument when filing a complaint. 

Let’s look at what exactly resulted in the Art Institute lawsuit. Find out if any of the legal activities happened to you and write them down. 

A complaint filed against the EDMC alleges that: 

  1. They used illegal marketing activities to trap students who would have applied to other schools or not qualified for the school. 
  2. Made claims that were false in accreditations of some programs
  3. Prepared false statement about their job placements and the rates of the graduation
  4. Lied about the benefits of an education in their Art Institutes. 

Ask Yourself These Questions

  • Are you a victim of the above-stated misconduct? 
  • Did you fall for their marketing tactics? 
  • Did the rates from the graduation from your Art Institute deceive you? 

If you answered yes to either one of the above questions, then you can boldly declare it when you file a claim. You could use these illegal behaviors if it happened to you in the Art Institute lawsuit. You can state these reasons that led you to get a loan to attend the school. 

It’s worth saying again that you have to take time, do your research, and file the complaint. There should be no room for mistakes. 

Where To File A Claim

There’s only one place to file your claim in the Art Institute lawsuit, and that is the Federal Student Aid official website. You will not get your application processed if you submit through another site. There are numerous student loan scams everywhere on the internet. So be careful you don’t fall victim to scammers. Only deal with the official Federal Student Aid website.  

Checking the Progress of Your Application After Submission

You must know that your submitted application will not get processed early. The time frame varies. You might probably get a response from the Department of Education a year later. But this should not discourage you from applying. It might be the only way you get a chance to get rid of your loan debt. 

According to Secretary of Education, Betsy DeVos, it’s possible the Borrower Defense To Repayment Program will be taken out from the US educational system. So, you must apply early. If you submit before the program is canceled, you are still entitled to benefit. So hurry and start your application before it’s too late.

Which Program Fits Best For You?

It’s not an easy answer. But we’ll 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.

Are Forgiven Debts Tax-Free?

No. Unfortunately, you will still have taxes to pay after you clear your student loan debt. The Internal Revenue Service (IRS) views any discharged debt as taxable income. It means you will have to pay the IRS a percentage of the debt you were forgiven.

To get a better understanding, if your student debt loan forgiveness amount is $10,000 and your taxable income is 25%, you have to pay $2,500 to the IRS. Also, you have to pay the $2,500 in lump-sum unless you work out a payment plan with them.

The truth about the student loan forgiveness is that even when you receive your forgiveness, you’ll have more burden to carry than the relief you expected. People with high repayment plans with low monthly payments will have more burden to bear, including those on fixed incomes.

How You Can Avoid Taxes On Forgiven Student Loan

There is an easy way to avoid taxable income on the student loan forgiveness program. You need to have a qualification that allows you to benefit under the Public Service Loan Forgiveness (PSLF) Program.

Public Service Loan Forgiveness is the quickest way to pay off your entire debt after you make consistent 10-year payments. It is the only program that does not need you to claim the benefits received as taxable income.

People who qualify for the PSLF don’t pay taxes because the Federal Government created the program to encourage people into public service. If you are passionate about public service, then this forgiveness program will be great for you. The Public Service Loan Forgiveness is the only way to pay your student loan debt without any Internal Revenue Service tax bill.

Public Service Loan Forgiveness Program (PSLF)

The PSLF is a federal program created to help students to work in low-paying careers like teaching, nursing, firefighting, government services, the military, and public interest litigation for a decade. The PSLF was the best Federal Student Loan Forgiveness Program until President Trump’s bid to end the program.

We will go into the details of how it works and why you should enroll before it ends.

Why Is Public Service Loan Forgiveness Important?

The Public Service Loan Forgiveness is the fastest way to pay off your debt without paying for them.

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.

Qualifications for Public Service Loan Forgiveness

People started applying for the PSLF in October 2017. But from June 2019, only about 1.1% of the people who applied received the forgiveness program. The percentage shouldn’t discourage you. To qualify, you need to have a federal student loan. The program does not accept private student loans.

Also, you should have received the federal student loan under the Direct program. That is, the William D. Ford Federal Direct Loan Program. Loans under the Federal Family Education Loan (FFEL) are not qualified for the Public Service Loan Forgiveness program.

If there are old loans that are not eligible, you can consolidate them with a Direct Consolidation loan. But, remember that the 10-year clock resets from your student loan consolidation. There will be no credit for past payments.

If you have Perkins loans and want to cancel them, separate them from other federal loan consolidation. You can cancel Perkins loans thoroughly after serving in the public service for five years. Separating them will help you solve it sooner than the others.

Employers Qualification

If you want to receive Public Service Loan Forgiveness, you need to work full-time for a specific employer. Employers that qualify are:

  • 501(c)(3) status nonprofit organizations
  • Similar nonprofits that have the primary role related to public service
  • Government organizations such as state, federal, tribal or local
  • AmeriCorps or Peace Corps

Full-Time Employment And Employment Certification Form

Full-time work adds up to 30 hours a week, at least for a qualified employer. In certain instances, you can work two jobs and still qualify, so long as your work hours amount to 30, and your employer is eligible.

You have to create a record with the US Department to create a paper record of your work history. Make sure you follow the record to keep a consistent track. After, you have to fill an employment certification form every year and send it to the FedLoan Servicing. When you create a work history, it will help you approve your work and get your Public Service Loan quicker.

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 don’t need to pay your due consecutively. Let’s 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 you’re 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.

How To Apply

Applying for the Public Service Loan Forgiveness is straightforward. You need to fill and submit the application form provided by the US Department of Education. Then, you can download the form at the official Federal Student Aid website.

You need to make sure you are working in a qualified organization under a qualified position before you submit your application. The 120 qualified payments should also be made before you apply. Failure to do will result in the decline of your application.

You can use the National Student Loan Data System to check your qualifying payments every year. Once you submit everything to FedLoan Servicing, you have to wait for the agencies to process your application before you make your final decision.

Apply for Student Loan Forgiveness Help

If you struggle with university student loan forgiveness, then you should get help with that. Because the employees in these agencies are dealing with the student loans every day and they have enough experience for solving different kinds of student loan problems.

Didn’t Qualify? You Have Other Alternatives

If you are not eligible for the Public Service Loan Forgiveness, there are other options you can try. Carefully take into consideration before taking the step, and find out if there’s a way for you to limit your student loan debt burden. 

Join Other Loan Forgiveness Programs

If you are not eligible for the PSLF, you might have another opportunity with another loan forgiveness program. Find out from the state government about different programs currently under service like military programs. Other organizations like AmeriCorps can pay off some of your student loan debt separate from PSLF. There are numerous forgiveness programs in the teaching sector and health services. 

You might not be able to pay off all your debt through these programs, but it can help towards getting rid of your student loan debt — any small amount of help counts. 

Plan With Income-Driven Repayment

You can qualify for an income-driven plan if your low-paying job doesn’t meet the requirements of Public Service Loan Forgiveness. The balance that remains can be forgiven after 20 or 25 years, depending on the plan. But it would be best if you were careful. You will get taxed under the income-driven repayment. 

Refinancing Your Student Loan

If you’ve had enough income-driven repayment and want to concentrate on paying small consistently and finish fast, then you can consider refinancing your student loan. You might get a lower interest rate and pay your debt more quickly. 

However, you have to be aware that when you choose to refinance your federal loan, you will be replacing it with a private loan. You’ll not be eligible for loan forgiveness or income-driven repayment. Also, you need to have some credit requirements. 

Where To File A Claim

There’s only one place to file your claim in the Art Institute lawsuit, and that is the Federal Student Aid official website. You will not get your application processed if you submit through another site. There are numerous student loan scams everywhere on the internet. So be careful you don’t fall victim to scammers. Only deal with the official Federal Student Aid website.  

Final Thoughts

President Donald Trump has proposed ending the Public Service Loan Forgiveness many times. He suggested the proposal in the recent fiscal year 2021. In 2019, he announced that he would end the program, which was not even part of the final budget for 2020.

So if you are planning on applying for the Public Service Loan Forgiveness, you have to hurry before the program shuts down completely. The program can help you get rid of all your debt. So, you have nothing to lose!

If you need help with more answers, check out our other pages on the website. You’ll find helpful information to help you get rid of your Art Institute student loan. For answers concerning the Closed School Discharge program and the Borrower’s Defense Repayment Program, check out the Federal Student Aid website. There is a lot of information that will help you.

Be careful not to obtain information on any other site apart from the Federal Student Aid. Of course, there are legit sources aside from the US government site like us. But there are a lot of scammers who will try to get all your money and waste your time. So be careful about the sources you get your information from. 

The Educational Management Corporation’s illegal actions caused thousands of students to fall into student debt. There seemed to be no hope until the Art Institute lawsuit was filed. Now, there is a glimpse of hope for the former students of the Art Institute to pay off their debt once and for all. You can say that the Art Institute lawsuit was a blessing in disguise. However, much effort and useful information are required from your part to make the free loan debt a reality.