Do You Qualify for an Art Institute Refund or Discharge?

While there is no official Art Institute Loan Forgiveness Program, you might qualify for Art Institute student loan forgiveness via the The Borrowers Defense To Repayment program or the Closed School Loan Discharge program.

In this article, I’m going to explain the qualifications for receiving Art Institute loan forgiveness and I’ll also provide you with details on how to apply for the benefits mentioned above. Furthermore, I’ll tell you exactly what you need to do to increase your chances of getting your application for either program approved.

If you’re a former student at the Art Institute and want to find out how to get rid of your student loans, then you’ve come to the right place. Rest assured, Art Institute loan forgiveness is 100% legit. As long as you qualify for either one of the two government programs I mentioned above in order to wipe out your debt for completely, and for good.

The Art Institute Lawsuit

The company that owns the Art Institutes,  Educational Management Corporation, was accused of violating US consumer protection laws, and in 2015, they agreed to forgive up to $103 million  in student loan debt. They also agreed to fork over $95.5 million as a result of a whistleblower’s claim that they were engaging in a student recruitment strategy that violated US federal law, which is good news for former students, as this opens them up to Borrower’s Defense Against Repayment claims.

In other words, The Art Institutes broke the law, and while they never admitted the illegal behavior, they did agree to pay out nearly $200 million dollars to make the lawsuits go away. This means that there’s a very good possibility that you can qualify for some of that $200 million settlement to get rid of the student loans you took out in order to attend the school.

Two Ways to Discharge Art Institute Loans

As I stated above, there are two ways that former students of the Art Institute can apply for student loan forgiveness:

1. The Borrower’s Defense Against Repayment Program
2. The Closed School Student Loan Discharge Program

Unfortunately, you cannot apply for both programs. Therefore, you’ll need to choose the student loan forgiveness program that gives you the best chance of actually getting rid of your loans.

Let’s take a look at the differences between the two programs so you can figure out which one will work best for your specific situation.

Discharging Art Institute Loans via Borrower’s Defense Against Repayment

The Borrower’s Defense Against Repayment program was created to help people who took out loans in order to attend schools that broke the law in order to convince them to attend the school.. And because the Art Institute has clearly violated many laws, anyone who took out a student loan to attend one of their schools is basically automatically eligible for the Borrowers Defense Against Repayment program, which offers complete student loan forgiveness.

Remember, you aren’t the only person who was affected by the school’s illegal marketing, enrollment and recruiting activities. Other students took out loans as well in order to attend the school and many of these students have already had their loans forgiven.

Therefore, if you’re still wondering whether or not the forgiveness benefits for the Art Institute are legitimate, I can tell you with certainty that YES, this is likely your best and perhaps only opportunity to wipe out your student loans. If you do choose to apply for a Borrower’s Defense Against Repayment Discharge, there’s a very good chance that you will be able to get your student loans forgiven entirely.

Listen Closely Now…

But before you get too excited, here’s the most important part of the Borrower’s Defense process: it’s extremely important that you link your Borrower’s Defense claim to the Art Institute’s  lawsuit and the fraudulent activity that they’ve been accused of performing.

In order to do that, you will need to add details about the lawsuit into your Borrower’s Defense application, including monetary settlement figures and links to reputable sources containing information about the lawsuit and settlement they agreed to. Consider your application as an attempt to build a case against the school, and if you’ve watched enough court TV, then you know that every case needs evidence to win!

If you are eligible for the program and your application for the Borrower’s Defense Against Repayment is filled out correctly then you will qualify to have your student loans discharged and any payments you have already made toward the loan may even get refunded. Therefore, it’s vital that you pay attention to the details and fill out your application correctly, so let’s look at the application process in more detail.

How to Write Your Borrower’s Defense Claim

When you write your Borrower’s Defense Claim you need to stress the fact that the Art Institute was involved in a lawsuit because they broke the law by doing illegal things to encourage students to attend their schools, and to take out student loans in order to pay for their attendance.. Do not overlook or rush through this essential part of your claim, because it’s literally the most important thing for you prove.

You need to carefully explain that you would never have taken out a loan to attend the Art Institute if the school had not engaged in fraudulent activity designed to convince you to take out those student loans. Stress the fact that the school lied to you and that this was the only reason you decided to take out the student loan, or your application may not be approved.

You’ll need to discuss the specific lawsuit involving the school too, but remember that because the Art Institute agreed to pay out nearly $200 million it will be relatively easy for you to prove that they misled you via false advertising; you just need to explain exactly what they did and how it impacted your decision to attend the school.

Be very specific when explaining how the school misled and tricked you into thinking that it was a good idea to take out the student loan to attend their programs. What exactly did they tell you?  Be sure to include everything in your application, and go into detail about it. Remember, you are building your case here so take your time and think it through before you even start writing about what happened and how it influenced you. Make sure that you can tell a clear story about what they said or did that changed your thinking, and convinced you to borrow money to attend the school.

In the next section, I’ll explain exactly the Art Institute did that led that to its closing and class action lawsuit. If any of these things sound familiar to you, then you can use them as the reasons for your Borrower’s Defense Claim, so listen closely and write down anything that you remember happening to you.

What Fraudulent Activity has the Art Institute Been Accused Of?

The Art Institutes are owned by Educational Management Corporation, the second largest for-profit college in the US. In the lawsuit against the Art Institute, which was actually filed against EDMC, they were accused of violating consumer protection laws, leading to a 2015 settlement in which they promised to forgive almost $103 million in student loan debt, and to pay $95.5 million over whistleblower claims that EDMC’s recruitment strategy also violated federal law.

EDMC refused to admit that they had done anything wrong. However, they agreed to pay almost $200 million dollars, which is basically as good as admitting their guilt, and which you can use for your Borrower’s Defense argument.

Of course, it isn’t enough to merely point to the Art Institute’s wrongdoing. You will need to emphasize that the school did these things to you. In other words, you will need to be very specific on your Borrower’s Defense application by explaining what the school said, did, or advertised which convinced you personally that you needed to borrow money to pay for their higher education programs.

Let’s take a look at what exactly EDMC was doing that led to the lawsuit. As a former Art Institute student, ask yourself if any of these things happened to you.

The Art Institute’s Illegal Marketing Activities

A complaint filed in the New York County Supreme Court alleges that EDMC:

  • Deceived and misled students about the benefits of an education at their schools.
  • Used high-pressure sales tactics on students that they knew weren’t 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 wasn’t actually true? If so, you can use this illegal behavior as your reason for filing a Borrower’s 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.

Where Can I File My Borrower’s Defense Claim?

In order to file your claim, you’ll need to go to the government’s official website for the Borrower Defense Discharge Program and complete their electronic application.

Whatever you do, don’t file a claim anywhere else! Make sure that you do it at the US government’s official website set up for this purpose, or you may be falling for one of the popular Student Loan Forgiveness Scams floating around. There are a lot of scammers out there who will make all sorts of wild promises to you. Don’t believe them! Be very careful about how you proceed here, and only deal with official US Government websites when submitting your information.

If you do get stuck on the application and need some help with it, then I suggest contacting the Student Loan Relief Helpline at 1-888-906-3065. The Helpline’s Advisors can explain the process to you so you’ve got a better understanding of how the Borrower’s Defense process works, and they may even offer to help write your claim for you (for a fee). This is the only company that I trust to help people with their student loans, so don’t call anyone else!.

Checking The Status of My Application

Unfortunately, your application probably won’t be processed in a timely manner. I personally know people who waited over a year before they heard anything back from the Department of Education, and the lines have grown even longer as more and more people apply for forgiveness benefits.

However, don’t let this stop you from submitting the application, because again, this may be your best and perhaps even only chance at discharging your loans. I’m just letting you know this in advance so that you don’t get discouraged if you don’t hear back from the Department of Education  immediately.

I would advise you to apply right away because Secretary of Education Betsy DeVos is trying to get rid of the Borrower’s Defense program entirely, but as long as your application gets submitted before things are changed, you should be grandfathered in and remain eligible for the benefit.

We also still aren’t entirely certain what President Donald Trump’s Student Loan Plan is going to look like, but he could try to pull the plug on this program too. Therefore, apply for the benefit now so that even if the Borrower’s Defense program is cancelled you’ll still have a chance of receiving loan forgiveness.

Receiving Forgiveness via the Closed School Loan Discharge Program

If you don’t feel that the Art Institute defrauded you, then don’t fear, because you’ve still got a chance of wiping out your loans via the Closed School Loan Discharge Program, which is the second best option for receiving Art Institute student loan forgiveness.

This program is for students of schools that closed before they could finish their degree. To qualify for a Closed School Discharge, you must have either been a student at the Art Institute at the time it closed, or have left the school no more than 120 days prior to its closing.

Therefore, if you were a student at the Art Institute on the date it closed, or you left no more than 120 days prior to that date, you would automatically qualify to have your student loan discharged via the Closed School Loan Discharge Program.

Eligibility Requirements for Closed School Discharges

I have a ton of information about the Closed School Loan Discharge Program here. Be sure to take the time to read through it carefully if you’re thinking about applying for the program.

As I mentioned above, you might qualify to have your student loans written off via the Closed School Loan Discharge Program if you were a student at the school when it closed or if you left the school no more than 120 days prior to the day it closed.

However, there are other two conditions to be aware of it you’re thinking of applying for this program. First, are you currently attending another school after having transferred your credits from the Art Institute? If so, you will not qualify for Art Institute student loan forgiveness under this program, because transferring credits invalidates your eligibility to receive the benefit. Second, if you had already completed all your coursework before the school closed, but just hadn’t received your diploma yet, then you also won’t be eligible for the discharge..

If neither of the above exclusions apply to you, and you were a student of the school when it closed (or left near enough to the closing date), then you stand a very good chance of achieving Art Institute loan forgiveness via the Closed School Loan Discharge Program, and I would encourage you to apply for the benefit right away.

How Do I Apply for a Closed School Discharge?

You can apply to have your student loan discharged via the Closed School Loan Discharge Program by going to this website. NOTE: This is the official Government website for the program, so you can trust it. DO NOT GET YOUR FORM FROM ANYWHERE ELSE!

Download the application form, fill it out, and submit it to your loan servicer. If you’re not sure who your loan servicer is, it’s the company who receives your monthly student loan payments.

Every loan servicing company has slightly different procedures for processing the Closed School application, so you’ll need to contact them for details on how to proceed.

Which Program is Better? Borrower’s Defense or Closed School Discharges?

That’s hard to say. Both programs discharge your outstanding student loan debt and both may refund you the money you already paid toward the balance of your loan, but if I had to pick one, I’d recommend going with the Closed School Discharge since it’s probably a faster turnaround time to approval..

The key thing to consider here is that you can’t apply for both. You need to pick one or the other. Therefore, assuming that you qualify for both I would suggest going with the Closed School Loan Discharge Program because the applications to the Borrower’s Defense program are taking such a long time to process.

In the end though, the choice is up to you. Read through all the information here about both programs and make the decision for yourself.

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 wouldn’t ever have to pay another student loan payment, but you would owe $30,000 to the IRS, and it’d be due all at once unless you worked out a payment plan with them. Ouch.

Because most people who have their student loans forgiven aren’t 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 you’re 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.

Where Else Can I Ask Questions?

The best place to find answers to your questions is Federal Student Aid, a US government website. There’s a lot of information here, including details on the Borrower’s Defense program, and the Closed School program.

Be careful about getting your information from any source other than the US government. I’m not saying that there isn’t good information out there from sources not associated with the US government (after all, I’m one of those types of sites…), but I am saying that there are a lot of scammers trying to steal money from people, so be sure to be cautious in choosing who to trust..

I am not a representative of the US government or the US Department of Education.  However, I would be happy to answer any questions you might have about these two programs, so please feel free to leave your question in the comment section below and I’ll do my best to get you a quick response.

Disclaimer:Information obtained from Forget Student Loan Debt is for educational purposes only. You should consult a licensed financial professional before making any financial decisions. This site receives some compensation through affiliate relationships. This site is not endorsed or affiliated with the U.S. Department of Education.


Tim's experience struggling with crushing student loan debt led him to create the website Forget Student Loan Debt, where he offers advice on paying off student loans as quickly, and cheaply, as possible. His new website Forget Tax Debt, offers similar advice to people with back tax problems.

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