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AG Nessel Announces Debt Relief for Art Institutes of Michigan Students

LANSING – Michigan Attorney General Dana Nessel announced today that former students of The Art Institutes of Michigan will receive nearly $29,000 in debt relief as part of a court order aimed at addressing the predatory and deceptive practices of the institutes' parent company, Dream Center Education Holdings LLC (DCEH).

Under a March 23, 2020 order from the U.S. District Court, Northern District of Ohio, 123 former students in the states of Colorado, Illinois and Michigan are to receive a total of $133,278 as a result of DCEH’s misrepresentation to student loan borrowers. For Michigan, 28 students will receive a share of $28,929 in debt relief.

DCEH, which is now in receivership, was in the process of purchasing several failing for-profit educational institutions – including The Art Institutes of Michigan – from the collapsing for-profit chain Education Management Corp. The Art Institutes of Michigan closed unexpectedly in 2018 and left behind students with debt and no degrees.

“Many students pursue their college educations with hope that the degrees they earn will enrich their lives, and they choose to make an investment in their futures by accumulating debt,” Nessel said. “Universities and higher education institutions must be held accountable if they’re not holding up their end of the deal by providing students with legitimate degrees and an appropriate education. I’m pleased these students are being provided some relief after being blindsided by an entity that was not playing by the rules.”

Multiple allegations were made against DCEH and its for-profit schools for their deceptive predatory tactics.

In addition to receiving the reimbursements, some Michigan students who obtained loans to attend the DCEH schools have had that debt forgiven.

Aside from the nearly $29,000 to be refunded directly to Michigan students, roughly $1.065 million in student loans will be discharged. About $782,500 in loans will be discharged under the U.S. Department of Education’s closed school discharge rules. Another nearly $282,900 will be discharged due to DCEH’s misrepresentation of its accreditation.

In October 2019, Attorney General Nessel and her colleagues requested the Department of Education extend the time frame in which students would be eligible to receive student federal loan forgiveness under the closed school discharge rules.

The closed school discharge time frame provides for a 100 percent discharge of federal student loan debt for students who were enrolled when the school closed, were on an approved leave of absence when the school closed, or withdrew within 120 days of the school’s closure.

The U.S. Department of Education in November approved extending the lookback period so that students who were enrolled at the DCEH schools between Jan. 20, 2018 and Dec. 4, 2018 would have their debt forgiven.

However, the Department on July 9, 2020 declined to further extend the debt forgiveness for students who withdrew from the schools since DCEH began operating them, which was in October 2017.

Students who were enrolled from Jan. 20, 2018, until the school closed can apply to have remaining loans discharged, which means they would all be canceled, due to the school’s closure. Students can get more information from their federal loan servicer or online from the U.S. Department of Education.