Lori Meadows
Art school can be expensive, and many students take out loans to fund their education. However, paying off these loans can be challenging, and some graduates find themselves struggling financially. While some art students have paid off their loans by working multiple jobs, others have benefited from loan forgiveness programs or negotiated settlements with lenders. Federal loan forgiveness programs are available for those experiencing financial hardship, and in some cases, private loans can be negotiated for a lower payoff amount. The choice to take out loans for art school is a personal decision, and some recommend pursuing a more financially stable undergraduate degree before taking out loans for an MFA.
| Characteristics | Values |
|---|---|
| Loan forgiveness | Borrower Defense, Closed School Discharge, Income-Driven Repayment Plan, Negotiating Settlements |
| Loan forgiveness eligibility | Students with federal student loans, students experiencing financial hardship |
| Loan forgiveness amount | $6.1 billion in student loan relief for 317,000 borrowers |
| Loan forgiveness reasons | Art Institutes "falsified data, knowingly misled students, and cheated borrowers into taking on debt" |
| Loan forgiveness examples | Art Institute Accreditation Lawsuit, Navient Settlement |
| Loan types | Federal, private |
| Federal loans | Federal Direct Stafford Loans, Federal PLUS Loans |
| Private loans | Private education loans |
| Loan fees | Origination fee of up to 1.073% of the loan amount, interest |
| Loan repayment | Repayment begins after the student is no longer enrolled at least half-time |
| Loan repayment period | 20-25 years |
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What You'll Learn
Federal vs. private loans
Art students, like any other students, have several options to finance their education. These include scholarships, grants, work-study programs, and loans. While scholarships and grants are preferable as they do not need to be paid back, loans are often a necessary part of financing an education.
Federal and private loans are the two main types of loans available to students. Federal loans are those issued by the federal government, while private loans can come from banks, credit unions, or other private lenders.
Federal loans typically offer more benefits and protections for borrowers compared to private loans. For example, federal loans usually have lower interest rates, and the government pays the interest on subsidized federal loans while the student is in school. Federal loans also offer more flexible repayment options, including income-driven repayment plans and loan forgiveness programs. Additionally, federal loans may qualify for borrower defence, which is the discharge or cancellation of loans due to fraud or predatory lending practices by the school.
On the other hand, private loans may be easier to obtain and can provide larger amounts of funding. However, they often come with higher interest rates and less flexible repayment terms. Private loans typically do not qualify for the same loan forgiveness or income-driven repayment plans as federal loans, but they may offer other benefits such as negotiating settlements for a lower payoff amount.
When considering federal vs. private loans, it is important to weigh the benefits and drawbacks of each. Federal loans generally provide more protections and flexibility, but private loans can be a source of additional funding if needed. Art students should carefully consider their financial situation and explore all available options before taking on any student loan debt. Additionally, they should keep in mind that their school's accreditation status and any changes to federal loan programs under different administrations can impact their loan terms and repayment options.
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Loan forgiveness programs
Art students who have taken out federal student loans to finance their education may be eligible for loan forgiveness programs. Here are some of the programs available:
Borrower Defense to Repayment
This program was established by the Obama administration to forgive loans for students who attended schools that broke state consumer protection laws or committed other serious misdeeds, such as fraud or predatory lending practices. The Biden administration reactivated this program, eliminating nearly $6 billion in loans for students who attended institutions like Corinthian Colleges, which was notorious for its illegal recruiting tactics.
Closed School Discharge
If your art school closed while you were enrolled or soon after you left, you may be eligible for this program. It applies to federal student loans and discharges the debt if the school's closure prevented you from finishing your education.
Public Service Loan Forgiveness (PSLF)
This program is for those working full-time for a qualifying employer, typically a government or nonprofit organization. It forgives the remaining balance on Direct Loans after 120 qualifying payments.
Income-Driven Repayment (IDR) Plan
IDR plans are designed for borrowers experiencing financial hardship. They cap monthly payments based on income and family size. If a balance remains after 20-25 years of payments, it is forgiven.
Negotiating Settlements
This option primarily applies to private loans and involves agreeing with the lender on a lower payoff amount. It may include a lump-sum payment or a reduced payoff amount.
Additionally, there have been specific instances where large-scale loan forgiveness was granted to students of certain art institutes. For example, in 2024, President Biden announced the forgiveness of over $6 billion in loans for 317,000 borrowers who attended The Art Institute, citing the institution's misleading practices and cheating borrowers.
It is important to note that eligibility criteria and application processes may vary for each program, and it is recommended to review the specific requirements and guidelines for each option.
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Fraudulent practices and illegal marketing
Art school can be expensive, and many art students struggle with paying off their loans. While some students opt for federal loans, others take out private loans, which can lead to significant financial challenges.
Unfortunately, the student loan system is not immune to fraudulent practices and illegal marketing. Student loan scammers exploit vulnerable borrowers, making false promises about federal student aid or debt relief services. These scams often involve promising unrealistic solutions, such as complete loan forgiveness or drastically reduced payments through non-existent government programs. Scammers may claim special relationships with government agencies or loan servicers to gain trust and charge upfront fees for free services.
In the United States, the Consumer Financial Protection Bureau (CFPB) has identified various unlawful activities in the student loan market, including violations related to refinancing, private lending, debt collection, and federal loan servicing. For instance, some servicers have misled borrowers about their rights to challenge loans based on school misconduct and distributed contracts allowing illegal collection tactics, such as withholding academic transcripts.
To protect yourself from student loan fraud, it is crucial to be knowledgeable about legitimate federal loan servicers and federal student aid options. Legitimate federal loan servicers never charge fees for basic services or pressure borrowers to make immediate decisions. They offer income-driven repayment plans and potential loan forgiveness programs without requiring upfront payments. Always verify communications through official channels, such as the U.S. Department of Education's websites and your assigned loan servicer's portal.
If you become a victim of student loan fraud, quick action is essential. Contact your bank to stop any automatic payments to the fraudulent company, gather documentation, and report the scam to your legitimate loan servicer and relevant authorities. Disputing fraudulent charges promptly improves your chances of recovering lost funds.
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Part-time work
Art school can be expensive, and many students are left with significant debt upon graduation. One way that art students can pay off their loans is through part-time work. This can involve taking on a second job in addition to their artistic practice, which may or may not be related to their field of study.
Some art students may choose to work part-time during their studies to help cover tuition fees and living expenses. This could involve finding employment in retail, hospitality, or other service industries, which often offer flexible hours that can accommodate a student's schedule. Additionally, freelancing or remote work in areas such as graphic design, illustration, or photography can provide income without a fixed schedule.
After graduation, art students may continue with part-time work alongside their artistic careers to help pay off loans. This could involve picking up freelance projects, teaching art classes, or working in galleries or art supply stores. Some artists may also choose to sell their artwork or take on commissions to supplement their income.
It is important to note that part-time work may not always provide sufficient income to cover loan payments, especially if the loan amounts are substantial. In such cases, art students may need to consider additional options, such as loan forgiveness programs or refinancing their loans to obtain lower interest rates.
Overall, part-time work can be a viable strategy for art students to generate income and contribute to loan payments. However, it may require careful time management and financial planning to balance work commitments with artistic pursuits and loan obligations.
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Loan fees and interest rates
Federal loans, such as Federal Direct Stafford Loans and Federal PLUS Loans, often offer low-interest rates and flexible repayment plans. For example, the School of the Art Institute of Chicago (SAIC) offers a low-interest fixed-rate loan program with a maximum award of up to $7,500 for dependent undergraduate students and $12,500 for independent undergraduates or dependent students whose parents have been denied a Federal Direct Parent PLUS loan. An origination fee of up to 1.073% of the loan amount may be deducted upfront, and interest begins accruing upon disbursement, with repayment starting six months after the student drops below half-time enrollment or graduates.
Private loans, on the other hand, are offered by private lenders and can assist with educational and living expenses. However, they typically have higher interest rates and less favourable terms than federal loans. Private loans should only be considered as a last resort if federal loans and other financial aid options are insufficient. It's important to carefully review the terms and conditions of private loans, as they can vary significantly between lenders.
Additionally, it's worth mentioning that some art institutes have been involved in scandals and lawsuits regarding fraudulent practices and misleading students. As a result, there have been instances of student loan debt relief and forgiveness for borrowers who attended these institutions. For example, President Biden announced a $6.1 billion student loan relief package for attendees of the now-closed Art Institute campuses. Therefore, it is essential to stay informed about any developments or opportunities for loan forgiveness or debt relief that may apply to your specific situation.
Overall, when considering loan fees and interest rates, it is generally advisable to prioritise federal loans over private loans due to their more favourable terms. However, each student's financial situation is unique, and it is important to carefully evaluate all available options before making any decisions regarding student loans.
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Frequently asked questions
Art students can pay off their loans by taking on additional work, such as multiple jobs, or by negotiating a lower payoff amount with their lender.
Yes, students can apply for loan forgiveness or debt relief. This can be done through the Borrower Defense or Closed School Discharge programs, or through income-driven repayment plans.
Borrower Defense is a program established under the Obama administration that forgives federal student loans for students whose schools broke state consumer protection laws or committed other serious misdeeds.
Yes, there are several federal programs that offer loan forgiveness after a certain number of payments. Additionally, there are some private loan forgiveness programs, such as the Art Institute Accreditation Lawsuit, which provided loan forgiveness to students who attended Art Institute campuses.
Art students can take out federal loans, such as Federal Direct Stafford Loans and Federal PLUS Loans, or private loans from lenders. Private loans are generally not recommended unless other options are not available.
