The for-profit company that operates Ashford University and the University of the Rockies has been fined $8 million and ordered to forgive or refund $23.5 million in student loans after it deceived students into borrowing funds.
In announcing a consent order to resolve complaints against the company, the Consumer Financial Protection Bureau (CFPB) says Bridgepoint Education, Inc. deceived students about the total cost of loans by telling students the wrong monthly repayment amount. As a result, students took out loans without knowing the true cost and had to make payments greater than what had been promised.
"Bridgepoint deceived its students into taking out loans that cost more than advertised, and so we are ordering full relief of all loans made by the school,” said CFPB Director Richard Cordray. “Together with our state partners, we will continue to be vigilant in rooting out illegal practices facing student borrowers in the for-profit space.
Through Ashford University and the University of the Rockies, Bridgepoint, based in San Diego, Calif., has enrolled hundreds of thousands of students, most of whom take courses online.
The CFPB says that from 2009 until recently, Bridgepoint offered private student loans to its students to help cover the cost of tuition. Students were told the wrong monthly repayment amount and informed that borrowers normally paid off loans made by the school with monthly payments of as little as $25.
The consent order states that Bridgepoint must refund all payments made by students toward private student loans taken out from the school, including principal and interest, a total of about $5 million. Bridgepoint also must discharge all outstanding debt for its institutional student loans, a total of about $18.5 million.
The company also must require students who borrow money to pay for school to use a newly created financial aid disclosure tool—developed by the CFPB—that provides personalized financial aid offer information as well as information about graduation and loan default rates, potential salaries for their programs, and post-graduation budgeting.
The order prohibits Bridgepoint from making false, deceptive, or misleading statements regarding actual or typical monthly payments in connection with its private student loan program. The company also must remove from borrowers’ credit reports any negative information about outstanding private student loan debt owed to the school, and stop reporting information to debt collectors and credit reporting companies about private student loan debt unless it is necessary to remove negative information on a consumer credit report.
Bridgepoint says in a news release that the agreement with the CFPB calls for it to forgive loans taken by about 1,277 current and former students between 2009 and 2015. The company says it had discontinued the loan programs in question before the CFPB investigation began.
“This agreement simply allows us to return our full and undivided focus to our students and their success,” says Andrew Clark, president and chief executive officer of Bridgepoint Education.