The Consumer Financial Protection Bureau (CFPB) on Monday took action against yet another for-profit institution, fining Bridgepoint Education, Inc., over $31 million for deceiving students into taking out private students loans that were more costly than advertised.
Based in San Diego, CA, Bridgepoint is an education company that conducts business as Ashford University and the University of the Rockies, with over hundreds of thousands of enrolled students, the majority of whom are online students. According to CFPB, Bridgepoint since 2009 has offered its students private loans to help cover the cost of tuition.
A CFPB investigation—conducted in partnerships with the California Attorney General and the Department of Education—found that the school told students who took out the private loans the wrong monthly payment, effectively deceiving them about the total cost of the loans. This resulted in students taking out loans without knowing the actual cost and being obligated to make larger-than-necessary payments. The company, CFPB said in a press release, “told students that borrowers normally paid off loans made by the school with monthly payments of as little as $25, an amount that was not realistic.”
CFPB is ordering that Bridgepoint discharge all outstanding private students loans made by the institution to its students and refund payments already made by borrowers, which combined will total over $23.5 million. The company will also have to pay an $8 million penalty to CFPB’s Civil Penalty Fund and halt illegal practices, such as making false, deceptive, or misleading statements about monthly payments connected to its private student loan program.
Bridgepoint is also ordered to require all entering students and some current students to use a new financial aid disclosure tool when borrowing money to pay for their education. The tool will provide students with personalized financial aid offer information and other consumer information, including graduation and default rates, potential earnings based on area of study, and ways to budget after graduation. Bridgepoint will be responsible for generating the personalized information and disclosure for each student.
Finally, Bridgepoint is required by CFPB to remove from borrowers’ credit reports any negative information about outstanding private student loan debt owed to the school. It must also cease reporting this information to debt collectors and credit reporting companies unless it is necessary in order to have the information removed on a consumer credit report.
Publication Date: 9/13/2016