The federal Consumer Financial Protection Bureau (CFPB) took action on Monday against Bridgepoint Education Inc., parent company of the for-profit Ashford University, for deceiving students by charging them higher-than-advertised monthly loan payments.
The consumer watchdog agency ordered Bridgepoint to provide $23.5 million in relief and refunds to consumers. The company must discharge all outstanding private loans made to its students, an estimated $5 million, and refund approximately $18.5 million in loan payments already made by borrowers. The CFPB also ordered the company to remove negative loan information from borrowers' credit reports and pay an $8 million civil penalty, among other things.
"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 in a news release. "Together with our state partners, we will continue to be vigilant in rooting out illegal practices facing student borrowers in the for-profit space."
Bridgepoint has been under investigation by the U.S. Department of Justice since July, The Chronicle of Higher Education reported. That probe concerns whether the company violated the federal 90/10 rule, which requires colleges to earn at least 10 percent of their revenue through means other than federal student aid. The Education Department also investigated the company's marketing practices in 2012.
Related Links
Consumer Financial Protection Bureau News Release
http://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-takes-action-against-bridgepoint-education-inc-illegal-student-lending-practices/
The Chronicle of Higher Education
http://www.chronicle.com/blogs/ticker/owner-of-ashford-u-is-ordered-to-forgive-23-5-million-in-student-debt/114190