The Consumer Financial Protection Bureau has sanctioned Bridgepoint Education, owner of Ashford University, for "deceiving students into taking out private student loans that cost more than advertised," the federal watchdog agency said Monday.
The CFPB ordered Bridgepoint to discharge all outstanding institutional loans made to its students and to refund loan payments made by borrowers -- a total of $23.5 million in payments to 1,277 affected students. The company also must pay an $8 million civil fine. The penalties are among the largest the young agency, which the Obama administration created, has levied in higher education so far.
Beginning in 2009, Bridgepoint offered private loans to its students. The bureau said the publicly traded for-profit deceived students about the total cost of loans by telling them the wrong monthly repayment amount. The CFPB's sanctions include a requirement that Bridgepoint use a newly created financial aid disclosure tool with its students, which includes personalized financial aid information as well student outcomes data such as graduation and loan default rates, potential salaries for graduates and postgraduation budgeting.
In a written statement, Bridgepoint said the CFPB identified only one problem area with the loan program -- that employees of the company may have verbally told students that loans could be paid in installments as low as $25 per month, when the actual payments may have been higher.
"While Bridgepoint maintains that its institutions acted in good faith and provided all appropriate tools and disclosures for the loan programs," the company said, "Bridgepoint chose to negotiate a mutually agreeable resolution in order to move forward and allow its institutions to focus on students."