After doling out its largest penalty ever last week to Wells Fargo, the Consumer Financial Protection Bureau turned its lens to the for-profit college industry, forcing Bridgepoint Education, Inc. to discharge all outstanding student loans and refund payments to the borrowers.
The company also must pay an $8 million civil penalty to the bureau for illegal student lending practices.
The CFPB said the for-profit education company began offering private student loans in 2009, but misled students about the total cost of the debt. The CFPB maintains that Bridgepoint told students the wrong monthly repayment amounts—as little as $25 per month—so they would take out loans that ended up having higher monthly payments than 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 in a statement.
Bridgepoint maintains that its schools acted in good faith when it came to the student loan program. “This agreement simply allows us to return our full and undivided focus to our students and their success,” said Andrew Clark, president and chief executive officer of Bridgepoint Education, in a statement.
The school must refund all payments made by students toward their private student loans provided by the school, totaling $5 million. It also must discharge all outstanding debt for its student loans, worth about $18.5 million. The actions affect 1,277 current and former students who borrowed between 2009 and 2015, according to Bridgepoint.
The San Diego-based education company that does business as Ashford University and the University of the Rockies also will remove any negative information from student borrowers’ credit reports related to their school loans. It is also required to provide a new financial tool to help students taking out college loans.