In accordance with the recent news about looser restrictions on for-profit college fraud oversight, two new schools operating under one company are the most recent victims of the Consumer Financial Protection Bureau’s regulatory actions.
In short, two schools, Ashford University and the University of the Rockies, under the operating company, Bridgepoint Education, were caught misleading its students with false information about student loan payments. The Consumer Financial Protection Bureau (CFPB) requires Bridgepoint Education to pay back the affected students as well as pay a fine to the CFPB.
The misdirection involved strictly the private student loans provided by Bridgepoint Education. These loans were advertised with a monthly payment “as little as $25,” but the actual monthly payments turned out much higher. The CFPB stated that Bridgepoint “deceived its students” with false advertising thus explaining the grounds for legal action.
After reaching an agreement, Bridgepoint is to pay $5 in reparations to affected students who took out private student loans with Bridgepoint between the years 2009 and 2015. This payment is meant for students who have begun paying back student loans. In addition to this, the remaining $18.5 million in private student loans are to be forgiven by Bridgepoint. On top of this, a fine of $8 million is to be paid to the CFPB as a civil penalty. In order to make this all happen, Bridgepoint has approximately 45 days to draw up a plan for the $13 million in refunds and fines.
As for the private student loan program, Bridgepoint discontinued the program before the legal agreement was reached with the CFPB. The program was available to about 50,000 students from Ashford University as well as 1,400 students from the University of the Rockies over the span of six years.
Despite the payout and private student loan forgiveness agreement, the majority of students at Ashford borrowed federal student loans, so most of the student body is completely unaffected by the legal action of the CFPB.
With everything taken into account, there is a positive outlook on the oversight of the CFPB. The promises made by the government to tackle fraudulent advertising and student loan practices came through in this specific case. It is hopeful that other institutions will adhere to legal practices as a result.
At any rate however, these developments simply chip away at the huge student loan issue. The loans forgiven were private loans which account for less than 10% of the total outstanding student loans.