Bridgepoint Education penalized for student loan practices
The Consumer Financial Protection Bureau announced on Monday, September 12, 2016, it had taken action against for-profit college chain Bridgepoint Education, Inc. for deceiving students into taking out private student loans that cost more than advertised. The Bureau is ordering Bridgepoint to discharge all outstanding private loans the institution made to its students and to refund loan payments already made by borrowers. Loan forgiveness and refunds will total over $23.5 million in automatic consumer relief. Bridgepoint must also pay an $8 million civil penalty to the Bureau.
"According to the Bureau's order, from 2009 until recently, Bridgepoint offered private student loans to its students to help cover the cost of tuition. The Bureau found that the school deceived its students about the total cost of the loans by telling students the wrong monthly repayment amount. As a result, students at Bridgepoint were deceived into taking out loans without knowing the true cost, and were obligated to make payments greater than what they were promised. Specifically, the CFPB found that Bridgepoint 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."
Under the order, Bridgepoint must provide $23.5 million in relief and refunds to consumers. First, it must refund all payments made by students toward student loans obtained from the school, or approximately $5 million. The remaining balance for all of its institutional loans (approximately $18.5 million) must be discharged. The school must require all new students and current students starting new programs, to use a new financial aid disclosure tool (similar to the tool found here) when they borrow money to pay for school.
Bridgepoint must also stop making false, deceptive, or misleading statement concerning payment amounts related to its private student loan program.
The school also must remove any negative information about outstanding student loan debt owed to the school, and stop reporting information to debt collectors and credit reporting companies about private student loan debt except as needed to remove negative information on a consumer credit report.