Ashford University and the University of the Rockies, operated by Bridgeport Education has been ordered by the Consumer Financial Protection Bureau (CFPB) to pay back over $23 million in private student loans. Additionally, the for-profit school will be required to pay an $8 million civil penalty to the CFPB.
According to the CFPB, the school was caught engaging in deceptive student loan practices. Students were told much lower payments than what they would be actually required to pay. Students were told that the loans could be paid off with monthly payments of $25.
As a result of the violations, the CFPB has required Bridgeport to do the following:
- Return $23 Million to customers – this includes a refund of $5 million in payments already made by students and $18.5 million in loan forgiveness.
- Create a new financial aid to help student address the cost of college an understand their options.
- Stop making any further false or deceptive claims about the cost of school or loan repayment.
- Remove negative credit reports for students who fell behind on the deceptive loans.
- Pay an $8 million penalty to the CFPB.
The Big Picture
Even though this particular issue only applies to about 1,200 students, the message from the CFPB to for-profits is clear – misleading students will cost you money.
As a result of the CFPBs actions, and their actions in other cases, for-profits across the country are likely meeting with their attorneys to analyze whether or not they could be subject to one of these lawsuits and changes that may need to be made to prevent one. It is because of the fear instilled in other colleges that students across the country are likely to benefit.
What may appear as an isolated win for borrowers can quickly spread across the country and help many. If not, the CFPB will certainly be attacking the next for-profit guilty of misleading students.
If you have been the victim of fraud at the hands of your college, be sure to file a complaint with the CFPB. Over the last few years, they have proven to be a tough advocate fighting for students across the country.