On Monday, the Consumer Financial Protection Bureau (CFPB) ordered Bridgepoint Education Inc. to forgive nearly $24 million in student loans.
The company, which runs both Ashford University and University of the Rockies, will forgive current debts and refund payments. This case is just the latest example of government officials accusing a for-profit school of inappropriate business practices.
Bridgepoint Education’s student loan program
Bridgepoint Education operated its own in-house student loan program. According to the CFPB, the company misled borrowers about the total cost of their private loans.
Allegedly, company representatives told students that they could pay only $25 a month when the actual cost was much higher. In a statement, the CFPB condemned Bridgepoint Education’s practices.
“Bridgepoint deceived its students into taking out loans that cost more than advertised,” said CFPB director Richard Cordray. “We are ordering full relief of all loans made by the school.”
What this means for students
Bridgepoint Education is responsible for contacting students eligible for loan forgiveness and payment refunds.
The company’s in-house loan program ran for over four years, distributing nearly $24 million in loans and collecting about $5 million back in principal and interest payments. Approximately $18.5 million in loans remains unpaid. Bridgepoint Education will forgive the remaining balance.
Going forward, Bridgepoint Education must have all students use CFPB’s financial disclosure tool before taking on any loans. The tool provides information on loans, repayment terms, grants, loan default, and salary expectations.
For students who may have defaulted on their loans, there is other good news: Their credit scores are about to get a boost. Bridgepoint Education is responsible for reaching out to the credit bureaus to have any negative information related to student loans removed from borrowers’ credit reports.
Impact on Bridgepoint Education
Unlike other schools that have opted to close, Bridgepoint Education is keeping their universities’ doors open. They have neither admitted to or denied any wrongdoing.
The company said the agreement was essential for the company’s stability.
“While Bridgepoint maintains that its institutions acted in good faith and provided all appropriate tools and disclosures for the loan programs, Bridgepoint chose to negotiate a mutually agreeable resolution in order to move forward and allow its institutions to focus on students,” reads a statement by the company.
“We believe in the high quality of education our institutions provide and we will continue helping students achieve their goals of a quality and affordable college education,” said Andrew Clark, president of Bridgepoint Education.
This development is just the latest in a series of problems Bridgepoint Education has faced recently. Last month, the US Department of Education fined the company for failing to verify enrollment information before disbursing federal dollars. The Department of Education also cited them for distributing more financial aid than is permitted under the law.
In July, the Justice Department launched an investigation into Bridgepoint Education. The case is ongoing and involves the allegation that the company gets more than the allowed 90 percent of their revenue from federal student aid.
Issues affecting for-profit schools
In-house loan programs like that offered by Bridgepoint Education have been a problem for for-profit schools recently. Recently, ITT Technical Institutes announced they would close their doors after being investigated for their loan offerings.
Just last year, Corinthian College, one of the largest for-profit institutions in the country, closed its remaining 28 schools. The closure was the result of ongoing controversy around the value of the school’s degree programs.
About Bridgepoint Education
Based in San Diego, California, Bridgepoint Education Inc. is a publically held company. Besides running two universities, the business also owns Waypoint Outcomes, which produces assessment software for schools.
Ashford University offers online programs to nearly 50,000 students. The University of the Rockies serves just over 1,300 students both online and on campus. Both schools offer graduate and doctoral programs.
Bridgepoint Education’s mission is to provide a high-quality education to better people’s lives and to build a stronger community. The two universities have been in operation since 1998.
What to do if you were a student at another for-profit school
If you did not attend Ashford University or University of the Rockies but had a similar experience with a for-profit institution, there are some options available.
If your school closed while you were a student or shortly after you graduated, you might be eligible for a federal loan discharge.
If your college committed deceptive marketing practices around their degree value or loan options, you might qualify for loan forgiveness based on borrower defense.
You can find out more information about closed school discharges and for-profit school developments at the Department of Education’s website.
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1 Important Disclosures for Earnest.
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Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.23% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
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The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
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2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
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4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
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Citizens Bank Disclosures
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