NEW YORK (TheStreet) -- Shares of Bridgepoint Education (BPI) were down on heavy trading volume late-afternoon Monday as the Consumer Financial Protection Bureau (CFPB) said the San Diego-based for-profit college chain must refund students $23.5 million for allegedly misleading them into taking out loans that cost more than advertised.
Bridgepoint, which operates Ashford University and University of the Rockies, neither confirmed nor denied the allegations. The company was also ordered to pay an $8 million civil penalty, according to the Wall Street Journal.
The CFPB said that Bridgepoint told students that borrowers "normally" paid off loans with monthly payments as low as $25, despite the bureau noting that amount is unrealistic.
Approximately $5 million will be paid to students who had already paid off a portion of their loans and $18.5 million to settle outstanding debt, the Journal added.
The news comes after another for-profit school manager, ITT Technical Institute, said it would close its more than 130 campuses after the government barred it from enrolling new students who receive federal aid.
Bridgepoint currently enrolls about 49,159 students, according to its latest annual report, the Journal noted.
About 1.54 million of the company's shares have changed hands so far today vs. its average volume of 70,286 shares per day
Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:
The team rates Bridgepoint Education as a Sell with a ratings score of D. This is driven by some concerns, which it believes should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks the team covers. Among the areas it feels are negative, one of the most important has been an overall disappointing return on equity.You can view the full analysis from the report here: BPI