The Washington PostDemocracy Dies in Darkness

Justice Department is investigating whether a for-profit college company violated federal financial aid rules

The Justice Department has launched a probe into whether Bridegepoint Education, the owner of Ashford University and the University of the Rockies, is violating a law that prohibits for-profit colleges from getting more than 90 percent of their operating revenue from federal student aid funding.

In a regulatory filing Tuesday, Bridgepoint disclosed that federal prosecutors are investigating allegations that the company misstated the amount of money it receives from government loans and grants provided to students or overstated revenue tied to private loan programs. If the accusations are found to be true, the company would be breaking the so-called 90/10 rule.

Investigators have requested financial documents from fiscal years 2011 to 2014, according to the filing. Bridgepoint officials say the company is evaluating the request and intends to fully cooperate with the investigation.

In a separate but related matter, Bridgepoint said the Department of Education has scheduled a review for the end of the month to assess Ashford’s participation in the federal financial aid program. The initial review will cover students enrolled from 2009 to 2012, but it may be expanded, the filing said.

It has been almost four years since Bridgepoint last tangled with federal prosecutors. The Justice Department launched an inquiry into the way the company compensated its admissions staff, after a 2011 audit by the Education Department’s inspector general found that Ashford may have violated a federal ban on incentive pay for college recruiters.

That probe was eventually closed, but the university has continued to draw the ire of its regulators. Late last year, Education Department officials began looking into Ashford’s marketing practices, questioning whether the school has made false representations to potential and enrolled students.

Many of the largest for-profit colleges and universities have run afoul of regulators in recent years for allegedly misleading consumers about their programs, aggressive marketing or steering students into high-cost loans. Regulatory scrutiny, coupled with a series of government lawsuits and depressed student enrollment, are placing tremendous pressure on the industry as a whole.

The combined enrollment at Bridgepoint’s two universities registered at 50,814 students at the end of March, down 8 percent from the same period a year earlier, according to the most recent quarterly report.

Learn more about for-profit colleges:

Second largest for-profit chain to pay $95 million to settle fraud charges

For-profit colleges lose bid to scuttle government rules

SEC charges executives at for-profit college ITT with fraud

How dozens of failing for-profit schools found an unlikely savior: a debt collector