Largest Student Loan Provider, Sallie Mae Under Fire

Student Loans

IMG: via Shutterstock

Sallie Mae is the nation’s largest student loan company. On Monday, the company disclosed new federal probes which are going after possible violations of consumer protection laws. This most likely means that Washington is looking into the company more than before.

In their most recent quarterly report, the company explained that that the Consumer Financial Protection Bureau launched an investigation into the ways the company processes borrowers’ payments on student loans. The FDIC told the company it will be publicly accusing the company of violating several federal laws.

Sallie Mae expects that it will pay penalties to the affected customers as well as the government. The Education Department has been accused of not having enough supervision.

The CFPB’s top student loan official, Rohit Chopra, said in an recent report that the agency found several problems in how student loan servicers process borrowers’ monthly payments. He also suggested that while his report focused on the private student loan market (at $165 billion), the same problems will probably affect the borrowers of federal student loans ($1 trillion).

“The department is aware of Sallie Mae’s discussions with federal agencies and will await the outcome of those conversations,” said Stephen Spector, Education Department spokesman.

Ever since Senator Elizabeth Warren questioned the Education Department’s supervision of companies it pays to collect payment on federal student loans, the Education Department has been on close watch.

When John Remondi, Sallie Mae chief executive was asked if the company felt comfortable with it’s practices since the CFPB report, he responded with, “We do, absolutely. I think it’s fair to say that our customers are not experiencing the problems that are hinted at or implied in that report.”

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About DevonJ140
I am currently an Accounting Director living in New York City. I love reading and learning more about business, finance, tech, and current events.

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