Illinois leads multistate probe of Sallie
Mae's student loan practices
Send a link to a friend
[February 21, 2014]
By Joseph Ax
NEW YORK (Reuters) — SLM Corp, better
known as Sallie Mae, faces a multistate probe led by Illinois into its
student loan practices, a spokeswoman for Illinois Attorney General Lisa
Madigan said on Thursday.
The investigation is part of an increasingly broad review of
student lending by state and federal regulators.
In a filing with the U.S. Securities and Exchange Commission on
Wednesday, Sallie Mae said it was facing "significant year-over-year
increases" in the number of investigative demands and in the breadth
of information being sought.
The rise in requests has been largely driven by state attorneys
general and by the federal Consumer Financial Protection Bureau, the
Madigan's spokeswoman, Natalie Bauer, said Illinois and other states
have opened an "active investigation" into Sallie Mae's loan
servicing and debt collection practices, among other issues. She
would not identify the other states involved in the inquiry.
"Inquiries from state attorney generals have occurred regularly in
the ordinary course of our business, for informational as well as
regulatory purposes," Patricia Christel a spokeswoman for the
company said in an emailed statement.
"Since the passage of Dodd Frank, the frequency of these inquiries
has increased significantly, and we are responsive to all requests,
sharing how our customer service practices help customers succeed,"
Congress created a consumer bureau in the 2010 Dodd-Frank law and
called for an ombudsman who would watch over bank and other loans to
students pursuing higher education.
[to top of second column]
Dodd-Frank encourages state attorneys general to take a more
proactive interest in the companies that provide services to their
residents and these are early conversations about Sallie Mae's
business, the company said.
Sallie Mae, the largest U.S. student loan provider, had set aside
$70 million as of the end of 2013 to help resolve enforcement
actions brought by the Department of Justice and the Federal Deposit
Insurance Corp, according to regulatory filings.
The company is in the process of splitting into two companies, with
one unit focused on student loans and the other handling its
consumer banking business.
(Reporting by Joseph Ax; additional reporting by Chris Peters;
editing by Mohammad Zargham and Supriya Kurane)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.