A third federal agency is now investigating Sallie Mae for violations of consumer protection laws, the company disclosed to investors in a quarterly report this week.
The Consumer Financial Protection Bureau in September sought information from Sallie Mae as part of the bureau’s investigation into “allegations relating to our existing payment allocation practices and procedures,” the company said. The CFPB’s inquiry, according to the report, is similar to a separate investigation of Sallie Mae by the Federal Deposit Insurance Corporation, which plans to issue an enforcement action against the company for violations of the Servicemembers Civil Relief Act and other laws. The Civil Relief Act provides service members special benefits while they are on active-duty, such as a cap on the interest-rate on their student loans.
The Department of Justice is also probing Sallie Mae about its compliance with consumer protection law. The company said that it is “cooperating fully” with all three agencies.
In a report last year, the CFPB said that military service members were missing out on important benefits because of problems with their federal student-loan servicers. In some cases, the errors could cost members of the military tens of thousands of dollars, the agency said. Earlier this month, a CFPB analysis of borrower complaints reveled that some private student-loan servicers were applying advanced payments on loans in a way that maximizes profits for the lender but often leads to the borrower paying more interest.