Sallie Mae Notes 'Significant' Increase in Regulatory Inquiries

Federal and state officials are ramping up their probe of SLM Corp. SLM -1.63% amid a broader industry review of student-lending practices by regulators.

SLM, better known as Sallie Mae, said in a filing Wednesday that it has seen a "significant" increase in the number of investigative inquiries from state attorneys general and various regulators, including the Consumer Financial Protection Bureau.

The inquiries focus on Sallie Mae's "business and those of others" that it works with, the lender said in its annual report filed with the Securities and Exchange Commission.

Illinois Attorney General Lisa Madigan is leading a group of states that is investigating Sallie Mae, focusing on the company's debt collection, loan servicing and other practices, a spokeswoman for Ms. Madigan said Thursday. She declined to name the other states that are involved.

Sallie Mae, the largest U.S. student-loan servicer, has previously disclosed probes by various regulatory agencies. In January, the company said it set aside $70 million in the fourth quarter for regulatory matters.

The company said it is cooperating with investigations by the Federal Deposit Insurance Corp., CFPB and U.S. Department of Justice over pending civil actions the agencies might take against it.

The FDIC notified the company in July that it plans to issue an enforcement action against Sallie Mae's bank over practices related to customer payments and late fees, according to regulatory filings. The FDIC in November also said it planned to file an additional enforcement action against the company related to loan servicing it performs for other financial institutions.

The inquiries also focus on alleged civil violations of the Servicemembers Civil Relief Act, a federal law that provides certain financial protections to active-duty military members. The company said in its filing Wednesday that it is negotiating a "comprehensive settlement, remediation and restitution plan" with the DOJ regarding those allegations.

John Remondi, president and chief executive of SLM, said during a conference call in January that the company was "making good progress" with regulators and "hope to bring this to resolution."

A spokeswoman for the Newark, Del.-based company said it regularly receives inquiries from state attorneys general "in the ordinary course of our business, for informational as well as regulatory purposes.

"We are responsive to all requests, sharing how our customer service practices help customers succeed," the spokeswoman added.

Spokesmen for the CFPB and FDIC declined to comment.

A representative of the DOJ didn't immediately respond to a request for comment.

The CFPB said in December it would begin overseeing the largest student-loan servicers starting in March. Regulators and consumer groups have raised concerns that servicers may charge borrowers improper fees and fail to properly process payments.

Mr. Remondi said in January that Sallie Mae's practices have been "always geared and structured to full compliance."

SLM unveiled a plan last year to split its operations into two businesses: an education-loan management company and a consumer-banking business.