One of the nation's most prominent financial servicers will pay millions of dollars as a penalty for student loan borrower violations.

The Consumer Financial Protection Bureau (CFPB) announced Thursday it had levied an $18.5 million fine on Discover Bank over "illegal private student loan servicing practices." The CFPB ordered a penalty of $2.5 million with the remaining $16 million directed to be returned to affected borrowers.

The federal watchdog stated Discover wrongfully set minimum monthly payments too high, called borrowers too early before and too late after business hours, and made it difficult to receive income tax benefits.

The CFPB offers a full rundown of the charges against Discover in the news release announcing the penalty.

"Discover created student debt stress for borrowers by inflating their bills and misleading them about important benefits," Richard Cordray, the CFPB's director, said in the release. "Illegal servicing and debt collection practices add insult to injury for borrowers struggling to pay back their loans. Today's action is an important step in the Bureau's work to clean up the student loan servicing market."

Student loans are second only to home mortgages in national household debt totals, causing agencies like the CFPB to hold federal and private loan servicers and collectors accountable, the Huffington Post noted. The CFPB is also watching the Education Department for how they treat their preferred collector for federal loans.

Now a high-ranking official at the Center for Responsible Lending, Maura Dundon, a former regulator at the Federal Trade Commission, told the HP Discover's transparency issues are representative of a big-picture problem.

"If a servicer like Discover can't even correctly disclose basic information," she said, "it raises serious concerns about the industry overall being able to perform the complex hands-on work of helping distressed borrowers."