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Sallie Mae Faces Third Student Loan Government Probe for Alleged Consumer Protection Violations

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The nation's capital has seemingly had enough of the complaints against Sallie Mae, as the student loan lender is facing another government probe for possible consumer protection law violations.

According to the Huffington Post, the Consumer Financial Protection Bureau (CFPB) has joined the U.S. Department of Justice (DoJ) and the Federal Deposit Insurance Corp. (FDIC) in opening an investigation to Sallie Mae's lending habits.

The government's leader in student loan contracts is facing possible violations of payment-processing, "unfair of deceptive" practices, discriminatory lending and of the Servicemembers Civil Relief Act, a federal law designed to give active-duty members of the military financial breaks on loans.

All but admitting fault, Sallie Mae has previously told its investors it expects a drop in its volume of student loan applications in the coming semesters. The student loan lender also said it expects pay penalties to the government and restitution to affected customers.

As Sallie Mae faces harsher criticism, so does the U.S. Education Department for a perceived lack of supervision. Sen. Elizabeth Warren (D-Mass.) has been among the most outspoken critics of the Education Department. She has questioned the agency's supervision of the companies it has contracts with to collect payments on student loans.

The CFPB investigation will focus on the affected customers. In a recent report, the bureau's top student loan official, Rohit Chopra, found the lender often misallocated payments to induce late fees. These "troubling" practices, as he called them, were preventing customers from paying off loans quickly.

Sallie Mae spokeswoman Patricia Nash Christel did not elaborate beyond saying the company was "cooperating fully" with the investigations against them. Sallie Mae also did not specify how much they were expecting to payout in penalties and restitution.

Since receiving scrutiny for not keeping closer tabs on Sallie Mae, the Education Department has done its own probing.

"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.

As a sign that other government agencies have had enough with the whispers of alleged violations, they have taken action against those perceived to be responsible.

Experiencing problems with Sallie Mae? The CFPB encourages you to file a complaint and are offering to help you through the process, just CLICK HERE.

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