Sallie Mae's former loan-servicing business, spun off last week into an independent company called Navient, expects to pay an additional $103 million - on top of $70 million already set aside - to settle two federal investigations.
None of the settlements are finalized, the company said, but accounting standards usually require companies to disclose potential losses only when they are likely and reasonably estimable.
The FDIC had cited the business for unfair or deceptive acts involving the way it made disclosures to borrowers and assessed certain late fees. The Department of Justice is still investigating whether the business cheated active-duty servicemembers by not providing them with the interest-rate discount they're entitled to under federal law.
Navient faces probes by the Consumer Financial Protection Bureau and several states - led by Illinois Attorney General Lisa Madigan - into
Sallie Mae in February reported in a filing with the U.S. Securities and Exchange Commission, that it was facing "significant year-over-year increases" in the number of investigative demands and in the breadth of information sought. Sallie Mae had set aside the initial $70 million by the end of 2013 to help resolve enforcement actions.
Navient reported Friday that it believes it will be required to refund $30 million worth of certain late fees to borrowers of Sallie Mae loans dating back to November 2005. The company expects to "voluntarily reimburse $42 million in late fees for borrowers whose loans were not owned by Sallie Mae but were serviced by them.
A growing number of Senate Democrats, as well as consumer advocates, have expressed concerns that the Education Department is too lax in overseeing how Sallie Mae services loans on behalf of the government. Some have called on the Education Department to assess penalties on Sallie Mae or to end its servicing contract with the company.
Navient began providing customer service last week to help 12 million Sallie Mae customers repay their education loans. It also is performing asset recovery services for more than 1,500 government, higher education and business clients.
People with loans serviced by Sallie Mae should expect to continue with the company without a change until the fall.
Sallie Mae is continuing as a consumer banking business. Navient's headquarters are in Wilmington, Del.
