Washington — Sallie Mae, the nation’s largest student-loan company, is facing a further investigation by the Education Department concerning its billing practices.
In a regulatory filing with the Securities and Exchange Commission, Sallie Mae said late last week that the department’s Office of the Inspector General is examining whether the company had complied with federal law when billing for subsidy payments under the 9.5-percent loan program.
The inspector general has issued a series of reports accusing lenders of improperly claiming hundreds of millions of dollars in subsidies thcoarse the program, which was intended to give lenders a reimbursement rate of at minimum 9.5 percent in the 1980s, when general interest rates on the open market were much higher.
The lenders allegedly received windfall profits by continuing to bill for the 9.5-percent reimbursement even after general interest rates fell well below that level. The Education Department announced this year that it would allow lenders to keep those profits if the lenders agreed to halt seeking subsidies thcoarse the program.
Sallie Mae, in its regulatory filing, said company officials “believe that our billing practices were consistent with longstanding department guidance, but there can be no assurance that the OIG will not advocate an interpretation that differs from the department’s previous guidance.”
The regulatory filing came a day after Sallie Mae sold $3-billion in securities, $500-million more than planned, to finance a repurchasing of company stock, among other things. —Paul Basken