Citigroup's student loan practices are being investigated as part of a government probe, the company reported in a filing today.
The Wall Street Journal reported that the investigation is believed to be part of the Consumer Financial Protection Bureau's broad sweep into private student loan practices by financial institutions.
The CFPB settled earlier this month with another major lender, Discover Financial Group, for bad practices relating to a portfolio of student loans purchased from Citibank in 2010. The portfolio included some 800,000 accounts, the CFPB said.
In the $18.5 million settlement, the the CFPB said Discover had "failed at providing the most basic functions of adequate student loan servicing." Discover, the CFPB said, had frequently overstated the minimum amounts that borrowers had to repay and harassed borrowers at all hours of the day in efforts to collect on the loans.
The CFPB has stepped up oversight over private student lenders in the past year, as the student loan debt burden grows and an increasing number of borrowers struggle with repayment. In May, it launched a public inquiry into private student loan servicers; last year, a CPFB investigation with the Justice Department resulted in a $60 million settlement with student loan giant Sallie Mae, which it said had consistently overcharged members of the military on their student loans.
A representative for Citigroup declined to comment on the investigation.
Molly Hensley-Clancy is a business reporter for BuzzFeed News and is based in Washington, DC. She covers the intersection of business and education.
Contact Molly Hensley-Clancy at email@example.com.
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