Elizabeth Warren Makes Mass. Latest State to Probe Sallie Mae For Questionable Lending Practices

Elizabeth Warren, one of the biggest critics of the Education Department and Sallie Mae, has officially begun a probe into the student loan company's lending practices.

According to the Huffington Post, the Democratic Massachusetts Senator has joined a group of states and government agencies that want to know more about Sallie Mae's business practices. Warren is concerned that they are harming borrowers and taxpayers.

She wrote a letter to Sallie Mae CEO and President Jack Remondi Monday suggesting the lender does not have any incentives to protect their borrowers. She said data proves that Sallie Mae does not help its borrowers avoid falling behind on payments or to repay their debt.

Warren noted that 37 percent of America's student loan borrowers have private federal loans with Sallie Mae, but only 15 percent of the company's borrowers have income-based repayment (IBR) plans. Warren also noted that although and IBR plan is most often the best option for borrowers, Sallie Mae seems to prefer granting deferments and forbearances, plans that provide immediate relief, but incur larger interest rates in the future.

The Consumer Financial Protection Bureau (CFPB), the Justice Department and the Federal Deposit Insurance Corporation (FDIC) are all probing Sallie Mae for potential violations. With Warren's involvement, more than half a dozen states have joined in as well.

The CFPB is accepting complaints from borrowers and the most common claims are that Sallie Mae is hard to communicate with, does not process requests in a timely manner and cheats active-duty members of the military.

Warren has been the most outspoken critic of the current debacle surrounding the Education Department's relationship with Sallie Mae. The department has used Sallie Mae as a preferred company to manage federal student loans for several years. Sallie Mae also had its lucrative government contract renewed recently despite the allegations and government probes.

Warren has written multiple times to Education Secretary Arne Duncan, most famously warning him not to let his department become Sallie Mae's "lapdog."