Moving Forward as New, Independent Company Focused on Responsible Financial Practices, Customer Experience and Compliance
Sallie Mae Bank, the wholly-owned subsidiary of the recently reorganized
SLM Corporation, has voluntarily settled its previously reported
regulatory matters with the FDIC and Department of Justice regarding
disclosures and assessments of certain late fees, as well as compliance
with the Servicemembers Civil Relief Act (“SCRA”). Sallie Mae Bank is
moving forward as part of a new, independent company focused on
responsible financial practices, customer experience and compliance.
Under the terms of the reorganization of SLM Corporation and related
separation of Navient Corporation on April 30, 2014, Navient Corporation
is responsible for funding all liabilities under the regulatory orders,
other than fines directly levied against Sallie Mae Bank in connection
with these matters.
In a consent order, Sallie Mae Bank and the FDIC agreed Sallie Mae Bank
will pay $3.3 million in fines and oversee the refund of up to $30
million in late fees assessed on loans owned or originated by Sallie Mae
Bank since its inception in November 2005. Under the consent order with
the FDIC, as well as under a consent order separately agreed among the
Department of Justice, a subsidiary of Navient Corporation, and Sallie
Mae Bank, the bank must implement enhanced policies, procedures and
training for SCRA processing. Under the Department of Justice order,
Navient is solely responsible for reimbursing SCRA benefits and related
compensation on behalf of both companies.
Sallie Mae Bank is in the process of implementing these new SCRA
policies, procedures and training, has updated billing statement
disclosures, and is taking additional steps to ensure its third-party
service providers are also fully compliant in these regards.
Sallie Mae Bank stated: “We are confident that in settling these
regulatory matters the bank is making the appropriate adjustments for
our customers regarding past issues with disclosure of late fee
assessments and SCRA compliance. We regret any inconvenience or hardship
that our customers may have experienced. Initiatives are underway to
prevent such errors from reoccurring and apply the clear regulatory
guidance these orders now provide. Furthermore, we appreciate the
service of the men and women who safeguard our freedom, and we are
committed to meeting their needs in a manner that reflects their status
and serves their best interests. Sallie Mae Bank moves forward well
prepared both to meet the needs of our customers with responsible
financial products and services and to assure a quality customer
experience that, working with our regulators, reflects our commitment to
compliance.”
For the first quarter of 2014, the last consolidated quarter of
operations of SLM Corporation prior to Navient Corporation’s separation,
SLM Corporation recorded an additional $103 million charge related to
the total estimated costs of these regulatory matters to Navient
Corporation and Sallie Mae Bank. Accordingly, SLM Corporation’s
previously announced first-quarter GAAP after-tax net income declined
$65 million ($.15 diluted earnings per share) to $214 million ($0.49
diluted earnings per share). A consequence of the reorganization
mentioned above is that SLM Corporation's historical financial
statements, including its first-quarter 2014 results, are now considered
those of Navient Corporation.
Online resources to help military families successfully manage student
loans are available at SallieMae.com/military.
Forward-Looking Statements
This press release contains statements that constitute “forward-looking
statements” within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934 as amended by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include,
among others, statements about the risk factors related to the spin-off
of Navient, and the development of trading markets after the spin. These
statements are based on the current expectations of Sallie Mae
management and are subject to known and unknown risks and uncertainties.
There are a number of risks and uncertainties that could cause actual
results to differ materially from those contemplated by the
forward-looking statements, including, but not limited to, uncertainties
and risks related to the spin-off. For further information regarding the
risks associated with Sallie Mae’s businesses and the spin-off of
Navient, please refer to the Sallie Mae’s filings with the SEC,
including its most recent Annual Report on Form 10-K. Sallie Mae assumes
no obligation to update any forward-looking statements as a result of
new information, future developments or otherwise.
Sallie Mae (NASDAQ: SLM) is the nation’s No. 1 financial services
company specializing in education. Whether college is a long way off or
just around the corner, Sallie Mae turns education dreams into reality
for American families. With products and services that include Upromise
rewards, scholarship search and planning tools, private education loans,
insurance, and online banking, Sallie Mae offers solutions that help
families save, plan, and pay for college. Learn more at SallieMae.com.
Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are
not sponsored by or agencies of the United States of America.