(Corrects Sallie Mae spokeswoman's name to Christel from Christe in paragraph 6)
By Joseph Ax
NEW YORK, Feb 20 (Reuters) - SLM Corp, better known as Sallie Mae, faces a multistate probe led by Illinois into its student loan practices, a spokeswoman for Illinois Attorney General Lisa Madigan said on Thursday.
The investigation is part of an increasingly broad review of student lending by state and federal regulators.
In a filing with the U.S. Securities and Exchange Commission on Wednesday, Sallie Mae said it was facing "significant year-over-year increases" in the number of investigative demands and in the breadth of information being sought.
The rise in requests has been largely driven by state attorneys general and by the federal Consumer Financial Protection Bureau, the company said.
Madigan's spokeswoman, Natalie Bauer, said Illinois and other states have opened an "active investigation" into Sallie Mae's loan servicing and debt collection practices, among other issues. She would not identify the other states involved in the inquiry.
"Inquiries from state attorney generals have occurred regularly in the ordinary course of our business, for informational as well as regulatory purposes," Patricia Christel a spokeswoman for the company said in an emailed statement.
"Since the passage of Dodd Frank, the frequency of these inquiries has increased significantly, and we are responsive to all requests, sharing how our customer service practices help customers succeed," Christel added.
Congress created a consumer bureau in the 2010 Dodd-Frank law and called for an ombudsman who would watch over bank and other loans to students pursuing higher education.
Dodd-Frank encourages state attorneys general to take a more proactive interest in the companies that provide services to their residents and these are early conversations about Sallie Mae's business, the company said.
Sallie Mae, the largest U.S. student loan provider, had set aside $70 million as of the end of 2013 to help resolve enforcement actions brought by the Department of Justice and the Federal Deposit Insurance Corp, according to regulatory filings.
The company is in the process of splitting into two companies, with one unit focused on student loans and the other handling its consumer banking business. (Reporting by Joseph Ax, additional reporting by Chris Peters; Editing by Mohammad Zargham and Supriya Kurane)