WASHINGTON— Federal regulators hit college financial services provider Higher One, Inc. Wednesday with $28.5 million in penalties and restitution charges saying the company mislead student financial aid recipients into improper fees, and other transgressions.

New Haven, Conn.-based Higher One is also sharing with WEX Inc.'s WEX Bank the responsibility for returning $31 million to affected students.

Higher One had previously disclosed that a fine could be coming. Last year, a spokesman for the firm said it has made significant changes to its business to avoid similar problems in the future.

A spokeswoman for WEX didn't immediately respond to a request for comment.

Higher One Chief Executive Marc Sheinbaum said in a statement that "product and service changes have already been completed to comply with a significant portion of the issues raised, which mostly relate to practices ended in 2013. After joining Higher One in 2014, I charged our team to set new standards for transparency and compliance." He said the company has since sold its disbursements business, including the "OneAccount" product cited by regulators.

The Federal Reserve ordered Higher One to give back to students $24 million in fees, and slapped it with a fine of $2.23 million. The Federal Deposit insurance Corp. separately levied a $2.23 million fine on Higher One and ordered it and WEX Bank to share the cost of returning $31 million to students.

The agencies said hundreds of thousands of students were affected by the companies' practices between 2012 and 2014 and would be receiving restitution.

The FDIC also fined WEX Bank $1.75 million.

Write to Ryan Tracy at ryan.tracy@wsj.com

(END) Dow Jones Newswires

December 23, 2015 11:55 ET (16:55 GMT)

Copyright (c) 2015 Dow Jones & Company, Inc.
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