A student loan ombudsman is an independent, objective, and impartial broker. Your job is to help student loan borrowers resolve disputes. You are neutral and do not represent any of the parties to the dispute.
Most lenders and loan service providers have their own student loan ombudsmen. But the federal government also has two ombudsmen. One federal ombudsman helps federal student loan borrowers while the other works to resolve disputes between borrowers with private lenders.
In this guide, we provide tips on how to resolve your student loan disputes yourself before seeking additional help from a Student Loan Ombudsman. We also provide the ombudsman’s contact information for the federal government and for several large lenders and service providers.
The most common student loan disputes
Many student loan problems arise due to the complexity of the federal student loan system. With so many repayment plans to pursue, even the most competent of companies can find it difficult to service federal loans effectively. It is precisely for this reason that some federal loan service providers are leaving in 2021.
But service problems aren’t just a federal problem for student loans. Even private student loan lenders can make mistakes. Regardless of the type of loan, the most common student loan disputes are:
- Missing loan payments or loan payments that have not been offset correctly
- Bad credit balance
- Bug with interest
- Misleading, inaccurate or incomplete information to the borrower
- Inadequate provision for the borrower’s financial situation
- Lack of loan repayment options
- Bad credit status
- Illegal debt collection activities by lenders
- Errors in providing information to credit agencies
- Identity theft
- Problems caused by the merger of two or more servicers
- Customer service quality issues
- Issues related to loan waiver requirements, loan exemption, deferral, deferral, and reinstatement of repayment obligations after the amortization
- Try to withdraw a student loan that has gone bankrupt
- Problems related to student loan consolidation or refinancing
- Issues related to student loan settlement
- Confusion About the Difference Between Federal and Personal Student Loans (or Types of Federal Loans)
Sometimes loan balances that are higher than expected can result from legitimate reasons such as interest capitalization, negative amortization, or late fees and collection costs.
However, inaccurate loan balances can also be caused by a mistake by the loan manager in incorrectly applying a payment or losing a payment. Below we discuss how to troubleshoot these types of problems as they occur.
How to Resolve Student Loan Disputes on Your Own
First and foremost, stay calm. Dealing with credit problems can get emotional. However, try to avoid letting it affect your interaction with the lender or loan service provider. Venting may make you feel better, but it doesn’t solve your problem. Don’t make threats.
1. Clarify the nature of the dispute
Start by clarifying the nature of the dispute. What exactly is the problem? What information can you provide in connection with the dispute? What is your desired outcome? What are the barriers to resolving your dispute?
2. Gather information
It is helpful to gather important information about your student loans. Some of the questions you would like answers to at this stage include:
- What are the name and contact details of the lender and credit service provider? (If you don’t know the name of your lender or credit service provider, you can often find it at StudentAid.gov or AnnualCreditReport.com.)
- What type of credit is there?
- Is it a government or private student loan?
- What is the interest rate?
- What is the due date?
Keep copies of documents such as invoices, proof of payment (receipts, collected checks, and bank statements with automatic transfer), correspondence (letters and email messages), promissory notes, and other evidence of your claims.
3. Contact your lender or loan service provider
Try to resolve the dispute directly with your lender or credit service provider before filing a formal complaint. Here are the contact information for the current federal student loan service providers:
There are two situations when you might want to call a number other than the ones listed above. If the problem is related to death, disability, serious illness, or similar financial challenge, the first thing to try is to call the lender’s main phone number and ask for their “compassionate verification process”.
Second, if you’ve defaulted on your loan and are dealing with a debt collection agency, the Default Resolution Group is the first place to go. You can reach them at 1-800-621-3115
4. Document everything
Write down your conversations with the lender or loan service provider. Write down who you spoke to, when and when you spoke to them, what was said, and what was told to you. Any details about the nature of the problem will help.
If an agreement has been reached, please contact us in writing to confirm the agreement. Send letters with confirmation of delivery or by registered mail, return receipt requested so that you have proof of receipt.
Ask for an answer within a reasonable time, for example within a few weeks. Most borrowers receive responses to their complaints within two weeks.
When to Contact Your Lender’s Student Loan Ombudsman
If you don’t get a response from the lender or loan service provider, or you are unsatisfied with the answer, it may be time to contact a Student Loan Ombudsman.
There are several types of student loan ombudsmen. Start with the lender’s own ombudsman. Here you will find links to the ombudsmen of several major lenders and credit service providers.
The Department of Education operates a feedback center (1-844-651-0077) where you can file complaints about government student loans (and other federal student grants) in addition to using the Ombudsman.
It is best to wait a few weeks after filing a complaint before moving on to the next step and contacting a federal ombudsman. The lender can respond to the complaint and eliminate the need for the problem to escalate.
When to Contact a Federal Student Loan Ombudsman
If working with the lender directly or through his ombudsman does not lead to a solution, contact the federal or state ombudsman. The state ombudsman is usually a position at the public prosecutor’s office or the state university authority.
There are two state ombudsmen – one for state student loans and one for personal student loans. How to get there.
Ombudsman for federal student funding
The Federal Ombudsman for Federal Student Aid, also known as the FSA Ombudsman, deals with direct loans, federal family education loans (FFEL), federal Perkins loans, and other federal student grants. They can be reached by phone at 1-877-557-2575 or 1-202-377-3800 or by fax at 1-606-396-4821 or 1-202-275-0549.
The FSA ombudsman will investigate the issue and work with you and the lender, credit service provider, or debt collection agency to resolve the dispute. You can:
- Identify and evaluate options to address your concerns
- Clarification of the requirements for deferral, deferral, termination and dismissal
- Explain how interest, default interest, and collection fees work
- Review your loan payment options
The FSA ombudsman is not authorized to overturn decisions made by other bodies. But they have a strong track record of resolving disputes. If necessary, they will refer you to the appropriate body or organization and give them clear information about the nature of the dispute
Ombudsman for private student loans
The Student Loan Ombudsman is provided by the Consumer Financial Protection Bureau (CFPB). You can file a complaint online at 1-855-411-2372 (TDD 1-855-729-2372).
It may be helpful to look at the CFPB’s consumer complaints database to see how similar issues have been resolved. When you see other issues being addressed, you can formulate your complaint in a way that gives you the best chance of finding a satisfactory solution.
Other resources for resolving student loan disputes
If you have followed all of the above and have not received a satisfactory resolution to your student loan complaint, you still have a few options. For many borrowers, the next step should likely be to file a complaint with the FTC or Better Business Bureau (BBB).
US Department of Veterans Affairs (VA). Veterans who are attending or have attended college through the GI Bill can file a complaint with the VA GI Bill Feedback System. Spouses and members of the military can also seek help through Military OneSource.
Spreading your complaint through social media such as Twitter and Facebook can sometimes put public pressure on the company to resolve your dispute. Finally, your member of Congress may be able to help, as they have helpers who are fully focused on helping voters resolve issues with the federal government.