When people think of the challenges of student loan debt, they might think of juggling payments against other bills or expenses, or trying to avoid late payments. However, borrowers might also run into issues with student loan payments not being applied correctly, incorrect interest information or other actions that threaten their credit and possibly place the loan in default.
If you have a student loan complaint, you’re not alone. In 2019, federal student aid customers filed 44,155 complaints using the Federal Student Aid Feedback System, according to the Federal Student Aid Ombudsman Group, which is part of the U.S. Department of Education. The most common complaints related to repaying loans.
Relief options implemented as a result of the coronavirus pandemic have slowed this trend. For example, the Consumer Financial Protection Bureau reports that relief under the CARES Act has contributed to a decline in student loan complaints since March 2020. However, it’s likely there will be an uptick in complaints once relief programs end.
Common student loan complaints include:
— Discrepancies with the account balance. There are a number of reasons why the total amount you owe on your federal student loan might be higher than you expect it to be, including unpaid interest, default fees, and/or credit not given for payments made.
— An account placed prematurely in default. This can happen when you move or change your address and payments are not made appropriately. This also could happen if you paid less than the amount due, or you thought your account was in deferment so did not make a payment.
— Identity theft. About 13 million Americans were victims of identity theft in 2019, and that includes fraudulent student loans, according to Javelin Strategy & Research.
Other complaints fall into a variety of categories, including borrowers who don’t agree with fees charged by lenders and formal complaints when lenders don’t fix errors on borrowers’ credit reports.
If you have student loan debt issues that hit any of the ones noted above, or other complaints, working with a student loan ombudsman can help.
What Is a Student Loan Ombudsman?
A student loan ombudsman serves as an independent mediator who can help with loan balance and payment discrepancies; explain interest or default charges, loan consolidation and bankruptcy; identify repayment options; and review laws affecting your student loans.
Independence is key, which is also a benefit of student loan counseling with a nonprofit organization that can also help with steps to address complaints.
Ombudsmen independently review disputes and work with borrowers and those who hold or service the loan to correct mistakes and find solutions. While the ombudsman can’t officially resolve an issue, he or she can get you to the correct resources and steer you on the right path to resolution.
Types of Student Loan Ombudsmen
When looking to tap into independent resources to help navigate formal student loan complaints, note that there are three main types of ombudsmen:
Federal Student Aid ombudsmen. The Federal Student Aid Ombudsman Group is an unbiased and confidential resource to use when you have issues with your federal student loans.
State student loan ombudsmen. While the FSA office can assist only with your federal student loan frustrations, your state’s ombudsman can help sort out issues relating to your private student loans as well. To find out who can help on the state level, contact your state agency via the Department of Education’s directory.
Private lender ombudsmen. Whether your loan is from a bank, credit union or online lender, it likely has a similar representative who can discuss your issues.
Tips for Working With an Ombudsman
Hopefully, throughout the life of your student loan, you have kept careful records of payment history as well as correspondence with the lender. Before contacting an ombudsman, gather these materials. During your interaction, continue to keep copies of any letters and note phone conversations in writing.
The ombudsman will review your information and help you identify potential solutions and steps forward.
Working with an independent ombudsman is a good strategy when looking to resolve a student loan dispute after making a formal complaint.
As an added resource, you can always access the Consumer Financial Protection Bureau’s consumer complaint database. The CFPB handles complaints related to both private and federal student loans.
These independent resources can help you stay solution-focused.
More from U.S. News