How to work with a student loans ombudsman – Forbes Advisor
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Contacting your student lender is usually the first step in resolving a problem. But what if it doesn’t get you anywhere? Last year, the Consumer Financial Protection Bureau received about 5,800 student loan complaints, 65% of which involved relationships with lenders or loan managers.
Sometimes you need more help. This is where a student loans ombudsman comes in. Here’s what it does and how it can help you with your loan problems.
What is a student loans ombudsman?
A Student Loans Ombudsman is an independent, confidential resource that helps you with student loans and sometimes with federal financial assistance.
The ombudsman can help you:
• Resolve disputes. If you are having difficulty with student loan balances, interest rates and payments or Pell Grant disbursements, you can contact the ombudsman for assistance. They can explain how interest rates and charges work and answer questions about how student loans work.
• Examine the collections. If you’ve missed payments for long enough, your loan may be in default. If your original loan manager sold or assigned your loan to a Recovering agency, an ombudsman can detail what this means for your repayment plan.
While an ombudsman is an informal resource for federal aid and loan assistance, he shouldn’t be your first stop. The ombudsman should be one of your last stops – after your student loan manager or the lender – when it comes to managing your loans.
Types of student loan ombudsmen
There is not an ombudsman who governs them all. There are dozens of different types depending on your needs. For example, there are ombudsmen in banks, hospitals, universities and other agencies. For student loan ombudsmen, you can look at:
• Federal student aid. Federal Student Aid Ombudsman Group handles disputes relating to federal student assistance, including loans and scholarship programs.
• Private lenders. Many lenders have their own ombudsmen who are used to resolve student loan issues. Most banks, credit unions, and online lenders should have these services, but they might not be readily available. Do an online search, like “your lender + ombudsman”, to find them.
• State agencies. Some states have their own ombudsperson who serves at the state level, rather than institutionally. Each state classifies them differently, whether it’s within the Department of Consumer Credit Protection or the Bureau of Financial Services. Since there is no universal state agency that hosts the Student Loans Ombudsman, you may need to dig a bit. You may also be lucky to seek out student loans ombudsman services through your state’s attorney general’s office.
• Consumer Financial Protection Bureau (CFPB). The CFPB has its own Ombudsman for Private Student Loans. Thanks to his “Submit a complaintThe CFPB deals with both federal and private student loan litigation.
How to work with an ombudsman on a student loan complaint
Reaching out to an ombudsman isn’t your first step – it’s usually one of your last. You can expect the process to work as follows:
1. Put your recordings in order
The ombudsman will ask you questions about your account information and the dispute. Make sure you have detailed files to share with the ombudsman before you begin. This will save you a lot of time when starting the process. This may also be the time when you realize that you are not yet ready to contact a mediator.
2. Keep detailed accounts
Take note of every interaction with your loan manager, ombudsman, or anyone else related to your student loans, including the time, date, name of the client representative, and the nature of your interaction. Good records will only help your case. Make sure your message is consistent. If your story changes, you might not solve your problem the way you want it to.
3. Fill out the necessary forms
Depending on your needs, each ombudsman may have a different process for filing disputes and complaints. For example, before filing your request with the Federal Student Aid Ombudsman Group, there is a checklist to complete. It describes your dispute, what you did to resolve the issue, your evidence, and any contact you made with your service agent.
This form helps you determine if you are ready to contact the ombudsman or if you need a little more time to resolve the issue with your lender.
4. Stay up to date
If you have submitted a complaint or dispute to an ombudsman, they can tell you how to resolve your issue in the future. Sometimes it is resolved over a phone call. Sometimes they will provide the next steps. Depending on your needs, be sure to stay on the line until the dispute is resolved.
What to Expect When Seeking Outside Help for Student Loan Problems
Reaching out to your lender to resolve the issue is a great first step, but that doesn’t mean your issue will be resolved immediately, or not at all.
An ombudsman is a good neutral resource for resolving your student loan issues. But that doesn’t mean your concerns will be resolved. Ombudsmen do not have the capacity to process loan modifications or requests for deferment, forbearance or forgiveness. All of this is handled by your loan officer. An ombudsman is not your advocate; they don’t work for you. They are working for a fair and just process.
But they will help you settle loan gaps and find other resources for your student loan problems. While they can’t sign up for a new repayment plan, they can point you in the right direction to make those changes. Sometimes it can seem like your lender doesn’t have your best interests in mind. Speaking with an ombudsman gives you an independent way to determine your student loan options.