Tip of the Week

With more than 5 million borrowers in default, the Department of Education has announced it will be taking proactive steps to help future students make better borrowing decisions.

On September 5, the Department’s Office of Federal Student Aid (FSA) announced that it is expanding the mission and work of the Office of the Ombudsman to focus on providing information to students and families on the benefits and risks of federal student loan borrowing.

“Given that federal student loan debt is nearing $1.7 trillion, and loan defaults and delinquencies remain at record highs, the Office of the Ombudsman will be refocused as the Office of Consumer Education and Ombudsman,” the Department said in the announcement. Historically, the office has focused primarily on resolving borrower complaints.

In addition, FSA announced that the Office of Consumer Education and Ombudsman will develop a centralized Common Manual for servicing and collection practices and policies under the William D. Ford Federal Direct Loan Program. The manual will create federal guidelines and guardrails for vendor operations, ensuring consistent borrower communications, customer service, and enforcement actions.

The Department is releasing a Request for Information (RFI) seeking input on the Common Manual from borrowers, servicers, advocacy organizations, institutions of higher education, state and federal partners, and other stakeholders to help inform the development and implementation of this new framework. The RFI has been published in the Federal Register and interested parties have 30 days to submit feedback on topics that they wish to be considered for inclusion in the manual.

– By Catherine Mueller