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The Evolving Role of the Ombudsman in Student Loan Advocacy: Insights from the FY2012 Update

This document outlines the pivotal role of the Ombudsman in addressing student borrower issues as highlighted during the 2012 NCHER Knowledge Symposium. With over 34,000 contacts recorded, it showcases a rise in research cases primarily related to economic issues, loan transfers, and system conversions. The Ombudsman's Caucus aims to create effective resolutions and support positive changes through best practices. The document analyzes trends in borrower inquiries, emphasizing key concerns such as account balances and repayment plans, and suggests prioritizing focus areas for more effective guidance.

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The Evolving Role of the Ombudsman in Student Loan Advocacy: Insights from the FY2012 Update

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  1. Ombudsmen Panel: Student/Borrower Advocate – The Role of the Ombudsman

  2. FSA Ombudsman FY2012 Update Navigating the Sea of Change 2012 NCHER Knowledge Symposium • 34,909 contacts received • Increase over FY2011 • Increase in Research cases • Economic issues • Loan transfers • System conversions • Collaboration with CFPB • Link from CFPB.gov to FSA Ombudsman site

  3. Caucus Background Navigating the Sea of Change 2012 NCHER Knowledge Symposium Vision: The vision of the Caucus of Student Loan Ombudsmen (the Caucus) is to: provide a resource for the creation and support of highly effective student aid problem resolution methodologies, techniques and processes that promote equitable services for all federal student aid participants. Mission: The mission of the Caucus is to: provide training and mentoring; identify and report on trends to support positive change through industry best practices and legislation; and serve as a voice of fair process throughout the student loan life cycle.

  4. Trends Committee Navigating the Sea of Change 2012 NCHER Knowledge Symposium Analyzes Data from FSA Ombudsman’s Office(Inquiries/escalation from customers throughout the industry) Adds in data from all participating Servicers and Guarantors for non FSA volume – full picture

  5. What are our Industry Top 5 Trends? Navigating the Sea of Change 2012 NCHER Knowledge Symposium Account Balance Loan Cancellation/Discharge Repayment Plans/Amounts (excluding IBR) Default (excluding rehabilitation issues) Service Quality (excluding split-servicing)

  6. Top Issue – Account Balance Navigating the Sea of Change 2012 NCHER Knowledge Symposium Averages 26-28.5% of overall volume over last 11 years; Questions/issues differ from non-defaulted compared to defaulted borrowers; Questions/issues cover a broad range of sub-topics What types of questions/complaints does your organization receive regarding account balances on loan accounts?

  7. The Caucus Hears… Navigating the Sea of Change 2012 NCHER Knowledge Symposium • From non-defaulted borrowers: • - Disbursement amounts • - Payment application • Pre-Payment • Interest capitalization (the effect of deferments and forbearances) • Subsidized vs Unsubsidized loans • Change in Payment Plan (example ICR to standard) • Simple daily interest accrual • Interest rate changes • Fees assessed

  8. Case Study #1:Non-defaulted Customer Navigating the Sea of Change 2012 NCHER Knowledge Symposium

  9. The Caucus Hears… Navigating the Sea of Change 2012 NCHER Knowledge Symposium • From defaulted borrowers: • Payment application – collection costs • Interest capitalization before default and after rehabilitation; • Subsidized vs. Unsubsidized loans • Simple Daily interest accrual • Interest Rate changes • Collection Costs – how much is charged • Effect on rehabilitation and consolidation • Offset payment application

  10. Case Study #2:Defaulted Customer Navigating the Sea of Change 2012 NCHER Knowledge Symposium

  11. Framing Recommendations Navigating the Sea of Change 2012 NCHER Knowledge Symposium List is long; must be prioritized No single problem or solution Use data to prioritize and provide a place to start Review contacts received about Account Balance from 28 Caucus members during FY2012

  12. What the Data Reveals Navigating the Sea of Change 2012 NCHER Knowledge Symposium • Account Balance represents nearly 67% of all contacts received by Caucus members, including FSA, from non-defaulted borrowers through 3rd quarter of FY2012 • FSA identifies more specific issues from non-defaulted borrowers: • loan disbursement timing and accuracy; • Interest accrual • Payment posting

  13. What the Data Reveals Navigating the Sea of Change 2012 NCHER Knowledge Symposium • Account Balance represents roughly 33% of all contacts received by Caucus members, including FSA, from defaulted borrowers through 3rd quarter of FY2012 • FSA identifies more specific issues from defaulted borrowers: • Challenges to the validity of debt • Late charge disputes (including collection costs) • General questions about balance calculation

  14. Next Steps: Navigating the Sea of Change 2012 NCHER Knowledge Symposium Work to create simple explanations for each steps Create a consistent message for customers Additional Communication Opportunities Share trend data with the Caucus and participate - Calls take place 3rd Tuesday of the month at 3pm eastern - Contact Vicki Shipley at vshipley@ncher.us to be added to the List Serv

  15. Contact Information Navigating the Sea of Change 2012 NCHER Knowledge Symposium Joyce DeMoss Joyce.DeMoss@ed.gov April Petroski April.M.Petroski@salliemae.com Tracy Stine Tracy.A.Stine@salliemae.com Diane Ziturdzitur@ecmc.org

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