ombudsmen panel: student/borrower advocate – the role of the ombudsman

Ombudsmen Panel:

Student/Borrower Advocate – The Role of the Ombudsman

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FSA Ombudsman FY2012 Update

• 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

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Caucus Background

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.

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Trends Committee

• 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

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What are our Industry Top 5 Trends?

• Account Balance• Loan Cancellation/Discharge• Repayment Plans/Amounts

(excluding IBR)• Default (excluding rehabilitation

issues)• Service Quality (excluding split-

servicing)

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Top Issue – Account Balance

• 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?

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The Caucus Hears…

• 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

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Case Study #1:

Non-defaulted Customer

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The Caucus Hears…

• 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

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Case Study #2:

Defaulted Customer

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Framing Recommendations

• 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

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What the Data Reveals

• 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

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What the Data Reveals

• 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

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Next Steps:

• 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

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Contact Information

• Joyce DeMoss Joyce.DeMoss@ed.gov

• April Petroski April.M.Petroski@salliemae.com

• Tracy Stine Tracy.A.Stine@salliemae.com

• Diane Zitur dzitur@ecmc.org