Question:
The Department of Education has created a new position called the Student Loan Ombudsperson. This office has been directed by Congress to be available to ist students who are having problems with their student loans. You can reach the Ombudsperson through the internet at http://sfahelp.ed.gov or their phone number is 877.557.2575.

Answer:
Some people may be concerned that this Ombudsman does not appear to be independent of the Department of Education. Also, I cannot help wondering whether this will just turn out to be a different approach to the same goal, i.e., to persuade people to pay student loans by letting them know that someone feels bad for them but can't really change the underlying fundamentals.

Bear in mind, of course, that the party paying for a toll-free number can see which number you're calling from; I've had the spooky experience of having the person at the other end of an 800 number tell me who I was, and where I was, as soon as they answered the phone. I ume the Ombudsman's 877 number works the same. Also, their online form says they won't respond unless you supply your social security number. I haven't looked into the statutes or regulations authorizing the creation or purpose of the Ombudsman, to learn exactly how Congress or the Department described those matters. My dictionary says that an ombudsman is "a government official who hears and investigates complaints by private citizens against other officials or government agencies."

The FAQs page says it like this: "An ombudsman resolves disputes from a neutral, independent viewpoint. The OSFA Ombudsman will informally conduct impartial fact-finding about borrower complaints. We will recommend solutions, but we won't have the authority to reverse decisions. We will also work to bring about changes that will help prevent future problems for other student loan borrowers." The FAQs page also says, "We will not accept complaints about grants or private sources of student financial aid. We also won't accept complaints when the U.S. Department of Education has already begun formal or legal investigations. The OSFA Ombudsman will only accept complaints about Direct Loans, FFELP Loans, Guaranteed Student Loans, and Perkins Loans." They recommend starting by talking to your lender, school, or whoever is at the root of the problem.

For Perkins loans, they say that many schools have administrative review processes or ombudsman services. For other types of loans, they recommend a similar process through your lender or guarantor. They say you should ask to speak to a supervisor, keep detailed records of your phone calls, etc. If you go to the Ombudsman after taking those steps, they say they "will informally research your problem and determine if you have been treated fairly. If your student loan complaint is justified, we will work with you and the office, agency, or company involved in the problem." They say, "It's best to think of the Ombudsman as a last resource. We will try to help when other approaches have failed." The site offers, or hopes to offer, FAQs on repayment issues pertaining to specific kinds of loans -- for example, cancellation of a Perkins loan for teaching in certain areas. They also address a few points about the treatment of student loans in default and bankruptcy situations. I could not fault a genuine ombudsman for trying to work out problems where there is a simple misunderstanding or where either party is trying to get away with something plainly illegal. But in the case of exorbitant collection fees, for example, I believe an ombudsman approach is generally inferior to a simple improvement in the relevant law. This is supposed to be a nation under the rule of law, and I believe student borrowers have the same right to a clear rule as anyone else. Even if the Ombudsman turned out to be the struggling borrower's best friend, which seems unlikely, it would still be inappropriate for rapacious collection agents to take advantage of those borrowers who did not know of the Ombudsman's existence. I certainly could understand why someone who was aware of the potential risks might decide to give them a try. In hopes that the Ombudsman's office might be interested in putting its best foot forward, I have just e-mailed them to ask if they'd be interested in participating in the . I guess we'll see them here if the answer is yes. Anyone interested in placing a bet?