The Education Department has a powerful complaint resolution path that is kept largely out of sight.
In the deluge of complaints about a troubled program that pays off student loans for people who work in public service, one stands out for its frequency: Thousands of people say they were misled by loan servicers working on the U.S. government’s behalf.
It is among the most vexing problems with a program that has become a notorious quagmire, with a rejection rate of nearly 99 percent. Lawmakers, consumer advocates and desperate public servants say the Education Department should create a formal process to appeal denials, especially rejections that borrowers say were affected by mistakes made by servicers.
But it turns out the Education Department already has a system for investigating complaints and making fixes — it just keeps it very quiet.
At a training conference for financial aid professionals in December, a program specialist at the Education Department said during a presentation that if the agency finds out that it or the servicers it hires “did something wrong,” it will “hold the borrower harmless as a result.”
Those who think they have been harmed by a servicer’s error should file a complaint explaining what happened through the Federal Student Aid office’s feedback system on the StudentAid.gov website, the specialist, Ian Foss, said during his presentation. That routes complaints to the agency’s Ombudsman Group, and the department will then investigate and try to confirm the borrower’s account.
That startled many in the room.
“I was legitimately surprised,” said Ryann Liebenthal, a journalist who is writing a book on student debt and asked the question that prompted Mr. Foss’s answer. She had never before heard of the department’s dispute system.
But the agency has investigated hundreds of borrowers’ claims and found that they were given inaccurate advice or otherwise victimized by a servicer’s error, according to agency records and interviews with current and former government officials. After verifying their claims — using any records it could get, including the call recordings that most servicers keep — the department adjusted those borrowers’ accounts using what is known internally as an “override” credit.
Yet few borrowers know about the appeals process — and even government auditors think that’s a problem.
In a report last year, the Government Accountability Office found that “there is no formal process for borrowers who are dissatisfied” to challenge decisions and that the Education Department does not fully inform borrowers about their appeal options, including the Ombudsman Group.
The obscurity is intentional: The Education Department does not prominently advertise the feedback system because the manual investigations are time-consuming, according to three people familiar with the matter.
That frustrates advocates for borrowers. READ MORE: