Print/Save Friendly Version

March 2000

SUMMARY: This letter transmits the information necessary to comply with the requirements for providing to borrowers information on the Department's Office of the Ombudsman.

Dear Partner:

We are pleased to provide you with the information necessary to comply with the requirements for schools, lenders, and guaranty agencies to notify borrowers regarding the Department's Office of the Ombudsman.

To whom do these requirements apply?

These requirements apply to schools, lenders, and guaranty agencies under three Title IV student loan programs: the William D. Ford Federal Direct Loan Program, the Federal Family Education Loan Program, and the Federal Perkins Loan Program.

What are the requirements regarding information to be provided to borrowers?

Schools, lenders, and guaranty agencies are required to provide borrowers with information on the availability of the Department's Office of the Ombudsman for student loans. On October 28 and 29 and November 1, 1999, the Secretary published final regulations implementing these requirements (see enclosures A, B, and C for the regulatory text).

What information meets these requirements?

Enclosure D includes all the information a school, lender, or guaranty agency is required to provide to borrowers on availability of the Office of the Ombudsman. An entity may provide additional information at its discretion.

When are these requirements effective?

The regulations are effective July 1, 2000. For any applicable activity occurring on or after July 1, 2000, a school, lender, or guaranty agency is expected to provide to the borrower the information on the availability of the Office of the Ombudsman.

For additional information, you can contact the Office of the Ombudsman at 1-202-401-4498 (Washington, D.C), toll-free at 1-877-557-2575.

Sincerely,


Debra Wiley
Ombudsman
Office of Student Financial Assistance

Enclosures

Enclosure A - Federal Perkins Loan Program Final Regulations (ombudsman provisions for schools)

Publication Date: November 1, 1999,

Effective Date: July 1, 2000

PART 674--FEDERAL PERKINS LOAN PROGRAM

Sec. 674.41 Due diligence--general requirements.

(a) * * *

(3) Provide the borrower with information on the availability of
the Student Loan Ombudsman's office if the borrower disputes the terms
of the loan in writing and the institution does not resolve the
dispute.

* * * * *

Sec. 674.42 Contact with the borrower.

(b) Exit interview.

(2) In conducting the exit counseling, the school must--

(ix) Review with the borrower information on the availability of the Student Loan Ombudsman's office.

* * * * *

Sec. 674.45 Collection procedures.

(h) As part of the collection activities provided for in this section, the institution must provide the borrower with information on the availability of the Student Loan Ombudsman's office.

* * * * *

Enclosure B - Federal Family Education Loan Program Final Regulations (ombudsman provisions for lenders and guaranty agencies)

Publication Date: October 29, 1999

Effective Date: July 1, 2000

PART 682--Federal Family Education Loan Program

Sec. 682.208 Due diligence in servicing a loan.

(c) * * *

(3)(i) If the borrower disputes the terms of the loan in writing and the lender does not resolve the dispute, the lender's response must
provide the borrower with an appropriate contact at the guaranty agency for the resolution of the dispute.
(ii) If the guaranty agency does not resolve the dispute, the agency's response must provide the borrower with information on the availability of the Student Loan Ombudsman's office.

* * * * *

Sec. 682.410 Fiscal, administrative, and enforcement requirements.

(b) * * *

(5) * * *

(vii) As part of the guaranty agency's response to a borrower who appeals an adverse decision resulting from the agency's administrative review of the loan obligation, the agency must provide the borrower with information on the availability of the Student Loan Ombudsman's office.

* * * * *

Sec. 682.411 Lender due diligence in collecting guaranty agency loans.

(b) Delinquency.

(3) As part of one of the collection activities provided for in this section, the lender must provide the borrower with information on the availability of the Student Loan Ombudsman's office.

* * * * *

Enclosure C - Federal Family Education Loan Program and William D. Ford Federal Direct Loan Program Final Regulations (ombudsman provisions for schools)

Publication Date: November 1, 1999

Effective Date: July 1, 2000

PART--682 FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAM

Sec. 682.604 Processing the borrower's loan proceeds and counseling borrowers.

(g) Exit counseling.

(2) * * *

(vii) Review with the student borrower information on the availability of the Student Loan Ombudsman's office.

PART 685--WILLIAM D. FORD FEDERAL DIRECT LOAN PROGRAM

Sec. 685.304 Counseling borrowers.

(b) Exit counseling.

(4) * * *

(vii) Review with the student borrower information on the availability of the Department's Student Loan Ombudsman's office; and

* * * * *

Enclosure D - Notification information

http://sfahelp.ed.gov

or

http://ombudsman.ed.gov

1-877-557-2575

Office of the Ombudsman
Student Financial Assistance
U.S. Department of Education
Rm. 3012, ROB #3
7th and D Streets, SW
Washington, DC 20202-5144