U.S. Department of Education Bolsters Office of the Ombudsman to Improve Consumer Education and Increase Transparency for Student Borrowers

Today, the U.S. Department of Education's (Department) Office of Federal Student Aid (FSA) announced that it is expanding the mission and work of the Office of the Ombudsman to focus on providing information to students and families on the benefits and risks of federal student loan borrowing. Given that federal student loan debt is nearing $1.7 trillion, and loan defaults and delinquencies remain at record highs, the Office of the Ombudsman will be refocused as the Office of Consumer Education and Ombudsman. Historically, the Office has focused solely on resolving borrower complaints. Going forward, the office will also take on a proactive approach to improve financial literacy among students, parents, and borrowers so that they are better equipped to make careful borrowing decisions and responsibly manage their federal student loan debt.

In addition, FSA announced that the Office of Consumer Education and Ombudsman will develop a centralized Common Manual for servicing and collection practices and policies under the William D. Ford Federal Direct Loan Program. The manual will create federal guidelines and guardrails for vendor operations, ensuring consistent borrower communications, customer service, and enforcement actions. By issuing clear and consistent rules, FSA can improve accountability for servicers and collectors and will strengthen oversight operations while eliminating the punitive and piecemeal regulatory approach established by the Biden-Harris Administration.

"Today, the Trump Administration is taking a meaningful step to transform how the federal government supports students and families in navigating the federal student loan system. We are expanding the role and mission of the Office of the Ombudsman to go beyond dispute resolution and become a proactive resource for student loan borrowers," said Under Secretary of Education Nicholas Kent. "This change marks a shift toward earlier and more comprehensive engagement with families, ensuring they understand both the opportunities and potential risks of taking on federal student debt before they borrow. By providing clearer guidance and support at the front end of the college journey, we believe students will make more informed decisions that lead to lower debt burdens, stronger repayment outcomes, and greater satisfaction with their educational investment."

"Creating a best practices manual will not only encourage better customer service and stronger repayment outcomes over time, but it will also improve the performance of the student loan portfolio which is underwritten by the American taxpayer," said Acting FSA Chief Operating Officer James Bergeron. "Unlike the previous Administration's focus on loan forgiveness, the Trump Administration is taking action to implement meaningful and necessary enhancements to the way student loans are serviced to better serve borrowers and American taxpayers. We invite feedback from student aid professionals, borrowers, and interested parties to help inform and implement clear and consistent rules across our vendor portfolio."

Current State of the Federal Student Loan Portfolio and Renewed Focus on Consumer Education

The Direct Loan Program is the largest source of federal assistance to students pursuing postsecondary education in the United States. FSA provides more than $85 billion in federal student loans to more than 6.7 million borrowers each year. Today, the outstanding federal student loan portfolio includes 42.3 million borrowers with federal student loans totaling $1.67 trillion.

As of June 2025, more than 6 million or 34 percent of borrowers were delinquent on their federal student loans, including 4 million in late-stage delinquency and at risk of defaulting in the next six months. Approximately 5.3 million borrowers are in default.

Given these sobering statistics, FSA must refocus its approach from solely reactive complaint resolution to also include proactive borrower education and engagement. The Office of Consumer Education and Ombudsman will be charged with:

• Providing clear, accessible guidance on student loans and repayment;
• Developing tools and resources to help borrowers navigate the financial aid process;
• Ensuring that FSA's actions are rooted in data about borrower behavior; and
• Maintaining the dispute function integrated with broader education efforts.

This new approach will analyze FSA complaint and outreach data to anticipate confusion, close information gaps, and improve borrower-centered delivery of support services.

Supporting Student and Parent Borrowers and Improving Servicing Oversight

By creating a centralized, public-facing resource, the Common Manual will improve clarity and transparency for borrowers and ensure servicers and collectors provide accurate, timely, and reliable information to all borrowers; reduce confusion caused by inconsistent guidance across servicers; and reduce the need for expensive, one-off change requests that disrupt operations and frustrate borrowers. The Common Manual will also allow FSA to conduct stronger oversight of its vendors.

This effort to develop a Common Manual has been supported by higher education stakeholders for more than a decade. It is designed to ensure that all federal student loan borrowers-regardless of which vendor services their loans-receive consistent high-quality support and guidance as they navigate repayment.

The Department is releasing a Request for Information (RFI) seeking input on the Common Manual from borrowers, servicers, advocacy organizations, institutions of higher education, state and federal partners, and other stakeholders to help inform the development and implementation of this new framework.

The RFI has been published in the Federal Register and interested parties have 30 days to submit feedback on topics that they wish to be considered for inclusion in the manual. FSA intends to complete the development of the Common Manual by July 1, 2026, in conjunction with the launch of the Repayment Assistance Plan authorized by President Trump's One Big Beautiful Bill Act.

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