I was just wondering what options I have if the ombudsman route doesn’t work out. I had filled out a direct consolidation application last summer, and it was completed by loan servicer A. However, they accidentally added all my loans to the consolidation, even though I requested that 3 loans be left out. I never received notice that this was happening…it just happened. (the paperwork I received from them never said those loans would be added) The supervisor their said that it was a clerical error on their part, and they would do their best to reverse those three loans. Two of the loans were fixed (although they were being transferred at the time of consolidation, so all they had to do was back out the balance of these two loans from the total balance). The third loan has still not been fixed. I was concerned because I wanted to make payments on this loan (high interest), but have been unable to because it was stuck inside this consolidation. I was told by loan servicer A that it would be up to Loan Servicer B to make any adjustments to the interest of the loan once it came back to them. I decided to get the ombudsman involved in November when I heard this, because I knew that loan servicer B was likely to not work with me. Finally, in February, the loan came back to loan servicer B, and my suspicions were correct, as they refused to do anything with the accrued interest because it was not a servicing error on their part, and they stated the other loan servicer should have deducted the interest before sending it back to them if they wanted to do that. I’m at my wit’s end here. The ombudsman is difficult to reach, and when I do, I do not get much assurance that anything can be done. This is even worsened by the fact that loan servicer A still has not deducted the balance of this third loan, as they claim they never received funds from loan servicer B. I’m going to give it a little more time to see if they straighten it out, as loan servicer A is claims they will see what they can do about the interest. If this doesn’t work out…what are my options? Is it even legal to charge interest during a time period where a loan servicer error makes it impossible to make payments on that loan? We’re talking 7 months here….

The ombudsman agent told me that people they are unable to help often contact their congressman. Beyond that, they can start a private lawsuit. It sounds to me like you have a strong case.

Fortunately neither option was necessary in my case, as the agent was able to get Nelnet to do the right thing (unwind an unlawful interest capitalization while I am on IBR). It took her a couple of months, though. She said she has caseload of 150 borrowers. So I would recommend patience for now.

Thank you for the response…I’m glad the ombudsman solved your issue. It gives me hope that mine will be resolved as well. Nothing new as of yet. I’m waiting to see what will happen before pursuing it further. A private lawsuit might cost more than the total interest I’m trying to have negated… Is there a small claims option for this sort of thing?