WASHINGTON, D.C. — The U.S. Department of Education’s Office of Federal Student Aid (FSA) announced a significant restructuring aimed at improving federal student loan management and borrower support. The agency is refocusing the mission of the Office of the Ombudsman, transforming it into the Office of Consumer Education and Ombudsman to better assist students, families, and borrowers navigating the federal student loan system.
Proactive Borrower Education Amid Record Debt
With federal student loan debt nearing $1.7 trillion and delinquency rates at historic highs, FSA leaders say the shift marks a move toward a more proactive borrower engagement strategy. While the Ombudsman’s office has historically focused on resolving borrower complaints, its expanded role now includes providing guidance on the benefits and risks of federal student loan borrowing.
Under Secretary of Education Nicholas Kent emphasized the importance of early outreach, noting that the changes aim to ensure families are “better equipped to make informed decisions before taking on federal student debt.” By educating borrowers at the start of their academic journey, the department seeks to reduce long-term debt burdens and improve repayment outcomes.
New Common Manual to Standardize Loan Servicing
In addition to its expanded educational mission, the Office of Consumer Education and Ombudsman will develop a centralized Common Manual outlining servicing and collection practices for the William D. Ford Federal Direct Loan Program.
The manual will establish federal guidelines and operational standards for loan servicers and collectors, ensuring:
- Consistent borrower communications across vendors
- Uniform customer service practices
- Clear enforcement protocols to strengthen oversight
FSA officials believe the manual will eliminate the “piecemeal” regulatory approach established under previous administrations, providing clarity for borrowers and accountability for servicers.
Acting FSA Chief Operating Officer James Bergeron described the initiative as a “long-overdue reform,” stating that it aims to “improve customer service, strengthen repayment outcomes, and enhance the performance of the federal student loan portfolio underwritten by taxpayers.”
Scope of the Challenge
The scale of the student loan system underscores the urgency behind these reforms:
- The Direct Loan Program is the nation’s largest source of federal financial aid, providing $85 billion annually to 6.7 million borrowers.
- As of June 2025, 42.3 million Americans hold federal student loans totaling $1.67 trillion.
- More than 6 million borrowers — roughly 34% — are delinquent, including 4 million in late-stage delinquency and at risk of default within six months.
- An additional 5.3 million borrowers are already in default.
Given these figures, FSA intends to combine borrower education, standardized servicing, and stronger oversight to improve financial outcomes and reduce repayment challenges.
Call for Public Input
As part of the initiative, the department issued a Request for Information (RFI) seeking feedback from borrowers, servicers, advocacy groups, educational institutions, and other stakeholders on the development of the Common Manual. The goal is to create a borrower-centered framework informed by those directly impacted.
Submissions will be accepted for 30 days via the Federal Register, with FSA planning to finalize the manual by July 1, 2026. The rollout will coincide with the launch of the Repayment Assistance Plan, authorized under President Trump’s One Big Beautiful Bill Act.
The Department of Education says the reforms aim to deliver greater transparency, stronger protections, and improved resources for borrowers navigating an increasingly complex federal student loan system.
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