TRENTON – The Department of Banking and Insurance today announced that it has designated a Student Loan Ombudsman within the department to assist student loan borrowers and help resolve disputes with student loan servicers.
The designation of the Student Loan Ombudsman is part of the Department's work to assist student loan borrowers in New Jersey under a law enacted last year. The law requires student loan servicers to be licensed and regulated by the Department of Banking and Insurance. It also protects student loan borrowers against deceptive practices by student loan servicers and provides assistance for borrowers who have concerns about their student loans, including through the creation of a Student Loan Ombudsman within the department.
"At a time when many residents are facing financial challenges due to the public health emergency, it is vital that resources are available to guide them through their student loan payment options and to resolve disputes with loan servicers when they arise," said Commissioner Marlene Caride. "The Department will ensure that borrowers and their families have the information they need to make informed decisions about their student loans, including how loan agreements work and what is expected of them under the loan terms. It will also assist borrowers when there is a dispute, so they do not have to face the challenge of navigating the student loan process on their own."
"Through Governor Murphy's leadership, New Jersey is helping student loan borrowers manage their debt and strengthening consumer protections. At HESAA, we have expanded financial aid to reduce the amounts that students need to borrow, increased transparency of college costs, and created new affordable payment options for the State's NJCLASS supplemental education loans," said David J. Socolow, Executive Director of the New Jersey Higher Education Student Assistance Authority (HESAA). "HESAA applauds DOBI for this initiative to protect student loan borrowers from unfair practices by loan servicers."
"Every New Jersey student should have clear and transparent guidance on the terms of their student loan and what resources are available to make a college education affordable," said Interim Secretary of Higher Education Diana Gonzalez. "The Student Loan Ombudsman will help us reach this vision and provide much-needed support for students by providing education on the terms of loans and helping to resolve complaints against lenders and servicers."
Raghu Kakumanu, Assistant Division Director of Banking, within the New Jersey Department of Banking and Insurance, has been designated as the Student Loan Ombudsman. Assistant Division Director Kakumanu leads the Office of Consumer Finance through which student loan inquiries and complaints will be processed.
In addition to assisting with student loan disputes between student loan borrowers and student loan servicers, the Department will help student loan borrowers understand their rights and responsibilities under the terms of their student loans, among other responsibilities.
The Department also implemented the licensing process for student loan servicers which are regulated by the department under the law. Last month, the Department issued a bulletin to the industry that creates the process for licensing student loan servicers on the Nationwide Multistate Licensing System (NMLS). The Department began accepting applications for licensure in mid-September.
The implementation of the law builds on the work of the department to assist student loan borrowers. In April, the Department worked to negotiate relief options with private student loan servicers to expand on the protections the federal government granted to federal student loan borrowers; the relief was available to approximately 200,000 New Jerseyans with privately held student loans.
The Department is working with the Higher Education Student Assistance Authority (HESAA) to establish a student loan borrower education course and to provide materials to educate borrowers about student loans. Information on student loans, how to file a complaint with the department, and the new law may be found on the Department of Banking and Insurance website here: https://www.state.nj.us/dobi/division_consumers/finance/studentloan/index.html.Student loan borrowers who are having issues with their student loans that they are unable to resolve with their student loan servicers, can file a complaint with the Department of Banking and Insurance by calling 1-800-446-7467 or online by going to the department website and clicking on Consumer Assistance - Inquiries/Complaints, at: https://www.state.nj.us/dobi/consumer.htm and completing the Banking Formal Complaint form