27,000 Borrowers Stuck In Student Loan Complaint Backlog

The Department of Education’s ombudsman office, which handles disputes from student loan borrowers, is facing a backlog exceeding 27,000 cases, according to a recent data sent to Senator Elizabeth Warren (PDF File). The surge comes after the office lost nearly two-thirds of its staff in sweeping layoffs authorized by the Trump administration earlier this year.

According to recent court documents (PDF File), the office had 63 employees at the start of the year but now has 25.

As a result, number of unresolved complaints has risen sharply from about 16,000 in March to its current level of over 27,000, and the office continues to receive hundreds of new cases each week.

In May, the most recent month with available figures, the office closed just over 1,100 complaints. At that rate, the backlog could continue to grow for months. Senator Warren has pressed Education Secretary Linda McMahon for details on how the department will address the bottleneck, along with other operational issues stemming from the layoffs.

Reduced Staffing Slows Dispute Resolution 

The ombudsman office handles a wide range of borrower problems, including incorrect payment counts, repayment plan errors, and allegations of misconduct by loan servicers. Complaints also come from vendors and members of Congress forwarding concerns from constituents.

The simple fact is that smaller staff will limit the speed of responses and the ability to spot patterns in borrower issues.

For example, in an interview with NPR, former Student Loan Ombudsman staffer Rachel Gittleman said that while she worked with borrowers to resolve individual crises, the oversight team “was responsible for systemic fixes to the system. Like, when you hear about credit reporting issues or bills being calculated incorrectly or bills not being sent to borrowers, things like that where it's affecting more than a handful of borrowers. … [the team members] have all been fully RIF'd and that work is just not being done.”

The department has defended the layoffs as part of a broader strategy to “eliminate excess bureaucracy” and reorient resources toward programs it views as effective under existing law. In the July 21 letter to Senator Warren, officials acknowledged the backlog but said they were committed to keeping borrowers informed about repayment options and to streamlining operations.

Other Legal Issues 

The complaint backlog is unfolding alongside other strains in the federal student loan system. Nearly 1.5 million applications for income-driven repayment plans are awaiting processing, delayed in part by court orders blocking elements of the Biden administration’s SAVE plan.

The Trump administration has also resumed collections on defaulted student loans and is encouraging borrowers in the SAVE plan to switch to what it considers “lawful” repayment options – such as IBR.

At the same time, the department is implementing changes from the recently enacted One Big Beautiful Bill Act, which will massively change repayment plans moving forward and cap certain types of student loans.

As a result of the correspondence and new information, Senator Warren sent a new request (PDF File) to Secretary McMahon raising questions about whether the department can manage these transitions while short-staffed, particularly in areas that directly affect borrower accounts. The senator requested a response by Aug. 20 and included a list of inquiries covering repayment plan administration, debt relief processes, and contractor oversight.

Student Loan Borrower Impact

For individual borrowers, a delayed complaint can mean months of unresolved disputes over billing errors, interest calculations, or eligibility for forgiveness programs. We're already seeing this with an 8 to 9 month delay in processing PSLF buyback requests.

Those awaiting resolution may face higher costs if incorrect balances remain in place or payments are misapplied.

The timing is especially difficult as student loan interest resumes for 7 million borrowers in SAVE, yet many are having difficulty changing repayment plans – even per the Department of Education's guidelines.

Whether the department will add staff or make significant process changes to clear the backlog remains unclear. For now, borrowers needing assistance should prepare for extended waits and, when possible, document issues thoroughly and follow up through multiple channels, including their loan servicer and the department’s online complaint form.