July 07, 2009

Staffing Arrangement at Federal Student Aid Ombuds Office Raises Conflict of Interest Concerns

An article in Inside Higher Ed reveals that Ombuds program at the student aid agency is staffed by Vangent, Inc., a company that also helps the department in collection efforts. In addition, several of Vangent's employees working in the Ombuds' office formerly worked on loan collections. Vangent provides staff to the Department of Education under a 10-year, $300 million contract that covers a range of services, including staff for the Ombudsman Office. This arrangement troubles financial aid experts like Mark Kantrowitz of Finaid.org, who questions the neutrality of the staff.
"The purpose of an ombudsman's office is to have a disinterested body looking at the problems that students are bringing to its attention, and try to negotiate with lenders to resolve problems," said Kantrowitz. "If you're a borrower, would you call the ombudsman if you knew people there worked for a company that does collection of debt?"

A spokesperson for Education Department said that an investigation into the matter concluded the concerns were overblown. (Inside Higher Ed.)

Whether or not there is a legitimate conflict of interest may be a moot point. The mere perception that the FSA Ombuds staff are biased could significantly undermine the work of the program. As conflict resolution professionals, the FSA Ombuds staff must be vigilant about protecting their reputation for neutrality and fairness. The Department of Education may need to do more to restore the image of the FSA Ombuds Office.

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