When people Google: "National Collegiate Student Loan Trust Lawsuit," they're looking for one of two things:
- to find out more about the CFPB lawsuit against the National Collegiate Student Loan Trusts or
- to find help to defend a lawsuit filed against them by one of the National Collegiate Student Loan Trusts.
You'll find information about both of those things below.
Let's start with the CFPB lawsuit.
The National Collegiate Student Loan Trust Lawsuit with the CFPB
In September 2017, the Consumer Financial Protection Bureau filed a lawsuit in the Delaware district court against NCT and Transworld Systems for illegal student loan debt-collection lawsuits.
The CFPB argued:
- National Collegiate filed tens of thousands of lawsuits against private student loan borrowers without having the correct legal documents (chain of assignment/paper trail, promissory note, etc.) to support their claims; and
- The affidavits filed with the lawsuits were invalid because they weren't signed by someone with personal knowledge of the borrower's or cosigner's account records.
A proposed final judgment was agreed to by the parties.
The resulting enforcement action required:
- an audit of the 800,000 student loans in NCT's portfolio and
- restitution to over 2 thousand private student loan borrowers.
It's my understanding that the judgment isn't final.
Last I checked, the proposed judgment was challenged by other parties to the underlying securitization transactions involving National Collegiate.
They argued that the judgment, if entered, altered their rights they relied upon when they entered into the transaction.
The district court agreed and allowed them to intervene in the lawsuit.
That lawsuit was dismissed in 2021.
Click here to learn Why the National Collegiate Student Loan Trust Lawsuit Was Dismissed
There also appears to be a class action involving one of the debt collectors NCSLT uses in state court. As part of its debt collection practices, the class action alleges that the collector filed tens of thousands of lawsuits without the necessary underlying paperwork.
What to due when NCSLT takes legal action against you
If one of the National Collegiate Student Loan Trusts has sued you, I imagine you have questions.
- What are the National Collegiate Student Loan Trusts?
- How did the NCSLT get your loan?
- What are your options to defend the lawsuit?
I'll answer all of those questions below.
Let's start with the basics.
National Collegiate Student Loan Trusts hold over 800,000 private student loans. But they are not the original lender. They bought the private student loans from banks. They do not own federal student loans. They have accepted student loan debt settlements. Their loans are subject to the statute of limitations. You may be able to get an NCT lawsuit dismissed if they can't produce a legal paper trail of ownership.
What are the National Collegiate Student Loan Trusts?
Well, the short answer is this:
National Collegiate Student Loans Trusts are:
- A series of statutory trusts.
- They didn't loan money to private student loan borrowers.
- They were (allegedly) assigned the private student loan.
- They file private student loan lawsuits in state court.
- Their loans are subject to the statute of limitations.
- But they win a lot of those lawsuits by getting default judgments.
NCT is nothing more than a storage unit for private student loans made by JPMorgan Chase Bank, Charter One Bank, Bank of America, RBS Citizens Bank, and Union Federal Savings Bank.
Banks sold the loans to National Collegiate
With NCT, the assets are student loans that were made by banks, including:
- Bank One
- Bank of America
- Charter One Bank
- GMAC Bank
- JPMorgan Chase Bank
- RBS Citizens Bank, and
- Union Federal Savings Bank.
Most if not all of these student loans were borrowed before 2008.
When they made these loans, the banks didn’t intend to hold on to them forever. Instead, they were looking to sell them to other loan companies quickly.
Enter, First Marblehead Corporation.
To buy the student loans, First Marblehead created:
- National Collegiate Student Loan Trust 2004-1
- National Collegiate Student Loan Trust 2004-2
- National Collegiate Student Loan Trust 2005-1
- National Collegiate Student Loan Trust 2005-2
- National Collegiate Student Loan Trust 2005-3
- National Collegiate Student Loan Trust 2006-1
- National Collegiate Student Loan Trust 2006-2
- National Collegiate Student Loan Trust 2006-3
- National Collegiate Student Loan Trust 2006-4
- National Collegiate Student Loan Trust 2007-1
- National Collegiate Student Loan Trust 2007-2
- National Collegiate Student Loan Trust 2007-3
- National Collegiate Student Loan Trust 2007-4
You can find more information about the NCT trusts by looking at the documents filed with the SEC.
The student loans were placed into the National Collegiate Student Loan Trusts, which were all registered in Delaware.
From there, investors bought pieces of the trusts in hopes of receiving a huge dividend as borrowers paid off their student loans.
That huge dividend didn’t really come.
Turns out, of the more than $12 billion of student loans that were placed into the trusts, over $5 billion of the student loans are in default.
And once the loans entered default, NCT had to take action to try and get the money from student loan borrowers.
Unlike the Department of Education, NCSLT can’t automatically garnish your wages or take your tax refund when you default on student debt.
Instead, NCSLT has to hire debt collectors and collection agencies to try and encourage you to pay. When that fails, NCT has to sue you, get a judgment, and only then can it get a wage garnishment or levy your bank account.
Basically, NCSLT has to do a lot to try and get you to pay.
Is your head spinning right now?
If so, you're not alone.
Use this flowchart to see the connection between your private loans and National Collegiate.
- Originators. These are the banks. They are the entities that loaned the money.
- Depositor. National Collegiate Funding LLC.
- Trust. The series of trusts the loans were deposited into.
- Investors. The persons and companies that bought the SLABs.
- Servicers. The companies that handled the collections of the private loans. The servicers included US Bank, PHEAA, American Education Services, and Transworld Systems Inc.
- Guarantor. This is the company that pays off the loan when a borrower defaults on the loan. For the NCT loans, the guarantor was The Education Resources Institute (TERI).
Who owns National Collegiate Student Loan Trusts
After much research, I'm still not sure who Owns National Collegiate Student Loan Trusts.
The New York Times has identified Donald Uteritz's private equity firm, Vantage Capital Group, as the beneficial owner of the trusts. But all that means is that his company receives any money remaining after holders of the promissory notes are paid.
So who are the noteholders?
As best I can tell, the noteholders appear to be a series of investment funds:
- Waterfall Master Fund, Ltd.
- Waterfall Delta Offshore Master Fund, LP
- Waterfall Sandston Fund, LP
- Baldr Sherwood Fund, Inc
- One William Street Captial Master Fund, Ltd
- OWS ABS Master Fund II, LP
- OWS COF I Master, LP
- OWS Credit Opportunity I, LLC
- OWS Global Fixed Income Fund (USD-Hedged), Ltd
- LibreMax Master Fund, Ltd
- LibreMax MSW Fund, Ltd
- AG Mortgage Value Partners Master Fund, LP
- AG TCDRS, LP
- AG Pisgah, LP
- AG Super RMBS LLC, and
- AG Opportunistic Whole Loan Select
How to check if National Collegiate Student Loan Trusts owns your loans
Now that you know who the National Collegiate Student Loan Trusts are, it's time to find out if they have your private loans.
The easiest way to do this is to contact AES.
They serviced private student loan debt for National Collegiate. So it stands to reason if you had a loan with NCSLT, AES would have your records.
And if they don't…
Try contacting Transworld Systems, Inc.
They serve as a debt collector for National Collegiate.
Again, chances are, if you have a loan with NCSLT and haven't paid on it, the loan went into default and was sent to TSI for debt collections.
And If that doesn't work…
You can always wait to be contacted by a debt collector like Simm & Associates; Wetsch Abbott; Weltman, Weinberg, & Reis; and Kramer & Frank. Those are a few of the common debt collection law companies and law firms National Collegiate uses.
What to do if NCT has Your Loans
Once you know National Collegiate has your loans, the next thing to know is your options.
Unlike federal student loans, National Collegiate has no right to wage garnishments until it files and wins a collection lawsuit against you.
Click here to read What to do When Sued for Student Loan Debt
That means that National Collegiate has no way to force you to pay any amount of money.
The best they can do is file late payments on your credit report and make repeated collection calls.
This inability to force you to pay makes negotiating a settlement with NCT a possibility.
Check the statute of limitations
A significant difference between federal loans and private loans is that federal loans do not have a statute of limitations.
The US Department of Education can collect on its loans until you die.
Private student loans, on the other hand, are subject to the statute of limitations.
Having said that, unless you live in a state with a statute of limitations that runs quickly (North Carolina, for instance), don't count on this as a way to dismiss the lawsuit.
Click here to learn How to Get a National Collegiate Trust Lawsuit Dismissed
National Collegiate Student Loan Trust Address
At some point, you may decide you want to sue National Collegiate Trust. Or maybe you'll meet with a student loan bankruptcy attorney who thinks you can get rid of the loan.
In either case, when you want to serve legal documents on NCT, consider using this contact information:
National Collegiate Student Loan Trust
℅ Wilmington Trust
Rodney Square North
1100 N Market
Wilmington De 19890-0001
If you were looking for National Collegiate Student Loan Trusts' website, stop. As far as I know, they don't have one. The closest you'll get is the website for NCT's owner trustee, Wilmington Trust.
My guess is you came here because you have a private loan with National Collegiate Trust, and you wanted to know more about them and what your options are.
I hope this post helped answer those questions.
Let's talk if you'd like help negotiating a settlement or if National Collegiate has sued you for student debt here in Missouri.