National Collegiate Trust Lawsuits | CFPB & More

The National Collegiate Student Loan Trust (NCSLT) is known to most borrowers as a persistent debt collector and frequent plaintiff.

But in recent years, the tables have turned.

Regulators and borrowers have sued NCSLT for allegedly abusive and illegal debt collection practices, triggering significant legal battles and critical court decisions.

Note: If you’re looking for guidance because you’ve been sued by National Collegiate Student Loan Trust (meaning NCSLT is the plaintiff in your case), visit our detailed guide: What to Do If You’re Being Sued by National Collegiate Student Loan Trust.

Here’s what you need to know about major lawsuits filed against NCSLT since 2018, including their current status and impact on borrowers.

In September 2017, the Consumer Financial Protection Bureau (CFPB) took action against all 15 National Collegiate Student Loan Trusts (NCSLT), alleging widespread illegal debt collection practices.

The CFPB accused NCSLT—and its primary debt collector, Transworld Systems Inc. (TSI)—of filing thousands of lawsuits without proper loan documentation, attempting to collect debts beyond legal deadlines, and using misleading affidavits (“robo-signing”).

An initial settlement proposed in 2017 stalled when a Delaware federal court rejected it in May 2020, finding that the law firm representing NCSLT lacked the authority to settle. The case was briefly dismissed in March 2021 due to constitutional issues involving the CFPB’s leadership structure, but was later revived after the CFPB amended its complaint.

The litigation reached a turning point in March 2024, when the Third Circuit Court of Appeals ruled decisively in favor of the CFPB, confirming that passive trusts like NCSLT could indeed be held accountable under federal consumer protection laws.

In January 2025, a new proposed settlement emerged, requiring NCSLT to pay $2.25 million in consumer redress and halt collections on improperly documented debts. However, on April 28, 2025, the Trump administration abruptly dismissed the lawsuit, abandoning the settlement that would have compensated affected borrowers.

This dismissal aligns with the administration’s broader moves to significantly reduce the CFPB’s oversight and enforcement capabilities, leaving borrowers to pursue remedies primarily through state-level or private legal channels moving forward.

Alongside regulatory pressure from the CFPB, National Collegiate Student Loan Trusts have faced significant class action lawsuits initiated by borrowers.

New York Class Action

In 2018, borrowers represented by Frank LLP filed class action lawsuits against specific NCSLT trusts, debt collector Transworld Systems Inc. (TSI), and the collection law firm Forster & Garbus LLP. These lawsuits alleged violations of the Fair Debt Collection Practices Act (FDCPA), accusing NCSLT and its agents of systematically using false affidavits and improper practices to secure default judgments against borrowers in New York courts from 2012 to 2018.

In a major win for borrowers, the U.S. District Court for the Southern District of New York certified the class in 2023. This formally established a group of borrowers entitled to pursue collective claims against NCSLT and its partners, significantly strengthening their position.

Nevada Bankruptcy Class Action

In September 2022, another notable class action emerged, this time led by the law firm Milberg in Nevada. The lawsuit accuses all 15 NCSLT trusts of attempting to collect on private student loans that borrowers had already discharged through bankruptcy. The allegations include violations of the Fair Credit Reporting Act (FCRA), breaches of the U.S. Bankruptcy Code, and Nevada state laws.
As of May 2025, this lawsuit remains active, seeking compensation for affected borrowers nationwide and specifically in Nevada, potentially opening the door for significant borrower relief and additional legal accountability for NCSLT.

Recent court rulings in lawsuits against National Collegiate Student Loan Trust initially provided borrowers with significant legal advantages:

• Collection Efforts Require Valid Documentation: Courts confirmed that NCSLT must have complete and accurate documentation to pursue collections or judgments against borrowers. Without proper paperwork—such as accurate loan records or proof of ownership—the trust’s legal claims weaken significantly, potentially helping borrowers dispute debts or dismiss lawsuits.

• Possible Debt Relief or Refund Opportunities: Class-action lawsuits, such as those in New York and Nevada, seek monetary compensation for borrowers who were improperly sued or pursued for debts already discharged in bankruptcy. If these lawsuits succeed, you could potentially recover money, have improper judgments reversed, or even see affected debts canceled.

• CFPB’s Regulatory Strength Was Initially Affirmed: A critical Third Circuit ruling in 2024 reinforced the Consumer Financial Protection Bureau’s authority to regulate NCSLT. This decision empowered borrowers to seek CFPB intervention against unfair collection practices.

But the landscape shifted dramatically in early 2025.

The Trump administration initiated significant cuts to the CFPB, proposing layoffs of nearly 90% of its workforce. Although federal courts temporarily halted some of these firings, the CFPB’s capacity to enforce consumer protections has been severely compromised. The agency has also publicly deprioritized oversight on student loan issues.

What This Means for You:

• Weakened Federal Oversight: With the CFPB’s enforcement power diminished, you can no longer reliably count on federal intervention if you experience illegal or abusive collection practices from NCSLT or its agents.

• Your Rights Still Exist: The reduced federal role doesn’t erase the legal protections already established. NCSLT must still demonstrate proper documentation and lawful practices. The Third Circuit’s decisions still hold weight and may help you in court.

• State-Level and Legal Options Remain Available: If you’re facing aggressive or questionable collection attempts, your best option is now likely through state consumer protection agencies, private legal counsel, or class-action suits like those ongoing in New York and Nevada.

In short, although recent actions have limited the CFPB’s effectiveness, your ability to defend against improper debt collection practices by NCSLT remains strong, particularly if you proactively explore state-level protections and legal assistance.

The ongoing lawsuits against National Collegiate Student Loan Trust highlight critical weaknesses in its collection practices, giving borrowers valuable leverage, particularly when facing debts with missing or questionable documentation.

Although recent cutbacks to the CFPB’s enforcement capacity under the Trump administration have reduced federal oversight, your legal rights and protections remain intact at the state and court levels.

What is the lawsuit against the National Collegiate Student Loan Trust?

The CFPB sued the National Collegiate Student Loan Trusts (NCSLT) for illegally suing borrowers without proper documentation, using false affidavits, and pursuing debts beyond legal deadlines. Although the CFPB initially proposed a settlement, the Trump administration dismissed the lawsuit in April 2025, canceling borrower relief.

What is the National Collegiate Student Loan Trust complaint?

The CFPB’s complaint against NCSLT alleged unfair and deceptive debt collection practices, including suing borrowers without sufficient evidence, filing false affidavits, and collecting time-barred debts. Despite reaching a settlement agreement in early 2025, the Trump administration dismissed the lawsuit in April, ending the proposed settlement.