The National Collegiate Student Loan Trust (NCSLT) is a name that has become synonymous with private student loan debt in the United States.
As one of the nation’s largest holders of such debt, NCSLT has been embroiled in numerous legal battles with federal regulators, investors, and other stakeholders.
Despite these controversies, National Collegiate Student Loan Trust (NCSLT) continues to exert pressure on borrowers to repay their loans.
This article will provide you with a comprehensive understanding of NCSLT and offer guidance to those dealing with NCSLT-held debt.
Who is National Collegiate Student Loan Trust
National Collegiate Student Loan Trust (NCSLT) is not a single entity but a collection of 15 trusts that collectively hold 800,000 private student loans, amounting to a staggering $12 billion. These loans were originally made by banks such as Bank of America and JPMorgan Chase over a decade ago.
To remove these debts from their balance sheets, the banks pooled the loans together, which were then purchased by a financing company and sold to investors. The trusts, in turn, collect payments from private student loan borrowers using a loan servicer, typically American Education Services, or by filing lawsuits in state court.
Here’s a brief overview of how National Collegiate Student Loan Trust (NCSLT) operates:
- Origination of Loans: Banks like US Bank, RBS Citizens, Charter One Bank, JP Morgan Chase Bank, and Citizens Bank initially provide loans to students, many of whom were attending for-profit schools.
- Creation of Trusts: A company focused on education lending, First Marblehead, purchases these loans and transfers them to trusts it creates.
- Securitization: The trusts then sell bonds backed by these loans, a process known as securitization. The trusts collect student loan payments from borrowers and distribute interest to bondholders.
It’s important to note that National Collegiate Student Loan Trust (NCSLT)’s debt collection practices have been criticized by the federal government and judges across the nation.
The loans owned by National Collegiate Student Loan Trust (NCSLT) are private student loan debts, which come with far fewer protections than federal student loans.
For instance, they offer limited forbearance and no loan forgiveness options.
Is National Collegiate Trust a Federal Loan?
A common misconception is that National Collegiate Student Loan Trust (NCSLT) is a federal loan. However, it’s crucial to understand that NCSLT owns private student debt, not federal loans.
This distinction has significant implications for borrowers:
- Repayment Plans: National Collegiate Student Loan Trust (NCSLT) loans are not eligible for income-driven repayment plans, Public Service Loan Forgiveness, or other benefits offered by the Department of Education to its borrowers.
- Consequences of Default: Falling behind on your payments to National Collegiate Student Loan Trust (NCSLT) won’t automatically result in wage garnishment or tax refund offset. The company must sue you and obtain a judgment before it can garnish your wages.
CFPB v. NCSLT
In 2017, the Consumer Financial Protection Bureau (CFPB) ordered National Collegiate Student Loan Trust (NCSLT) and TransWorld Systems, the company handling its debt collection, to pay $21 million for collecting debt it couldn’t prove.
However, banks, insurers, debt collectors, and hedge funds involved in the trusts’ operations have tried to block the enforcement action, arguing that the lawyers hired to act on the trusts’ behalf lacked authority to deal with the CFPB.
A federal judge agreed with their arguments and denied the settlement last year. Litigation related to that fight persists, and NCSLT continues to collect from borrowers using its loan servicer, American Education Services, debt collection agencies, and law firms.
What to Do if NCSLT Has Your Student Loans
If you find that your private student loan is owned by one of the NCSLT trusts, your course of action will depend on the current status of your loan.
Here are some strategies to consider:
If your NCSLT loans are with AES
American Education Services (AES) is the loan servicer for NCSLT loans. They are responsible for collecting student loan bills, tracking your payment history, and explaining your repayment options.
If you need a lower student loan payment, consider these strategies:
- Request a Temporary Payment Decrease: While income-driven repayment plans aren’t an option for private loans, you may be able to make interest-only payments for a limited time.
- Request a Forbearance or Deferment: Either option can temporarily stop payments.
- Apply for Student Loan Refinancing: Borrowers with good credit scores and stable income may qualify for a lower interest rate and better repayment terms.
If your NCSLT loans are in collections
Your loans are moved to a debt collector if you don’t make payments as outlined in your loan’s contract. Your options for recovering from default are limited.
However, the collector will typically offer you three options:
- Pay the Loan Balance in Full: When student loans default, the full amount owed is due immediately. If you can afford that, you can pay the balance and be done with the debt.
- Negotiate a Payoff: You may be able to negotiate a student loan settlement for less than you owe.
- Make Monthly Payments: If you can’t afford a settlement, the debt collector may offer to let you make payments toward the balance.
If NCSLT is suing you
National Collegiate Student Loan Trust (NCSLT) has been known to file lawsuits to recover past-due debts. If you find yourself in this situation, it’s crucial to respond to the lawsuit.
Here are the steps you should take:
- Go to Court: The summons will have a date for you to attend court. Show up and let the judge know you’re ready to respond. Also, consider hiring a student loan lawyer to represent you or give you advice about available defenses.
- Defend the Lawsuit: Start by demanding NCSLT prove it owns your particular student loan. Many National Collegiate Student Loan Trust lawsuits have been dismissed due to chain-of-title and record-keeping issues.
- Get a Resolution: If the judge doesn’t dismiss the case, try to negotiate a settlement for less than you owe. The settlement can be a lump sum payment, a series of monthly payments, or a combination of the two.
How to Handle Wage Garnishment by NCSLT
If National Collegiate Student Loan Trust (NCSLT) has obtained a judgment against you, it can garnish your wages.
However, there are ways to stop wage garnishment:
- Negotiate a Settlement: You may be able to negotiate a lump-sum settlement or a payment plan. Consult with a student loan lawyer to understand your options.
- Bankruptcy: While student loans are typically not dischargeable in bankruptcy, there are exceptions. If repaying your loan would cause undue hardship, you may be able to have it discharged in bankruptcy.
Remember, dealing with NCSLT can be challenging, but understanding how it operates and your rights as a borrower can help. If you’re struggling with NCSLT student loan debt, consider consulting with a student loan advisor to explore your options.
How to Contact NCSLT
If you need to contact National Collegiate Student Loan Trust (NCSLT), you can reach out to TransWorld Systems, the company that handles its debt collection. However, keep in mind that dealing with debt collectors can be tricky, and it’s often beneficial to have a student loan lawyer on your side.
Here’s the contact information for NCSLT and TransWorld Systems:
- TransWorld Systems Contact Number: 1-800-825-6523. This is the company that handles NCSLT’s debt collection. If you have any questions about your loan or your payment status, you can call this number.
- NCSLT Address for Legal Service: If you need to serve any legal documents to NCSLT, you can send them to the following address: Wilmington Trust, Rodney Square North, 1100 N Market, Wilmington, Delaware 19890-0001.
Remember, it’s essential to keep all communication with NCSLT or any debt collectors in writing. This way, you have a record of all interactions, which can be useful if there are any disputes or misunderstandings in the future.
Who Owns the National Collegiate Student Loan Trusts?
The beneficial owner of the trusts is the National Collegiate Funding LLC, which is controlled by Donald Uderitz, the founder of Vantage Capital Group. However, the trusts are managed by a variety of entities, including loan servicers, debt collectors, and law firms. The noteholders have no role in the management of the trusts.
Conclusion
Dealing with National Collegiate Student Loan Trust (NCSLT) can be challenging, but understanding how it operates and your rights as a borrower can help. If you’re struggling with NCSLT student loan debt, consider consulting with a student loan advisor to explore your options. Remember, you have rights, and there are resources available to help you navigate this complex situation.
