Over the last few years, National Collegiate Student Loan Trust has brought hundreds of debt collection lawsuits against Minnesota citizens. If you've been sued by National Collegiate Student Loan Trust, here's what you need to know.
Who is National Collegiate Student Loan Trust?
NCSLT doesn't lend money. It's merely a series of trusts that contain a pool of hundreds of private student loans. The loans have been packaged together and sold as investment vehicles. If this sounds similar to the way mortgages are handled, it should.
There are several National Collegiate Student Loan Trusts. They are typically named with the year the loan was originated. For example, most of the cases I'm seeing lately involve National Collegiate Student Loan Trust 2007. I've also seen loans held by National Collegiate Student Loan Trust 2005 and 2006.
How do the student loans get into these trusts?
First, a bank issues a student loan to help someone pay for college. The bank then sells the loan to an entity called National Collegiate Student Loan Funding. This entity is merely a holding company that deposits all of the student loans into the individual trusts. Once the loans are packaged into trusts, bonds are sold to investors. The investors receive money based on the amount of money collected from student loan borrowers.
The trusts themselves don't actually service the loans and collect the payments. They hire someone, called a servicer, to do that for them. In most of the cases I've seen, the servicer is U.S. Bank.
Another interesting element of these trusts is that the loans are partially guaranteed. This means that the investors basically have an insurance policy when student loan borrowers aren't able to make payments. If the borrower defaults, the guarantor steps in and covers the payment.
What should I do if I'm sued by National Collegiate Student Loan Trust?
In my experience, it's difficult to negotiate a reasonable payment plan with National Collegiate Student Loan Trust. They demand that the borrower hand over a bunch of sensitive financial documents, such as tax returns and pay stubs before they'll even consider a settlement offer. And the offers that they make are rarely affordable. To avoid this frustrating experience, I've been advising people to fight back against the lawsuit by answering it and challenging NCSLT's proof in court.
National Collegiate Student Loan Trust can usually prove that they acquired a pool of loans from the originating bank. But, in my experience, they rarely have sufficient proof that they own your loan. There are other ways to challenge the sufficiency of their evidence and, depending on the specific facts involved, you may have other defenses as well. We've been successful getting NCSLT cases thrown out of court and have negotiated very favorable payment plans by pushing back.