Private Student Loan Debt Held by National Collegiate Trust May be Wiped Out
National Collegiate Trust is an umbrella name for 15 trust that hold 800,000 private student loans totaling $12 billion. More than $5 billion is in default. The trusts, usually represented by Transworld Systems, have aggressively pursued delinquent borrowers. The NY Times today reports that billions of the debt might be wiped away because National Collegiate Trust often lacks the paperwork to show it is entitled to collect on the debt. Judges throughout the country have dismissed lawsuits by NCT and Transworld because required documentation was missing.
NCT’s loans were made to college students more than 10 years ago by dozens of banks and then bundled together by a financing agency and then sold to investors in a process known as securitization. The loans were not guaranteed by the federal government. The loans often were made a very high interest rates.
Students sued for collection of these debts would be well advised to retain their own attorney.