More Arguments Chip Away at National Collegiate Student Loan Trust Bankruptcy Dischargeability

Student loans under National Collegiate Student Loan Trust (NCSLT) remain a mess on so many levels. Just looks at these past articles.

But arguments by attorneys Austin Smith and Christopher Bush filed in an Adversary Proceeding, seem pretty compelling on why the NCSLT loans should be allowed to be discharged in bankruptcy.

The arguments put forward by NCSLT are that the loans are not dischargeable in bankruptcy because the loans were somehow funded and guaranteed by TERI, a non-profit.

But as the Plaintiff filing and judge points out, there is a fundamental problem if TERI funded the loan then how can they guarantee the loan they funded. And if TERI funded the loan then why did the money not come from them?

When it comes to the guaranty agency TERI, there also seems to be some concern the guaranty company is not an IRS approved non-profit in good standing.

The last non-profit tax return I could find for The Education Resources Institute (TERI) is from 2013 where they list $0 in assets. – Source

On this tax return, TERI states it underwent “a liquidation, termination, or significant disposition of net assets during the year.”

A current search of the IRS Tax Exempt Status website can not find a listing for TERI.

On May 15, 2015, TERI was dissolved and assets were transferred to “Massachusetts Higher Education Assistance Corporation (doing business as American Student Assistance).” – Source

The last public tax return I could find for Massachusetts Higher Education Assistance Corporation is here.

The court filing in the Adversary Proceeding that I find interesting are this and this.


Steve Rhode
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