By Gregory Frank, FRANK LLP.
What a Student Loan Recordkeeping Mess
A group of murky Wall Street trusts have taken millions of dollars from Americans, claiming they are owed almost $12 billion in student loan debt, even though they cannot prove it. The Attorney General of New York and other regulators have forced National Collegiate Student Loan Trusts to stop its illegal collection of debts—but consumers may still be owed money.
Most people have never heard the name “National Collegiate Student Loan Trust” until seeing it on their credit report or a letter in their mail.
In the last decade the National Collegiate Student Loan Trusts (“National Collegiate” or “NCT”) and their debt collector Transworld Systems, Inc. have targeted people across the country, accusing them of owing thousands of dollars for student loans allegedly taken out with big-name private banks in the mid-2000s.
National Collegiate and Transworld have now caught the attention of government investigators. Most recently, on September 14, 2020 the Attorney General of New York announced a settlement “holding Transworld accountable for the unlawful and manipulative student loan debt collection practices that affected thousands of New Yorkers [accused of owing money to NCT].” This action by New York follows similar recent penalties against NCT and Transworld by the Federal government’s Consumer Financial Protection Bureau (“CFPB”).
If I am a victim, are my rights protected?
Your rights and interests may not be protected by the New York or CFPB actions. Because of this, people affected by the scheme have come together to bring class-action lawsuits on their own. But suing National Collegiate is not the same as suing a regular company. National Collegiate is actually made up of 15 “National Collegiate Student Loan Trust[s],” each existing on paper as its own business entity. Each Trust has the same name except for a different number on the end—National Collegiate Student Loan Trust 2007-1, National Collegiate Student Loan Trust 2007-2, National Collegiate Student Loan Trust 2007-2, etc.
So, each Trust must be individually held accountable. Frank LLP represents the plaintiffs in three class-action lawsuits in U.S. District Court for the Southern District of New York. These actions cover 7 of the Trusts: 2004-2, 2005-3, 2006-1, 2006-4, 2007-1, 2007-2, and 2007-3.
We are investigating claims against all National Collegiate Trusts. In addition to the 7 listed above, there are 8 more Trusts consumers may have valuable claims against:
National Collegiate Student Loan Trust 2003-1
National Collegiate Student Loan Trust 2004-1
National Collegiate Student Loan Trust 2005-1
National Collegiate Student Loan Trust 2005-2
National Collegiate Student Loan Trust 2006-2
National Collegiate Student Loan Trust 2006-3
National Collegiate Student Loan Trust 2007-4
National Collegiate Master Student Loan Trust
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How do National Collegiate and Transworld operate?
National Collegiate and Transworld operate a scam that plays on American’s fear of student loan debt. Usually, National Collegiate does not have paperwork proving they are owed anything. National Collegiate never actually dealt with people taking out student loans—they were part of a Wall Street scheme. Loans were pooled together by the thousands and each pool was sold multiple times. The goal was to maximize profits immediately, not keep clear records. As a result, it became impossible for National Collegiate to prove or even know which people took out which loans (if any), how many times loans were bought and sold, and how much might be owed on loans individually.
National Collegiate and their debt collectors use bogus paperwork to collect on old student loans they don’t know that they own. If threatening letters don’t get people to pay, National Collegiate sues consumers in local court systems.
National Collegiate’s lawyers have flooded the courts with false sworn statements promising that debts can be proved, down to the penny—even though the documents needed for this are missing, or never existed.
What do I do if I have been sued by National Collegiate?
If you are sued by National Collegiate, it is important that you speak to an attorney. When consumers refuse to respond, National Collegiate and their debt collectors can obtain a default judgment in state courts anyway, often based upon false affidavits. With these judgments, they may garnish your wages or bank accounts—even if they don’t know and they cannot prove you owe them any money.
You can contact me here for a free consultation about the ongoing class actions and any claims you may have regarding National Collegiate Student Loan Trust loans.