National Collegiate Student Loan Trust Loans are a True and Utter Mess Maybe People Don’t Owe


Dear Steve,

I started receiving wage garnishments from my paycheck come to find out its National Collegiate Student Loan. They contacted me about the debt and the repayment plan. I asked them to send me a copy of the original signed loan documents and any payment history on the account so I could verify the debt.

They refused and called me several times after that and I ask them the same thing. Never got a response about the paperwork other than they didn’t/ wouldn’t give the info unless I made a payment.

Didn’t hear from them for a while after that and then they started garnishing my wages. I received no paperwork informing me of the hearing or even that the garnishment was about to take place. I do know that they are supposed to inform me in writing at least 30 prior to taking any wages. I never received and court paperwork nor was I served. I am seeking help from a lawyer who handles these things.

I saw in your article about student loans being bogus and possibly being able to fight them ( published in June of 2015 and updated on June of 2016) you mention that there was a class-action law suit against National Collegiate Trust in the state of California. Would you be able to possibly give me the lawyers information that is handling the class action law suit? I thought maybe I could talk to them to see if they could help me with my situation.



Dear Mercedes,

It sounds as if they ignored your requests and sued you, and then you lost by default. They then went on to get a wage garnishment.

National Collegiate Student Loan Trust (NCSLT) loans are a mess. I would not be surprised if they didn’t sue quickly because they don’t want people to challenge the validity of the debt. By the very nature of the way NCSLT these loans were sold, packaged, and fractionalized, it is very probable the original notes can’t be easily or ever found.

According to their own public record information the loans, from a number of originators, were then packaged and sold in even dollar shares. They say, “The offered notes (other than the auction rate notes) will be available in minimum denominations or notional amounts of $100,000 and $1,000 integral multiples in book-entry form only. The auction rate notes will be available for purchase in minimum denominations of $25,000 and any integral multiple thereof in book-entry form only.”

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The buyers of these notes, appear to have nothing more than a line item book-entry about what they purchased and not the actual note itself.

But then add in the international twist, “The offered notes will be issued in book-entry form through The Depository Trust Company, Clearstream Banking, société anonyme, Luxembourg and Euroclear.”

And while it is an evolving area, some bankruptcy courts have held that the NCSLT loans can’t be discharged in bankruptcy because TERI guaranteed them but a strict reading of the protection from discharge is if a nonprofit group like TERI funded them.

But according to the NCSLT note the loans were absolutely not funded by TERI but by the underlying commercial banks that originated them. In fact their own documentation seems to support the fact TERI was not the originator or funder of these loans but played a secondary role.

Screen Shot 2016-07-07 at 10.26.15 AM

Public documents even identify the originators of the notes as:

  • Bank of America, N.A.
  • JPMorgan Chase Bank, N.A., as successor by merger to Bank One, N.A.
  • RBS Citizens, N.A.
  • Union Federal Savings Bank

They are identified in the trust documents as the “Primary Originators” and not TERI.

But then it all gets even more messy when you see all the hands that played in the NCSLT pool.

Screen Shot 2016-07-07 at 10.30.28 AM

It seems even more far fetched that the role of TERI should play a part in preventing these loans from being discharged when NCSLT even says, “The sponsor and the trust are not affiliates of PHEAA, TERI, the owner trustee, the indenture trustee, any originator (other than Union Federal Savings Bank), the note insurer, any credit enhancement provider, the auction agent or any broker-dealer. The sponsor and the trust are affiliates of the administrator, a wholly owned subsidiary of The First Marblehead Corporation, the structuring advisor.”

You can read the trust document I’m quoting from, here.

[documentcloud url=”http://www.documentcloud.org/documents/2943132-NCSLT-2007-3-FPS.html” sidebar=false text=false]

If I had to take a best guess I would predict you had a good case to challenge the debts to begin with but could have really used some expert legal help who knew what they were doing to push back with National Collegiate Trust.

But I don’t think it is too late. I would suggest you contact an attorney who is experienced with student loan issues. You can find an attorney who is licensed in your state, here.

In California, one attorney who has experience in dealing with these loans is this guy.

I’ve been working on a bigger article on National Collegiate Student Loan Trust and from public court records it appears that when pushed they fold or significantly reduce the student loan debt owed.

My best advice would be for you to connect with an attorney in your state that you like, unwind whatever judgment they have against you, and fight the debt if possible or challenge it through a bankruptcy filing.

You should not have to repay a debt you can’t legally owe, unless you want to for some other reason.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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