What is the NCSLT and Why You Need a Consumer Lawyer

by | Mar 1, 2020 | Consumer Protection

What is the NCSLT and Why You Need a Consumer Lawyer

Most college students look to federal loans to fund their education, however, this often isn’t enough. As a result, people turn to privately-funded loans to cover their education expenses. These loans typically originate at a bank who, in turn, transfers the loan to National Collegiate Funding LLC. This company holds the loan until it is transferred into a trust. One group, called the National Collegiate Student Loan Trust (NCSLT), is made up of 15 different trusts. They hold a significant number of student loans, about 800,000, worth about $12 billion, according to a recent New York Times report.

Who is NCSLT and What Do They Do?

The NCSLT packages private student loans and sells them to investors. Being privately-backed loans typically carry high-interest rates, a lot of money is generated. Most people who have taken out private student loans have no idea that a third party, such as NCSLT, is involved. The servicer they pay their monthly bills to is not the owner of the trust. Not to mention, students don’t know where their loans end up because the NCSLT doesn’t provide documentation to show who owns the student loans.

NCLST Initiating Lawsuits

A portion of the student loans held by the NCLST, worth about $5 billion, is at the center of a massive legal dispute. The NCSLT has been aggressively suing borrowers across the U.S. who have defaulted on their loans. Most cases, which have the trust listed as the plaintiff, are problematic because they:

  • Don’t show a chain of ownership
  • Contain incomplete information
  • List inaccurate information (i.e. students in schools they never attended)

These lawsuits have been compared to the subprime mortgage fiasco that emerged after the housing bubble burst.

Why Georgia Residents May Need a Consumer Law Attorney

Student loan borrowers are vulnerable because few consumer protections are in place to help them and the NCSLT takes advantage of this. They pursue legal action to bully borrowers into paying, relying on the fact that many borrowers don’t show up to court and the trust wins by default. Borrowers who fight back usually see the cases dropped. Many judges across the U.S. throw these cases out of court due to the poor paperwork, fuzzy details of ownership, and an overall lack of transparency.

To date, the NSCLT has sued over 5,000 Georgia residents. Aside from the inaccuracy problems associated with these trusts, these lawsuits don’t align with Georgia law. Georgia’s Constitution limits the judicial power of its courts because the legal title to property held in trust must be linked to an owner. Georgia law states a trust is a non-entity and, that being the case, the NCSLT doesn’t have the right to sue Georgia residents. These NSCLT lawsuits are frivolous, improper and illegal.

A consumer law attorney will ensure your rights are protected and defend you when the NCSLT tries to bully you into paying extraordinary amounts—sums you may not even owe. For more information, contact us today.