Many former college students who default on their private student loans find themselves facing a lawsuit brought about by the National Collegiate Student Loans Trust; but who are they and what role do they play in the student loan process?
Student loans are something that roughly every college student has considered taking out or had to take out while in school. This is usually the last resort for some, as the funds in the form of grants, awards, and scholarships are just not enough. Meanwhile, a college education wouldn’t be possible without student loans for many other students. In 2012 alone, 66% of public school attendees and 74% of private school attendees had student loans. While the U. S. Department of Education handles all federal student loans, numerous entities are involved in issuing and collecting on private student loans.
The Journey of Private Student Loans
Private student loans may seem like they come directly from the institution into your pockets, but the process is not that simple. In all actuality, with several entities and numerous transactions involved, it can be highly complex.
Originator
Banks are some of the most commonly utilized institutions for private loans. These include:
- Bank of America, N.A.
- RBS Citizens, N.A.
- JPMorgan Chase Bank, N.A.
- Union Federal Savings Bank
- Charter One Bank, N.A.
The loans begin with these institutions, which is why they are referred to as the “Originators” in the student loan securitization system.
Depositor
The next step in the journey of your private loan is with the “Depositor”. Your private loan is transferred to them shortly after you receive the funds. They do not take any action with it but merely hold onto it until it’s ready to be deposited into the trust. The entity that holds this position is known as The National Collegiate Funding LLC.
Servicer
Neither the Originator nor the Depositor is responsible for collecting on your student loan; the “Servicer” holds that responsibility. They send out the monthly bills and manage the accounting. The Servicer receives payment for their services from the trust that owns the loans.
The Role of the Trust
There are numerous versions of the National Collegiate Student Loan Trust, each of which is identified with a specific number. Once your loan finds its way into one of these trusts, it is packaged and sold to investors as bonds. The investor enters an agreement with the trust that entitles them to the funds that come from the borrowers. The more payments made by the borrowers, the more money the investor makes. The more individuals default on their loans, the less money investors make.
Being that investors are involved, the National Collegiate Student Loan Trust is not hesitant to sue students who default on their loan payments. However, the law states that the entity pursuing legal action must have legal standing to sue you, and with so many parties involved, it can be challenging to identify who exactly owns your loan. This is when having the legal counsel of an Illinois debt relief attorney can be to your benefit.
The attorneys at Benveniste Law Offices can refute the claims of the National Collegiate Student Loan Trust and have them prove every element of the lawsuit. Don’t assume that merely because you took out the student loan and defaulted on payments that they have the right to sue you. Allow us to go to work for you! Contact us today for a free case evaluation.