What connection does this "trust" have to my student loan?
These trusts are not lenders or guarantors. National Collegiate Student Loan Trust is a trust, or series of trusts, that contain private student loans packaged and sold as investment vehicles. This process is called "securitization." Stated another way, it's the repackaging of these loans into "asset backed securities" for investors who will receive interest payments, like a bondholder. Pooling these loans together enables the loaning agencies to sell interests in these loans to investors in order to generate cash. Such selling of these pooled loans also spreads the risk of default amongst the investors. This process, in theory, may also lead to more cash available for loans to more students.
But because of rising student loan borrowing and the rising average student-loan balance, some are worried that the student-loan market may implode like the sub-prime mortgage market did recently. But unlike mortgaged-backed securities, the student loans have no collateral to seize upon to help investors recover some of the investment. Others argue that the better credit worthiness of student-loan borrowers reduce risk of these packaged loan investments.
How did the trust get my loan?
With regard to National Collegiate Student Loan Trusts, the loans are "originated" by private banks such as JP Morgan Chase Bank, N.A. or Bank of America, N.A. Once the funds are dispersed, the loan is transferred to The National Collegiate Funding, LLC, which then transfers ("deposits") them into a trust; That trust being National Collegiate Student Loan Trust, which now acts as "servicer" who engages, contacts and/or sues the student to collect the loan.
Different variations of this trust include:
- National Collegiate Student Loan Trust 2007-3
- National Collegiate Student Loan Trust 2007-2
- National Collegiate Student Loan Trust 2006-3
Each trust holds a bucket of private student loans that could be valued over $1 billion. The trust then sells bonds to investors who receive distributions based on the amount of student-loan payments coming in. The pooling of the loans is supposed to balance the risk in the buckets.
What must this trust prove in court?
If and when you contact our office, you've likely been sued by one of these trusts. The individual trust must be identified correctly in the caption. But these trusts may lack particularized proof showing a transfer of the loan at issue from the bank to the Depositor to the Trust. The paper trail appears to be problematic and burdensome for the lawyers who are hired to bring lawsuits on behalf of these trusts.
The basic elements that a plaintiff must prove to win a student loan case are 1) a signed promissory note; 2) that is in default; and 3) that is now in the hands of the entity suing you. Given the pooled transfers of your loan, these trusts may lack a clear presentation of these elements, which could increase your bargaining power.
In New York City and the surrounding area, the law firms representing National Collegiate Student Loan Trust are usually Forster & Garbus, LLP and
Rubin & Rothman, LLC.
No matter what, do not ignore any communication from National Collegiate Student Loan Trust. You could lose important rights — and bargaining power — once a judgment is entered against you. As with regard to any debt, you also want to make sure that your credit health is as best as it can be.
Call or write us for a free consultation.