Student loans have become a focal point of consumer protection experts across the country. The total debt owed by borrowers, now totals more than the entire nation’s credit card debt. Private student loans create more of a challenge for borrowers than federal loans because debt relief for such loans is limited. Federal loans have many different repayment options while private loans do not. Private loans cannot be automatically discharged and most companies are unwilling to offer borrowers plans to help keep them out of default or take them out of default as federal loans do.
One of the main players in the private student loan market is National Collegiate Student Loan Trust (NCT). The company is the assignee of thousands of securitized private student loans and files thousands of lawsuits all across the country. In some states, NCT has been known to file more than one lawsuit per day such as in New York. Most of the time these lawsuits demand payment that is higher than what the borrower can afford and much higher than what was originally taken out due to fees and interest. This scenario often leads to default and litigation. These lawsuits also often involve co-signers, such a parents or grandparents who are attached to the potential default and are negatively affected by it.One weakness that attorneys have found in lawsuits brought by NCT is legal standing. NCT does not have contractual relationships with the borrowers it sues. The company acquires loans after multiple assignments. New York state law requires a tremendous amount of documentation to assign securitized student loans multiple times and therefore, it can sometimes be difficult to determine who is the actual owner of the loan. If it can be determined that NCT is not the owner of the debt, the lawsuit can be dismissed for a lack of standing.
NCT is required to prove that it owns the loan before the court can order the borrower to pay an amount. In some cases, NCT’s lawsuits have been dismissed for failure to prove ownership of the debt. In hundreds of others that we have handled for clients, favorable settlements have been reached with NCT.