National Collegiate Trust

Is National Collegiate Trust a Federal Loan?

Is National Collegiate Trust a federal loan? First of all, if you’ve never taken out a private student loan and then sued for defaulting, then you probably don’t even know of this organization or what they do. However, chances are since you’re reading this, you have previously taken out a student loan and the National Collegiate Trust is now suing you. 

Is National Collegiate Trust a Federal Loan Officially?

Is National Collegiate Trust a federal loan associated with the federal government in any official manner? Here’s the thing, the National Collegiate Trust isn’t a federal loan, a lender, guarantor, or even a servicer of your loan. It’s not connected to the federal government or any universities across the country for that matter.

What is the National Collegiate Trust?

Is National Collegiate Trust a federal loan or any type of loan at all? If you took out a private student loan then most likely the National Collegiate Trust is involved with your loan but it’s not a loan itself. The trust is actually a string of trusts that are comprised of several private student loans put together as a package and then sold as a means of an investment vehicle for other investors. 

Basically, they purchase the private student loans and then pursue the judgments against the individuals with the debt. They may use unethical methods and have been known to harass debtors especially if you don’t take the opportunity to challenge their claims in court. 

Here’s how the process goes:

It’s no secret that the cost of getting a degree is steep. It’s no wonder Millennials are more likely to have higher debt. If you’re looking for ways to fund your college education in the United States, you may try to qualify for a grant or a scholarship that does not require repayment. If you strike out there, you most likely will turn to federal student loans. These loans come from the U.S. Department of Education and funds are limited. 

If you are unable to secure enough funding, then you might consider getting a private student loan from a local bank as a way to make up the difference not covered by grants, scholarships, or a federal loan. Some of these banks include:

  • Bank of America, N.A.
  • Charter One Bank, N.A.
  • JPMorgan Chase Bank, N.A.
  • RBS Citizens, N.A.
  • Union Federal Savings Bank
  • Wells Fargo Bank, N.A.

What Happens to the Loan?

If you obtain a loan from one of these banks, then is National Collegiate Trust a federal loan or a private loan? It’s neither because it buys the debt in an attempt to make a profit off of it. These above banks are referred to as the loan originators because you borrowed or co-signed a private student loan from one of these institutions. 

The loan begins with the bank and is then transferred to The National Collegiate Funding LLC, which is an entity for holding on to the loan until it’s moved into the trust. The National Collegiate Funding LLC is known as the Depositor because it does nothing except take in the funding from the loans and then deposits them into the trust.

Now, someone has to collect the money on the private student loans. This company is referred to as the Servicer. This company sends students their bills, collects, and handles all of the accounting that goes along with taking care of the student loan payments. This company is then paid by the trust that owns the loans for taking care of the necessary work to collect the funds for the private student loans.

How Many Trusts Exist?

You would think there is only one National Collegiate Student Loan Trust, but you would be incorrect to assume that. There are many in existence. In fact, trusts are comprised of most likely thousands of private student loans. After the private student loans are transferred from the National Collegiate Funding LLC into the trust, these bonds are sold to a number of investors. 

Each one can be identified by a unique numeric code. They permit each investor to receive a specific amount from the trust determined by the amount of money being paid by the private student loan borrowers. For example, if a higher percentage of loans in the trust are paid according to their agreement and on time, then the investor will receive a better return on their investment. 

However, if the loans go into default, then the investor makes far less on their investment. This may give you the opportunity to settle your debt of far less than the entire private student loan balance or even challenge the legitimacy of your loan.

Entering Default

If your private student loan payments have gone past due and you have defaulted on your loan, then the operators of the trust most likely will hire another company to send out collection letters or contact you via phone to attempt to collect on your debt. 

They may attempt to sue you for defaulting on your private student loan debt but in many instances, they are unable to produce the original signed contracts or promissory notes showing that you owe the debt in the first place. Additionally, if you find they have entered your debt on your credit report, and do not have any proof, then they will be forced to remove it from your report in accordance with the Fair Credit Reporting Act.

What Should I do if I’m contacted?

If someone from the National Collegiate Trust contacts you, then you need to contact an attorney specializing in student loan debt. If you do not act prior to a default judgment, then it will be too late. There are numerous cases that have been upheld against the National Collegiate Trust mainly because they were unable to prove their case against the debtor. 

The biggest advantage this group has against debtors is most of them do not understand the legal requirements behind collecting on a student loan debt. Speak with a knowledgeable student loan debt lawyer for a free case evaluation before you become locked into an unfair judgment. Contact us by calling, (954) 765-3166 or emailing, today!

Published by
Chad Van Horn

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