To pay for college many students borrow money from the federal government or a private lender. Student loans made or guaranteed by the federal government usually offer the best terms and repayment plans. For example, some payment plans for federal student loans are tied to a borrower’s income and offer forgiveness of the remaining debt after a borrower makes payments for 20-25 years. Federal student loans also offer subsidized interest rates and more options to borrowers who default on their loans. The problem with federal loans is that there is no statute of limitations on collection, default might result in wage garnishment without court intervention and the government can offset tax refunds and benefits like Social Security.
Private student loans, made by a private lender without any involvement of the federal government, don’t come with the same benefits as federal loans. For instance, private lenders aren’t required to offer payments based on a borrower’s income or to forgive debt. Some private lenders might make favorable payment plans and settlements but there are no laws forcing them to do anything helpful for a borrower. Most private loans also require a co-signer.
Many of the lawsuits collecting private student loans in Iowa are filed by one of the National Collegiate Student Loan Trusts. These trusts contain thousands of private student loans sold by the original lenders to National Collegiate Funding and then to one of the trusts. Not only are the loans bought and sold, but the debt collection agency trying to collect the loan has probably also changed.
When a debtor is sued, the party filing the suit has to prove it owns the debt. If the company suing doesn’t own the debt then it is not the real party to bring the lawsuit. This is an important legal rule. If the company suing a borrower can’t prove ownership of the debt, someone else could sue the same debtor the same debt sometime in the future.
In the lawsuits filed by one of the National Collegiate Student Loan Trusts, the trusts are often unable to prove they own the student loans. They can’t prove the borrower’s loan was sold to the trust or that the loan balance being collected is correct. The original loan documents may be missing and the trusts may be suing after the statute of limitations has passed.
If you have a private student loan being held by one of the National Collegiate Student Loan Trusts and want to know your rights, contact the Nancy L. Thompson Law Office, P.C.