The Consumer Financial Protection Bureau (CFPB) has proposed a $2.25 million compensation fund to assist student loan borrowers affected by improper debt collection practices. This judgment targets the National Collegiate Student Loan Trusts (NCSLT), a network of 15 investment trusts that purchase and service private student loans.
The CFPB’s action aims to hold NCSLT accountable for aggressive and misleading collection tactics, providing long-overdue relief to borrowers unfairly pursued for debts.
Unlawful Debt Collection Practices
According to the CFPB, NCSLT and its subservicers engaged in widespread misconduct, including:
- Filing lawsuits without proper documentation to prove loan ownership.
- Submitting false affidavits, where signers falsely claimed to have personal knowledge of the debts.
- Pursuing collections on loans past the statute of limitations, making those debts legally uncollectible.
CFPB Director Rohit Chopra called NCSLT a “web of investment trusts” that failed student borrowers, particularly during the COVID-19 pandemic. The proposed compensation aims to correct these violations and ensure that affected borrowers receive some form of justice.
CFPB Judgment Provide
If approved by the court, the CFPB judgment would require NCSLT to:
| Relief Provided | Details |
|---|---|
| $2.25 Million Fund | Compensates borrowers harmed by improper collections. |
| Lawsuit Dismissals | NCSLT must withdraw or dismiss invalid debt collection lawsuits. |
| Cease Wage Garnishments | Borrowers will no longer have wages garnished for invalid debts. |
| End Unlawful Collection Actions | No more attempts to collect on time-barred or unverified loans. |
Who Qualifies?
Not all NCSLT borrowers will be eligible for relief. The compensation fund is only available for those:
- Whose loans were pursued without valid documentation.
- Who were sued for debts after the statute of limitations had expired.
Unfortunately, this relief does not include broad loan forgiveness or cancellation, which generally applies only to federal student loans under specific programs.
Next Steps for Borrowers
The CFPB has not yet provided a detailed claims process but urges potentially affected borrowers to:
- Visit the CFPB website for updates.
- Call (855) 411-CFPB to check eligibility and know more.
- Monitor court approval of the judgment, as the compensation will only be available once finalized.
This $2.25 million compensation fund could bring long-awaited relief to borrowers wrongfully targeted by NCSLT. While it won’t erase student loan debt, it does represent a step toward accountability for deceptive collection practices.
For affected borrowers, staying informed and acting quickly when the claims process begins will be essential to receiving compensation.
FAQs
What is the CFPB’s judgment against NCSLT?
It proposes a $2.25 million fund to compensate borrowers harmed by improper debt collection.
Who qualifies for compensation?
Borrowers whose loans were pursued without valid documentation or past the statute of limitations.
Does this judgment provide loan forgiveness?
No, it only provides compensation for improper debt collection.
What relief does the CFPB order provide?
Dismissed lawsuits, halted wage garnishments, and monetary compensation.
How can borrowers check their eligibility?
Visit the CFPB website or call (855) 411-CFPB for updates.
