A major student loan creditor, National Collegiate Student Loan Trusts and student loan debt collector, Transworld Systems settled with the Consumer Financial Protection Bureau (CFPB) and agreed to stop collecting on certain loans and pay more than $21 million in penalties and refunds to borrowers. The creditors had attempted to collect or sued alleged student loan borrowers for loans that were either uncollectable or that the collectors could not prove they owned. This is a big win against student loan lenders who engage in poor business practices or take advantage of unsuspecting debtors.
While many student loans are not dischargeable in bankruptcy, this case sends a clear signal that student loan debtors still have rights against big banks and should fully explore their legal options when dealing with a creditor with suspect claims or unenforceable claims.
The full press release from the CFPB with includes the complaint is here: LINK