In order to win a student loan lawsuit, the lender needs to prove that it owns the debt and that the amount claimed is correct.
That first part, the lender’s ability to establish title to the student loan debt, is known as standing.
Unless the plaintiff is the same lender you borrowed the money from, it must prove purchase of the loan in order to win the case.
For private student loan companies such as Navient (click here for an article explaining the relationship between Sallie Mae and Navient), this is a major headache. That’s because most of the time, you’re not being sued by Navient – you’re being sued by someone else.
In order to win the case, Navient has to prove that it has legal ownership of the loan.
That would be a problem for most corporations – but for private student loans, it’s even tougher because they go through a number of transfers, and sometimes re-transfers.
Follow Your Private Student Loan
For example, if you have a private student loan from Navient, your actual lender may have been one of a number of entities including:
- Sallie Mae Bank;
- SLM Education Credit Finance Corporation;
- NM Education Loan Corporation;
- SLM Education Credit Management Corporation; or
- SLM Education Loan Corp.
Some private student loans are held by the lender, but many others are transferred to wholly-owned subsidiaries of Navient with names such as:
- VG Funding LLC;
- Blue Ridge Funding LLC;
- SLM National Funding LLC; and
- VL Funding LLC.
The loans are then transferred to SLM Funding LLC, which is yet another wholly-owned subsidiary of Navient. SLM Funding LLC holds the loan for a few minutes and then transfers it to a company with a name such as:
- Navient Private Credit Student Loan Trust
- SLC Student Loan Trust
- SMS Student Loan Trust
- SLM Student Loan Trust
This is known as securitization, the process of taking a group of assets that otherwise can’t be sold for immediate cash and, through financial alchemy, transforming them into a security that can be sold on the financial markets.
You Think You Owe the Money to Navient (But You Don’t)
That security, known as a trust, hires a company to send you bills and collect your payments. That company, known as a servicer, is usually Navient.
Navient sends your money to the trust that owns the loan, and the trust divides the money among the investors.
It’s easy to see why you think you owe money to Navient, but that’s not the case. Instead, you owe money to this shadow entity you’ve never heard of.
And that’s the company that will ultimately file a lawsuit against you.