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To help the cause, I am sending this email to you. This morning, I read one of your blog posts regarding student loan securitization. In it, you stated:

“If you borrowed money directly from the Government for a student loan then it is not likely, based upon the information I have, that the loan was securitized or sold into secondary markets. But the jury is on completely in on that.”

This prompted me to check my own student loans and I found the following:

– My loans originated with the federal government (DOE).
– In 2006, Deutsche Bank, acting through Academic Loan Group (now deceased, more or less), consolidated by federal student loans on the basis of an “Eligible Lender Trust Agreement”.
– Since 2006, Great Lakes has been my “servicer”.
– Phone calls to Academic Loan Group are answered “Nimbus 1 Financial”.
– Research this morning showed several similar “Eligible Lender Trust Agreement” SEC filings that ended with the student loan being ultimately transferred to a Trust 2006-X (or something like that)
– Putting it all together, it is a very similar (though the terminology is a bit different) to the mortgage scheme.
– I don’t know all the “Depositor” or final trust — yet — but it is clear that both exist and that Great Lakes/Academic Loan Group/Nimbus 1 Financial/X is the servicer under the student loan equivalent of the pooling and servicing agreement.

It looks like jury is leaning. I hope this helps others and spurs them to look into their student loan debt as well. The more fronts the big banks must fight, the weaker their position grows (Sun Tzu, paraphrased).

Spencer Brasfield, Esquire
423.967.8034 (t)
888.769.5650 (f)

13 Responses

  1. I don’t think you’ll find anyone who will argue that they’re a good thing, but for many they are a necessary evil. Much like credit cards, the student loans are being handed out at colleges to children who don’t understand the consequences of them. And the financial aid folks push them to take the maximum amount offered, even doubling tuition amounts for living expenses. I can remember many peers who were driving around in new cars using student loan money.

  2. tnharry/carie- if student loans are nondischargeable in BK proceedings, then what is the difference between secured and unsecured? They never go away, they are just “secured” by an individuals’ wages, which are garnished forever. with all the junk fees, late charges, document review fees, alot of the loans will triple quadruple or more. Not a good deal, especially if the college grad has to work in a big box store for $7.75/hr.

  3. @carie – i appreciate your daily recitation of your mantra, but i don’t know of anyone who has claimed that student loans are anything other than unsecured………

    and as e tolle mentioned – they have a whole different set of rights than mortgage companies hold. stop paying and they’ll garnish without a suit or judgment and they’ll seize any tax refunds to which you may be entitled.

    and of course they were “loans”, not collection rights. tuition and books cost a certain amount, the borrower either didn’t have or didn’t want to use cash, and obtained the “loans” to cover the tuition. this situation seems more clear than the sub-prime refinance scenario you discuss. they may have become more difficult to collect during the securitization scheme, but you just can’t recite your unsecured chant and wiggle out of this one.

  4. @Rabi

    Did you see my post below yours? Direct Loan too. And Mama Bear is involved…

  5. Last week I was told I have TWO servicers now for my student loans.
    I was denied additional funds to finish school now because of my less- than-perfect credit because of the foreclosure!! I spent so much time trying to save our home that I got behind in my studies. So I am scratching my head trying to figure out how to finish.
    Jeeeeeeezzzzz !!

  6. Those student loans bastards.My kid jhad been paying and after 5 years , when she asked for the documents to file for interest on her income taxes, they told her she had’nt started paying. Shocker. Well now…. papa bear IS going to get involved. P.S Direct Loans is the name of the entity.

  7. @E.Toile,

    There’s got to be something not yet securitized no one has thought about. I need a few bucks. Any ideas? How can we securitize Grand’ma?

    Makes me want to throw up.

  8. @ carie, yeah, that’s the real reason I’m involved with OWS, the fact that I’m sleeping in a cardboard box disguises the fact that it’s not by choice! 🙂

    Here’s the next hedge fund dump….clunker securitizations. Soon they’ll figure out how to securitize our kids spent diapers….

    Buy Here Pay Here is being boosted by one of the sophisticated financial strategies that drove the nation’s recent housing boom and bust: securitization.

    Loans on decade-old clunkers are being bundled into securities, just as subprime mortgages were a few years ago. In the last two years, investors have bought more than $15 billion in subprime auto securities.


  9. E.Tolle—you can’t get blood out of a turnip…what if you don’t have a job OR a checking account??? Tent cities…here we come…wait a minute—isn’t that what OWS is???

  10. My kid was paying her student loan regularly and had about $16,000 left to go. The outfit is called “Direct Loan” and allowed her to combine a Sallie Mae and a Leaf Loan into one payment three years ago. She works on a ship and does everything online (difficult to get to the P.O. from sea). In September, she attempted to pay online, as usual. The system wouldn’t take her payment. She called and was told that the system no longer accepted online payments. She asked to pay by phone and was told that the “system is down”. She called again a few days later to pay by phone and was told that, again, the “system is down” and to call again later. She told them that her payment was due on October 1st and that she was going to be late if they didn’t take the payment right away. They still refused. She called on October 1st and the number no longer existed. She went online to check her account and it now states that the loan was paid off. Zero balance, no idea who, what, where, when or anything. We e-mailed and have never received any answer.

    My suspicion is that the account was sold to some collection agency or “securitized”. We are preparing for the fight of her life. It is one thing to go after me, her mother. it is largely another to go after my kid and her future. I told her to check her credit report and see whether there is any kind of a write off on it or any derogatory information.

    Between my own legal action for my house and hers for her student loan, this will never end. The thing is: it started right about the time everything about MERS started coming out in the open. I would suggest that, as the mortgage debacle was found out, banks rushed to put their hands on whatever else they could quickly “securitize” either to recover some of their losses in get-rich-quick investments or simply to complete and finalize the tearing down of America.

    If I do nothing else in my entire life, I will fight those battles. Back to “document, document, document”.


  11. It is called ” The GSE Business Model” and is exactly the same as the “mortgage scheme” as you call it.

  12. Yes, but stop paying student debt and watch the garnish….BAM! Your checking account will be as empty as Obama’s promises in just under three weeks start to finish. Why? Because they can.Thank your creditor friendly legislature near you. Whores one and all.


    They did the SAME DAMN THING with student “loans”…NOT “LOANS”.

    Collection rights sold over and over…and over.



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