U.S. President Donald Trump looks on, as he signs executive orders in the Oval Office at the White House in Washington, D.C., U.S., April 23, 2025.
Leah Millis | Reuters
The Trump administration has dismissed the federal government’s lawsuit against National Collegiate Student Loan Trusts, abandoning a $2.25 million proposed settlement that could have gone to harmed borrowers.
The Consumer Financial Protection Bureau filed a lawsuit in 2017 against the trusts, which it described as a group of 15 “securitization trusts organized under Delaware law that acquire, pool, and securitize student loans, which they then service.”
The CFPB accused the trusts of bringing improper debt collection lawsuits against private student loan borrowers, suing consumers for debts the trusts couldn’t prove were owed and attempting to collect on debts after when they were legally allowed to do so.
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The $2.25 million settlement between the government and the trusts was expected to go to impacted borrowers.
But the CFPB under President Donald Trump filed the voluntary dismissal last Friday.
The Trump administration has also moved to gut the CFPB, most recently attempting to terminate as many as 1,500 of the bureau’s 1,700 employees. A judge has stopped those cuts.
In February, the CFPB also dismissed its lawsuit against the Pennsylvania Higher Education Assistance Agency. The bureau sued the student loan servicer in 2024, accusing it of illegally collecting on student debts that borrowers had discharged in bankruptcy and sending false information to credit reporting companies.
The CFPB and White House did not respond to a request for comment. Neither did the Pennsylvania Higher Education Assistance Agency or counsel for the National Collegiate Student Loan Trusts.