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Article snippet: One of the nation’s largest holders of private student-loan debt must refund millions of dollars to borrowers and temporarily stop many of its collection activities, under a settlement with federal regulators announced on Monday. The creditor, the National Collegiate Student Loan Trusts, holds $12 billion in student loans that were originally made by banks. In Monday’s settlement with the Consumer Financial Protection Bureau, the trusts agreed to pay nearly $19 million in penalties and borrower refunds — and could be on the hook for millions in additional payments and forgiven loans. A debt collector that National Collegiate hired, Transworld Systems, will pay an additional $2.5 million. The trusts “sued consumers for student loans they couldn’t prove were owed and filed false and misleading affidavits in courts across the country,” said Richard Cordray, the consumer bureau’s director. As part of the $19 million pact, National Collegiate agreed to set aside $3.5 million for refunds to 2,000 borrowers. Those borrowers had made payments after being sued over loans that were legally uncollectable, either because the statute of limitations had passed or because National Collegiate lacked the documentation needed to collect the debts in court. But many more borrowers may eventually have their debts set aside. The consumer bureau ordered National Collegiate to hire an independent auditor to review all of its 800,000 loans. The trusts will be prohibited from collecting ... Link to the full article to read more