FILE - NY Columbia University

The Library of Columbia University is seen in October 2016 on the Upper West Side of New York City.

(The Center Square) – Student loan borrowers will be released from legal action resulting from unlawful practices by debt collectors, the New York attorney general’s office announced recently.

The protections apply to thousands of students who defaulted on loans, a news release from the office of New York Attorney General Letitia James said.

The attorney general’s office investigation found that Transworld Systems, Inc., one of the biggest debt collectors in the country, violated state and federal consumer protection laws while performing services on behalf of the National Collegiate Student Loan Trusts. Transworld’s practices included false and deceptive statements and filing lawsuits beyond the statute of limitations.

Transworld has agreed to change its debt collection practices and will pay $600,000 restitution as part of the settlement agreement.

“Today, my office is holding Transworld accountable for the unlawful and manipulative student loan debt collection practices that affected thousands of New Yorkers,” James said. “For years, Transworld used fraud and deception to pursue defaulted borrowers and obtain default judgments on a massive scale. Our investigation not only is putting hundreds of thousands of dollars back into the pockets of student borrowers, but brought about concrete changes by Transworld, which is now finally providing consumers struggling with defaulted student loan debt all the protections required by law.”

Among the changes Transworld has agreed to implement:

• “Cease identifying the National Collegiate Student Loan Trusts as ‘original creditors,’ stop identifying documents prepared for litigation as ‘redacted,’ end the obfuscating of entities involved in originating National Collegiate Student Loan Trusts loans, and discontinue the use of misleading language in communications with borrowers by implying that they cannot sue due to the expiration of the statute of limitations"

• Increased training for Transworld staff members.

• Agreeing not to file lawsuits after the statute of limitations has expired

• Voluntarily dismissal of all lawsuits filed between Jan. 1, 2018, and the date of the settlement.