Billions in student loan debt may be wiped away over missing paperwork

As Least $5 Billion Of Private Student Loan Debt May Be Erased Because Of Missing Paperwork

As Least $5 Billion Of Private Student Loan Debt May Be Erased Because Of Missing Paperwork

But according to a New York Times report this week (paywall), the trusts have been failing in court to produce the legal paperwork showing that they actually own numerous $5 billion in loans now in default, meaning that judges across the country have already dismissed dozens of the trusts' lawsuits against students. Judges throughout the US, including recent cases in Ohio, New Hampshire, and Texas, have thrown out lawsuits by National Collegiate because the trusts could not prove they owned the debt they were trying to collect.

National Collegiate Student Loan Trusts, one of the country's largest owners of private student loans, is locked in a prolonged legal battle with borrowers who have fallen behind on their loan repayments.

Who would have thought that the bureaucratic hellscape that makes student loans such a nightmare to navigate would eventually work in your favor?

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Judges have recently thrown out lawsuits brought by the trusts in New Hampshire, Ohio and Texas. According to DealBook's review of court records, "many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation". Those 800,000 private student loans are worth $12 billion, and more than $5 billion of that debt is in default.

The New York Times reported Monday that the missing paperwork could result in tens of thousands of delinquent borrowers having their private student loan debt cleared. The loans were originally sold by banks and then purchased by National Collegiate, though ownership records were lost in the process.

National College Student Loan Trusts is an umbrella name for 15 trusts that hold a combined total of 800,000 private student loans. If it's a loan we're owed fairly, we want to collect.

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