$5B in Student Loan Debt Could Be Gone Thanks to Missing Paperwork

Private Lenders Struggle to Prove Ownership of Student Loans in Court

National Collegiate have brought tens of thousands of lawsuits in the last five years and have filed more than 800 so far this year. Court filings show that more than $5 billion of that debt is in default, the paper reported, but important paperwork has gone missing for numerous loans involved as they were passed between multiple private companies.

The National Collegiate Student Loan Trusts, which holds 800,000 private loans and is one of the country's largest owners of private student loans, is at the center of the legal dispute, the Times reported.

When borrowers do show up to fight, the cases are not so straightforward.

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The paperwork documenting the chain of loan ownership disappeared as the bank loans were bundled together and sold to investors through the securitization process.

Read the report here via The New York Times.

Judges have already dismissed dozens of lawsuits against former students, essentially eliminating their debts because of the paperwork problem, according to the Times.

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Missing paperwork could wipe out billions... "We want no part of that". The loans are not guaranteed by the federal government, which remains the primary lender in America, and lack consumer protections like income-based repayment options.

More than half of those with student debt would prefer monthly contributions towards their loan debt rather than health care benefits, and almost 48% would choose student loan assistance over a 401 (k).

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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