Paperwork Errors Could Wipe Out $5B in Student Loans

Randall Padilla
July 19, 2017

The amount of private loans is increasing, topping $6 billion in 2015.

Billions of dollars in student loans may be wiped out for tens of thousands of borrowers in the United States because a lender didn't keep track of the paperwork verifying ownership of the loans, according to The New York Times.

National Collegiate Student Loan Trusts, one of the nation's largest owners of private student loans, is squarely in the middle of a controversy involving missing paperwork, lawsuits, and at least $5 billion in student loan debt that may be wiped away.

Judges have recently thrown out lawsuits brought by the trusts in New Hampshire, Ohio and Texas.

As much as $5 billion owed on private student loans could be dismissed due to lost or incomplete paperwork.

Some borrowers say the company has sued them trying to collect on high-interest loans that they never even took out. At least $5 billion in loans is now being disputed in court, as private creditors, who have pursued lawsuits against against student loan borrowers that have failed to meet their payments, have struggled to produce paperwork that prove who owns the loans.

The 15 trusts have led a serious offensive to track down the borrowers who fall behind on their student loan payments. Disorganized or missing paperwork has made it hard for National Collegiate to prove it does indeed own the defaulted loan it's demanding repayment on.

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.

Other reports by AllAboutTopnews

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