Tens of thousands of borrowers will likely see their private student loan debt erased due to a technicality- missing paperwork and incomplete ownership records. One of the largest owners of private student loans in the U.S., The National Collegiate Student Loan Trusts is at the center of a legal dispute involving at least $5 billion in student loans, the New York Times reports.
Judges have dismissed dozens of lawsuits filed by the lender against student borrowers due to the lack of documentation proving the loans are even owed. The National Collegiate Student Loan Trusts, which includes 15 trusts that hold 800,000 private student loans, has brought tens of thousands of lawsuits in the past five years against borrowers who have fallen behind on their payments. The trusts hold loans totaling $12 billion and more than $5 billion of those loans are in default. The mix up occurred when the loans, which were originally made by banks, were sold to lenders and the ownership records were lost in the process.
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