Missing paperwork may cause student borrowers to be forgiven more than $5 billion in debt, according to a Tuesday investigation of court records. Judges throughout the USA, 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.
This is an important story, particularly if you are one of the students who has one of these loans. That leaves roughly $108 billion in private student loans, of which National Collegiate holds $12 billion, or 11%.
National Collegiate's legal problems have hinged on its inability to prove it owns the student loans, not on any falsification of documents. And like those troubled mortgages, private student loans - which come with higher interest rates and fewer consumer protections than federal loans - are often targeted at the most vulnerable borrowers, like those attending for-profit schools. He is Donald Uderitz, the founder of Vantage Capital Group, a private equity firm in Delray Beach, Fla., that is the beneficial owner of National Collegiate's trusts. A review of court records by The New York Times shows that many other collection cases are deeply flawed, with incomplete ownership records and mass-produced documentation... "I question whether they actually possess the documents necessary to show that they own loans", Ms. Smith said. Statistics from website Student Loan Hero showed that Americans, overall, owe more than $1.4 trillion in student loan debt spread between almost 44 million borrowers.
Even if National Collegiate owns your loan, however, that doesn't mean you're off the hook.
Has National Collegiate sued me for nonpayment? National Collegiate have brought tens of thousands of lawsuits in the last five years and have filed more than 800 so far this year.
The 15 trusts have led a serious offensive to track down the borrowers who fall behind on their student loan payments.