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

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

A 2015 audit of the company, organized by one of the financiers behind National Collegiate's trusts, looked at almost 400 random loans owned by National Collegiate, and found that none had the proper paperwork documenting the chain of ownership.

While National Collegiate struggles with servicing issues, thousands of students also are struggling to dig their way out of debt imposed by the hefty loans.

According to the New York Times, the 166,000 loans that total $5 billion are now in the middle of a legal battle.

Some of the loans held by National Collegiate were granted to students over a decade ago by tons of different banks, and then the loans were packaged together and sold to investors. Defendants often settle with National Collegiate or ignore the summons altogether. While a large share of Americans have student loans, most of the $1.3 trillion in outstanding student debt are federal student loans. The group says the creditors aggressively pursued them in court after they fell behind on payments, according to the New York Times.

But at issue is the group's ability to show paperwork proving that it owns the loans in question. The debt passed through too many hands before reaching National Collegiate's trusts, and imperative paperwork that documented who owned the loans disappeared. 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.

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Has National Collegiate sued me for nonpayment?

Even if National Collegiate owns your loan, however, that doesn't mean you're off the hook.

Missing paperwork could wipe out billions...

You see, trusts like the NCSLT typically win default lawsuits automatically-almost be default, pardon the pun-because borrowers typically don't even show up to court (probably assuming that they can not win the case).

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