Billions in student loan debt could be forgiven because creditors do not have the proper paperwork. The group of trusts is one of the largest owners of private student loans in the US and has brought tens of thousands of lawsuits against borrowers who've fallen behind on their payments.
That amounts to around $five billion in loans.
Overall, there is about $1.3 trillion in outstanding student debt among Americans, Time Magazine reports.
The entire $5 billion of loans that are in default right now stand a chance at being basically wiped away. The loans were made to students by dozens of banks, and then bundled together by a financing company and sold to investors.
National Collegiate's troubled loans did not start out with the organization. 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. And it is this trust which has reported the loss of this paperwork, which documents the chain of ownership for these loans. This is similar to what happened in the 2000s during the subprime mortgage crisis, when judges ruled in favor of borrowers, saying the companies could not collect subprime mortgage loans because the documents were either missing or forgeries.
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Has National Collegiate sued me for nonpayment?
"It's a numbers game", lawyer Richard Gaudreau, who has helped defend borrowers in several National Collegiate lawsuits, told the newspaper. The missing documentation may mean tens of thousands could be off the hook for paying back loans. "It's not like they're rolling over on these cases", Gaudreau says.
Missing paperwork could wipe out billions...
The messy paperwork may be something of a miracle for burdened students, but it is a nightmare for the thousands of borrowers who are now in the middle of the storm, unable to get answers about the state of their loans.
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