They say student debt is going to be the next housing bubble, and with $1.3 billion in student loans already built up, the growing debt signs no signs of slowing down.
However, there may be hope for some lucky graduates, as a new legal case may make $12 billion of loans disappear.
According to a report from The New York Times, the National Collegiate Student Loan Trusts, a network of 15 trusts, has had difficulty proving that they actually own the loans they’ve been suing people for.
via NY Times:
Tens of thousands of people who took out private loans to pay for college but have not been able to keep up payments may get their debts wiped away because critical paperwork is missing.
The troubled loans, which total at least $5 billion, are at the center of a protracted legal dispute between the student borrowers and a group of creditors who have aggressively pursued them in court after they fell behind on payments.
Judges have already dismissed dozens of lawsuits against former students, essentially wiping out their debt, because documents proving who owns the loans are missing. 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.
Robyn Smith, a lawyer for National Consumer Law Center, says that the paperwork in ‘dozens of cases’ involving private student loans from a variety of lenders and debt buyers have been ‘shoddy and inaccurate’ paperwork in dozens of cases involving private student loans from a variety of lenders and debt buyers.
According to court filings, the National Collegiate is an umbrella for 15 trusts that hold 800,000 private student loans, totaling $12 billion, with more than $5 billion of that debt in default.