A graduating student's cap during City College graduation, June 3, 2016.
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Billions of dollars in private student loan debt could be eliminated because of missing paperwork, The New York Times reports. At least $5 billion in loans is currently being disputed in court, as private creditors, who have pursued lawsuits against against student loan borrowers that have failed to meet their payments, have struggled to produce paperwork that prove who owns the loans.
The National Collegiate Student Loan Trusts, an umbrella company that consists of 15 trusts that hold around $12 billion in student loans, is at the center of the legal battle. National Collegiate have brought tens of thousands of lawsuits in the last five years and have filed more than 800 so far this year.
Judges have recently thrown out lawsuits brought by the trusts in New Hampshire, Ohio and Texas. According to The New York Times, the cases showed that the cases showed that National Collegiate kept "incomplete ownership records and mass-produced documentation."
The defaulted loans were first issued by a number of banks, before being bundled together and sold to investors. The loans are not guaranteed by the federal government, which remains the primary lender in America, and lack consumer protections like income-based repayment options. Crucial paperwork showing ownership of the loans went missing as the debt was bundled and acquired.
Read the report here via The New York Times.