Many private student loan debts may be discharged

Jul 20, 2017, 00:51
Many private student loan debts may be discharged

Lawyers say that since the loans generally passed through many hands before reaching National Collegiate, the paperwork involved is so shoddy that it could affect most of the $5 billion of its debt that is in default.

The National Collegiate Student Loan Trusts, one of the largest owners of private student loans in the US, has sought to collect from borrowers only to have cases dismissed due to lack of proper documentation, the New York Times reports.

This is an important story, particularly if you are one of the students who has one of these loans. The College Board estimates that the average cost of attending a for-profit institution is $16,000 a year, roughly 4.5 times more than the cost of the average two-year college, and 1.7 more than the cost of the average four-year public college for in-state students. The issue of who owns the debt on $5 billion worth of student loans is at the center of a legal battle that is resulting tens of thousands of people having their debt wiped away.

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The loans in question were originally granted by banks, then later bundled and sold to National Collegiate.

National Collegiate's troubled loans did not start out with the organization. For the economists who have always been anxious about the US's impending student-loan crisis, it's even worse.

From the sounds of it, there are thousands of dutiful Americans in debt who are paying their monthly loan payments to this company that may not have to do so because of this massive issue. There are additional considerations.

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Judges throughout the country have already tossed dozens of collection lawsuits filed against borrowers because of missing documents.

Has National Collegiate sued me for nonpayment? The Times also notes that for the cases National Collegiate has been able to win, the mitigating factor is borrowers not even knowing the cases have gone to court and/or not showing up to defend themselves.

"It's fraud to try to collect on loans that you don't own", Uderitz told the Times.

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