Student loan lenders lost key paperwork, and debts may soon be wiped away
Who would have thought that the bureaucratic hellscape that makes student loans such a nightmare to navigate would eventually work in your favor?
According to a new report by the New York Times, thousands of student loan recipients may be off the hook when it comes to paying back their debts, thanks to some critical missing paperwork on the part of the lenders.
The report claims that creditors have hit a snag when it comes to collecting the affected debts in court, as a result of insufficient ownership records and other missing documentation.
The filing errors mean that tens of thousands of people who took out private loans to pay for college — and who have been fighting their debtors in court over not being able to keep up with payments — might have their debts wiped clean.
One of the largest owners of private student loan debt is the National Collegiate Student Loan Trusts, an umbrella group that encompasses 15 trusts holding more than 800,000 private student loans that total more than $12 billion. According to the Times, of that $12 billion, nearly $5 billion is in default but tens of thousands of borrowers could see their debt erased in light of the newly discovered paperwork issues
One woman the Times spoke with, 33-year-old Samantha Watson, had $31,000 in debt wiped out in court after her lawyer realized that National Collegiate’s paperwork was a mess, and after the group tried to claim in court that Watson had enrolled at a school that she had never attended.
“It was such a relief,” Watson told the Times. “You just feel this whole weight lifted. My mom started to cry.”