On Tuesday, many people have found that due to missing paperwork, billions of dollars in student debt could be erased.
According to the New York Times’ report on Monday, judges all over the country had dismissed several lawsuits filed against borrowers by entities who purchased the loans from other lenders cannot produce the paperwork proving it owns their debt.
According to Mark Kantrowitz, an expert in student loans, some of these issues came up because some documents went missing, especially older loans, which depended more on hardcopies than electronic ones.
He explained that in other cases, it was due to a mix up in information, such as in the borrowers’ names or their social security numbers.
Am I Likely Affected?
To know if you’re affected, you need to ask yourself: “Have I been paying my loans on time,” and “are my loans owned by the entity in question?”
The loans in question are also for people who have not been paying their debts, so if you have been paying everything on time, your debts will not be erased.
The entity responsible for this is “National Collegiate Student Loans Trust,” an entity which holds about 800,000 loans. Although this is a large number of cases, it still represents a small percentage of the overall student debt in the US. There is currently a $1.3 trillion outstanding debt from “federal student loans”, $108 billion in “private student loans,” of which the said loans trust only holds about $12 billion- 11 percent of the total outstanding student debt.
If your loans are owned by this entity, and were taken prior to the year 2007 by another originating institution, you are likely to be one of the affected cases. According to the SEC, the majority of National Collegiate’s loans were purchased by the following originating institutions: “Bank One, Charter One Bank, Bank of America, JPMorgan Chase, GMAC Bank, RBS Citizens Bank and Union Federal Savings Bank.”
You can contact your own loan servicer in order to find out who owns your loans. However, according to “National Consumer Law Center” attorney, Robyn Smith, your servicer is not legally obligated to give you that information.
However, Richard Gaudreau, an attorney who specialises in bankruptcy, has advised that another clue that you may be one of those affected is if you had received collection notices or bills from “Transworld” or the “American Education Services” (AES). Transworld is a debt collector which is usually involved in such cases, and AES is the National Collegiate’s loan servicer.