Loan Paperwork Missing, $5B in Student Borrowing Up in Air?

Paterniano Del Favero
Luglio 18, 2017

National Collegiate is composed of 15 different trusts, collectively holding 800,000 private student loans.

The New York Times reported National Collegiate Student Loan Trusts, the creditor that has pursued lawsuits against student borrowers over the past few years, has had many of those suits thrown out due to missing documents.

Robyn Smith, a lawyer with the National Consumer Law Center, a nonprofit advocacy group, has seen shoddy and inaccurate paperwork in dozens of cases involving private student loans from a variety of lenders and debt buyers, which she detailed in a 2014 report. According to The New York Times, the cases showed that the cases showed that National Collegiate kept "incomplete ownership records and mass-produced documentation". If they can't prove in court the person on the documents took out the loans, they can't make that person pay up.

The trusts win numerous lawsuits they file automatically, because borrowers often do not show up to fight. National Collegiate have brought tens of thousands of lawsuits in the last five years and have filed more than 800 so far this year. That translates to about $5,527 out of the average $23,757 yearly tab, Reuters reported.

To be sure, college tuition hikes and the resulting increase in student debt burdens in recent years have caused a significant drop in homeownership among young Americans, according to new research by the Federal Reserve Bank of NY. Homebuying typically leads to additional spending-on furniture, and gardening equipment, and repairs-so the drop is likely affecting the economy in other ways, Bloomberg reported.

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