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Charles B. Sears Law Library SUNY Buffalo Law School

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Billions in Private Student Loan Debt Could be Wiped Out Due to Missing Paperwork

Posted on: | by Brian Detweiler |

If you are a student loan borrower, you may have read with interest recent stories about missing paperwork jeopardizing the collection of billions of dollars in private student loan debt. According to this New York Times article, the National Collegiate Student Loan Trust, who owns the loans in question, “hold[s] 800,000 private student loans, totaling $12 billion, [of which] more than $5 billion…is in default.” National Collegiate and its collection company, Transworld Systems, are also now being investigated by New York Attorney General Eric Schneiderman, who vowed that he “won’t allow a generation of New Yorkers to get victimized by the very system that was created to help them get ahead.”

But before you spend next month’s student loan payment on a bottle, or let’s face it, a case of champagne, check out this article from Time to see if you might be affected. Likewise, this Bloomberg.com article cautions that defaulting on your loans can “have ruinous consequences for your credit [and, if you lose your case,] could stick you with National Collegiate’s legal fees, on top of the debt you’d be ordered to repay and any lawyer’s fees of your own.”

The debt held by National Collegiate originated as private student loans, which “lack the consumer protection” of federal loans. Borrowers wishing to dispute federally guaranteed loans can find additional information on the Department of Education’s website, or by contacting the Department’s Federal Student Aid Ombudsman Group.

 

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