Private student loan debts are being erased because of incomplete and missing paperwork

Graduates.
(Image credit: Joshua Lott/Getty Images)

Judges across the United States are wiping away student loan debts worth, in some cases, tens of thousands of dollars, all because National Collegiate Student Loans Trusts has been unable to show in court that it owns the loans it says it does.

National Collegiate is composed of 15 different trusts, collectively holding 800,000 private student loans. Those loans add up to $12 billion, and more than $5 billion is in default, court records state. The private loans were made by banks, then sold to investors, and when the borrowers struggle to pay back these loans — which often have high interest rates — National Collegiate takes them to court; on average, at least four new collection lawsuits are filed every day, The New York Times reports, and more than 800 have been filed this year so far.

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Catherine Garcia, The Week US

Catherine Garcia is night editor for TheWeek.com. Her writing and reporting has appeared in Entertainment Weekly and EW.com, The New York Times, The Book of Jezebel, and other publications. A Southern California native, Catherine is a graduate of the University of Redlands and the Columbia University Graduate School of Journalism.