Billions of dollars in student loan debt may be forgiven because documents proving ownership of the loans are missing.
Creditors taking borrowers to court over loans in default are instead seeing the debt wiped out because of incomplete ownership records and other documentation, The New York Times reports.
National Collegiate Student Loan Trusts -- an umbrella name for 15 trusts that own $12 billion in private student loans -- has brought more than 800 collection cases to litigation this year alone. But it has struggled to prove ownership in court, with the loans originally made by banks being sold to investors. Without proper documentation, the loans are deemed uncollectible and a situation not unlike the last decade's subprime mortgage crisis is created.
More than $5 billion of the debt held by National Collegiate remains in default.