And this is just part of the larger issue of the student loan crisis. That’s another version of the sub-prime crisis waiting to explode.
In a shocking discovery, nearly 200,000 private student loans amounting to $8 billion issued by the National Collegiate Student Loans Trust are missing critical paperwork.
According to Forbes:
Could at least $5 billion of student loans be erased?
As reported by the New York Times, about $5 billion of student loan debt owned by the National Collegiate Student Loan Trusts – one of the nation’s largest owners of student loans – could be erased by judges due to alleged improper documentation and missing ownership records.
“The National Collegiate Student Loan Trusts holds 800,000 private student loans through 15 different trusts, which collectively own approximately $12 billion of student loan debt, according to the New York Times.
Of that amount, about 160,000 private student loans are in default. These student loans were originally issued by banks, and then subsequently sold through securitization to investors, including the National Collegiate Student Loan Trusts. Ownership records may have been lost in the process.
The New York Times reports that given the incomplete ownership records, it is not exactly clear who owns the individual student loans. If true, this could pose a major problem for National Collegiate, which is seeking to collect unpaid student loan debt from borrowers who have defaulted.
Part Of A Larger Issue
While these lawsuits involve borrowers who have defaulted on their student loans, the student loan crisis continues to grow.
More than 44 million student loan borrowers collectively owe more than $1.4 trillion in student loans, according to the most recent student loan debt report from personal finance site Make Lemonade.
Student loan debt is now the second highest consumer debt category – second only to mortgages.”
Are you concerned the student loan crisis will explode as the net sub-prime crisis destroying America’s economy?