Thousands of people who have private student loans and haven’t been paying them on time may get an unexpected gift: Their loans may be wiped away because of missing paperwork, reports the New York Times.
The thought of your expensive student loans you used to afford college magically disappearing is the dream of every millennial, but the way in which these people will have their loans wiped away is not as fun as it sounds.
Here’s what you need to know:
- Borrowers vs. creditors: The loans in question are part of a legal dispute between the borrowers of the student loans and creditors that aren’t pleased with their lack of repayment. However, several loans have been dismissed by judges because documents proving the ownership of the loans are missing, the Times reports.
- It’s complicated: One of the largest student loan lenders, the National Collegiate Student Loan Trusts, is having trouble in court proving that it has this legal paperwork. The lenders is actually made up of 15 trusts that hold 800,000 student loans, according to the Times, totaling $12 billion.
- Losers: Judges in New Hampshire, Ohio, and Texas have tossed lawsuits by National Collegiate because it couldn’t prove who owed the debt from the student loans.
- Winners: In many lawsuits, when people allegedly responsible for the loan show up to court, National Collegiate drops the lawsuit. “I question whether they actually possess the documents necessary to show that they own loans,” Robyn Smith, a lawyer with the National Consumer Law Center, told the Times.
- Oh, crap: The lack of proper paperwork is reminiscent of the problems that surrounded the subprime mortgages that were eventually the catalyst for the 2008 financial crisis.
You can read the whole report from the Times here.