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Student Loan Trust Paperwork Disorganization May Free Some Borrowers of Debt

Green chalk board with "Student Loans" written on it

Millions of student loan borrowers in the US are bearing the burden of cumbersome monthly payments, usually paid to a designated student loan trust or servicer. With an average of $351 due per month for student loans borrowers in the age range of 20 to 30, many are so beaten down with these debts that they are forced to hold off on buying homes, getting married, or planning to have families. Undoubtedly, these loans weigh heavily on their minds. So, imagine if one day these debts and consequent lawsuits simply went away due to inadequacies on the lender’s parts. While this might sound like a fantasy, it has recently been a reality for numerous student loan borrowers whose required legal paperwork went the route that so many can only hope for: missing.

In a recent articleThe New York Times outlined what might seem impossible, but certainly not unwelcomed by borrowers responsible cumulatively for over $5 million in student loan debt. Disorganization and lack of paperwork have made it difficult—or impossible—for companies to prove they actually own the debts. This raises big questions in court when borrowers are being sued.

While this type of activity is new in the student loan realm, it is certainly not unheard of in terms of credit card debt; in fact, in many debt settlement cases, the borrowers end up paying nothing simply because the creditors cannot prove they own the debt, or show its history. Now it looks as if tens of thousands of student loan borrowers may have one less delinquent debt to worry about. Entities such as National Collegiate Student Loan Trusts have plenty to be concerned about, however, as they continue to attempt to demonstrate that they do indeed own many of the student loans in question.

As with many credit card debts that end up in question during lawsuits, the student loans with missing paperwork were sold to multiple different trusts and organizations—and then put into the hands of servicers— making it easier for errors—and loss of information—to occur within the paper trail. Delinquent accounts travel to different banks and debt collectors.

“As news of the servicing issues and the trusts’ inability to produce the documents needed to foreclose on loans spreads, the likelihood of more defaults rises,” National Collegiate attorneys stated recently.

According to The New York Times, National Collegiate is responsible for a staggering amount of student loans, to the tune of $12 billion—generated by 15 different trusts which hold a total of over 800,000 student loans. Some of the existing documentation being offered up in court by organizations such as National Collegiate is extremely disorganized and error ridden. Their main problem though is the missing paperwork, keeping them from proving they own the loans they would like paid. And it would seem numerous organizations are quick to shy away from borrowers who fight the collection lawsuits, often backing out at the last moment. This issue seems to be exaggerated in the case of National Collegiate—an organization unique in their aggressiveness for collecting, despite their problems with documentation.

“I question whether they actually possess the documents necessary to show that they own loans,” said Robyn Smith, a lawyer with the National Consumer Law Center, a nonprofit advocacy group.

Even some with close ties to National Collegiate are disturbed by the discrepancies, like Donald Uderitz, whose company operates as ‘beneficial owner’ of all their trusts. He requested a report in 2015 which showed that out of 400 of their student loans, none of them had paperwork detailing ownership.

“We don’t like what’s going on,” said Mr. Uderitz said in a recent interview.

Green chalk board with "Student Loans" written on it

If you are a student loan borrower, keep detailed documentation of your loan and all payments, from the beginning. And if you are being sued for delinquent payments—on a student loan or any other debt—consult with Fitzgerald & Campbell, APLC regarding your options.

With decades of experience in helping clients navigate areas such as student loans and other debt issues, our attorneys can sit down with you and review your case. We are here to help! Call us today for a free consultation at (844) 431-3851, or email us at or email us at

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