Thursday, June 25, 2015

Student Loan Collector ECMC's CEO Received $1.1 million in 2010.

A Word to the (not so?) Wise: Your senators and congressmen will continue to allow this nonsense unless WE demand an end to exorbitant collection fees and CEO pay to collectors of student loan debts.

"Taxpayers (and student loan borrowers) Fund $454,000 Pay for Collector Chasing Student Loan" 

Read the full story from Bloomberg News at:

By John Hechinger, Bloomberg News - May 15, 2012 12:01 AM ET
Photographer: Scott Houston/Corbis
Occupy Wall Street protesters burn a Sallie Mae envelope during a demonstration against the rise of student loan debt... Read More
Photographer: Scott Houston/Corbis
Occupy Wall Street protesters demonstrate against student loan dept reaching $1 trillion on April 25, 2012 in New York.
Source: Educational Credit Management Corp. via Bloomberg
Richard Boyle, chief executive officer of Educational Credit Management Corp. (ECMC).
Photographer: Don Emmert/AFP/GettyImages
The 'Master of Degrees' strikes a pose during an Occupy Wall Street rally against the high cost of college tuition... Read More
Photographer: Shawn Rocco/Raleigh News & Observer/MCT via Getty Images
U.S. President Barack Obama talks about the affordability of higher education during a speech at Carmichael... Read More

Joshua Mandelman made $454,000 in a single year as a student-loan debt collector -- more than twice the pay of the U.S. secretary of education.....
His boss, Richard Boyle, chief executive officer of Educational Credit Management Corp., received $1.1 million in 2010, including commuting expenses from his ranch in New Mexico. Five other managers each took home more than $400,000.....

The company (ECMC) stands by its executive pay. Rising management compensation reflects ECMC’s growth, said Hawn, who received $541,000 in 2010.
Since Boyle became CEO in 1999, revenue tripled, to $168 million, as the company took over the portfolios of guaranty agencies in Oregon, Connecticut and California. Under the company’s charter, the Education Department turns to ECMC as the go-to organization to take charge of troubled agencies.
Boyle also used excess revenue to buy related businesses that aren’t tax-exempt, including Premiere Credit of North America LLC, which chases patients for medical bills and parents for child support, as well as students for loan payments.

Like all guaranty agencies, ECMC receives more money collecting from borrowers like Raposa than it does keeping them from defaulting in the first place.
Agencies get 1 percent of a borrower’s loan amount for preventing a default through counseling. That’s $250 on a $25,000 loan, the current average of a student leaving college, according to the Education Department.
Once borrowers default, or fail to make payments for 270 days or more, the financial rewards for collectors multiply.
Under government rules, guaranty agencies add collection costs -- currently as much as 25 percent -- to a borrower’s loan balance. They also keep 16 percent of any money recovered.

Hitting the Jackpot (emphasis added by this blog)

If an agency “rehabilitates” a loan -- getting borrowers to make nine payments in 10 months -- it gets a jackpot. 

By law, the organizations can receive as much as 37 percent of a borrower’s entire loan amount, half in collection costs and half in taxpayer-funded commissions. ECMC says it typically collects 31 percent, or $7,750 on a $25,000 loan. That’s 31 times what it can make for preventing the default through counseling.
In 2010, ECMC generated $131 million from collections, or about three quarters of its revenue, compared with about $17 million from programs aimed at preventing default. 

In terms of caseload, ECMC devotes more employees to default prevention than collections, Hawn said. The company averages 77 default-prevention workers for 241,000 delinquent borrowers in need of counseling. It has about 90 debt collectors for 557,000 borrowers in default.

‘Poorly Aligned Incentives’...-read the article at:


News students & parents can use:  What to know before you apply for student loans:Before you apply for student loans, investigate one thing to avoid graduating with crippling debt: Find out how much graduates in your field of study earn ...


---Student Loan Action Group is re-publishing this post since Congress has yet to address what it 

requires student loan borrowers to pay in fees to its student loan collectors...

"Student Loan Collector ECMC's CEO Received $1.1 million 

in 2010, including commuting expenses from his ranch in 

New Mexico...."

5:30 PM (1 minute ago)

1 comment:

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