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, CEO of Educational Credit Management Corp., received $1.1 million in 2010, including commuting expenses from his ranch in New Mexico to EMC's headquarters and to offices in Indianapolis and Sacramento. Five other ECMC managers each took home more than $400,000.
ECMC, a Minnesota-based not-for-profit group, owes its success to an 18-year-old agreement with the U.S. government. The company charges fees to borrowers and earns commissions from taxpayers — totaling as much as 31 percent — when it collects on defaulted student loans. Those rich rewards, which are approved by Congress, are sparking criticism that ECMC and similar collection agencies are reaping a bonanza from former students’ pain.
Among those is Indianapolis-based United Student Aid Funds Inc., the largest guaranty agency, better known as USA Funds.
The federal loan program “is enriching collection agencies and undermining a goal we all want for society — to encourage people to go to college,” Robert Shireman, a former deputy undersecretary of education under President Barack Obama, said.
ECMC and USA Funds are two of 32 little-known “guaranty agencies” that play a key role in the world of higher-education finance. They oversee student loans for the U.S. Education Department, which began its lending program in 1965. The groups guarantee loans made by banks and other private lenders. They promise to repay the lenders if borrowers don’t. If the agencies can’t recover the money, the federal government takes over the loan, shifting the risk to taxpayers.
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