Battle for Second Brewing on ED Collection Contract

With the overall leaders firmly entrenched on the U.S. Department of Education’s student loan collection contract, a battle for second place may be developing on the large business contract, with the small business set aside also seeing competition in the middle of the pack.

Pioneer Credit Recovery was the top scorer in ED’s monthly performance statistics competition, according to the data released last week by ED’s Federal Student Aid division. Pioneer, the leader in the large business – called “unrestricted” by ED – category topped all companies by collecting $21.1 million in May. Pioneer leads all collection agencies in total dollars collected over the length of the contract with $519.3 million.

But the second place battle seemed to pick up in May. NCO Group had the second-most points behind Pioneer in the unrestricted category. NCO has the second-most dollars collected among the large agencies over the life of the contract with $389.4 million collected. Nipping at NCO’s heels was Diversified Collection Services (DCS). Although NCO scored more total points in the month, DCS collected more debt in May: $17 million to $16.9 million. DCS has also had a slightly higher recovery rate in the first two months of the second quarter at 3.03 percent to 2.97 percent for NCO.

ED’s monthly scores are based on a weighted average of performance metrics, including total dollars collected, total accounts serviced and administrative resolutions.

On the small business collection contract, Premiere Credit had a perfect score to take the competition for May. A perfect score means that the company was the leader in all performance metrics. Premiere has had a run of success lately, also winning the competition in April. But the company is still fourth overall on the small business contract with $85.6 million collected in 39 months compared to the Continental Service Group’s (Conserve) total of $123.6 million. Conserve is currently leading the small business competition in total dollars collected with Account Control Technology in second place with $102.2 million collected.

There are currently 17 collection agencies on ED’s contract: 12 on the unrestricted contract and five on the small business set aside. The Department of Education will be awarding new contracts in September of this year. ED has invited 26 agencies to bid on the contract (“ED Approves 26 Collection Agencies to Bid on Student Loan Collection Contract,” June 4).