Three Congressmen wrote a letter to the Department of Education this week urging careful scrutiny of a plan that would see 56 campuses previously owned by Corinthian Colleges, Inc. sold to ECMC Group, a student loan guarantor and parent company of a student loan debt collection agency. The letter cited debt collection tactics, among other things.

The Congressmen – Reps. Steve Cohen (D-Tenn.), Raul Grijalva (D-Ariz.), and Mark Takano (D-Calif.) – accused ECMC of being a bad fit for running colleges because as one of the largest student loan guaranty agencies in the country, it “has benefited by collecting loan payments from student, sometimes using dubious tactics.”

Under the plan, ECMC Group is forming a non-profit subsidiary, Zenith Education Group, to facilitate the sale and run the campuses post-transaction. ECMC is the parent company of Educational Credit Management Corporation, one of the largest student loan guaranty agencies in the U.S. and Education Department partner, as well as Premiere Credit of North America, a debt collection agency that also collects student loans on an ED contract.

ECMC said that the transition from for-profit to non-profit status would involve transforming “the culture and education model at the acquired schools, including lowering tuition and introducing strict accountability standards for program completion and job placement rates.”

But the letter noted that once the transition is complete, Zenith will not be held to new measurable standards set for for-profit institutions involving job placement goals and the ability of its students to repay student loans.

Further, the Congressmen wrote that, “We are concerned that neither the ECMC Group nor the Zenith Education Group has any previous experience in operating an academic institution.”

Rep. Cohen is also the lead sponsor of the Private Student Loan Bankruptcy Fairness Act of 2013 with Congressman Danny Davis (IL-07), which aims to restore fairness in student lending by treating privately issued student loans the same as other types of private debt in bankruptcy.

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