For the first 15 months of its current student loan debt collection contract, the U.S. Department of Education’s 22 private debt collection agencies have recovered $3.8 billion, 41 percent more than collected during the first 15 months of the previous contract.

The recoveries, which include all revenue streams such as approved litigation accounts and pending rehabilitated loans, are surprising given that the agencies began their collection efforts when the unemployment rate peaked at 10.2 percent in October 2009, the highest in 26 years and more than double the unemployment rate in September 2005.  In January, the unemployment rate dropped to 9 percent, but is still well above what some economist say will be the new normal.

Nonetheless, the Department of Education (ED) was expecting more.

“The current default recovery rates are not what we projected,” an ED spokeswoman told “Although we are collecting more funds, we are not meeting our own internal goals and expectations for recoveries. We continue to analyze the data and look for ways to improve the department’s recovery efforts.”

ED had hoped to generate more collections through competition when it attached new incentives to the current contract, awarded in 2009.  Top performers — which are determined by a weighted average of contractors’ performance in total dollars collected, total accounts serviced and total administrative resolutions — now receive a greater share of the accounts when they are divvied up each quarter, boosting the agencies’ potential revenues and bonuses.

Since the incentives were introduced a year ago, the collection contractors’ performance rankings have been as unpredictable as the stock market, particularly among the unrestricted contractors where it’s rare to see any one company earn the top performance ranking two quarters in a row.

While quarterly performance rankings determine placement volumes, monthly results usually are a precursor to the likely winners each quarter. At the end of January Van Ru Credit Corp. climbed five spots to finish first in the ED performance rankings with 93.46 points, while Continental Service Group, d.b.a. ConServe, earned second place with 87.27 points. Collecto Inc., d.b.a., EOS-CCA finished third among unrestricted contractors with 85.50. Pioneer Credit Recovery, the top performer among unrestricted contractors last quarter and overall leader in the dollars collected category, fell to sixth place in January.

Of all the contractors, only small business contractor Collection Technology Inc. (CTI) has earned the top ranking for more than three consecutive quarters. CTI, of Monterey, Calif., ended January with 94.11 points, followed by Coast Professional with 89.42 points. Immediate Credit Recovery finished third with 83.03 points.

CTI has maintained its lead by winning at least two of the three categories, the most important of which is dollars collected which the ED assigns 70 points. The ED awards 20 points to the winner of the total accounts serviced category and 10 points to the winner of the administrative resolutions category.  The other agencies are scored against the top performers.

In the unrestricted category, Van Ru won the dollars collected category, but no others. The two other top three finishers also earned their rankings because of their performance in the dollars collected category, but neither was the top performer in any category.

Of the $3.8 billion the collection agencies (17 unrestricted and five small business firms) have recovered to date, more than $894 million is categorized as collected, which includes rehabilitated loans. Loans are considered rehabilitated when 10 or more consecutive payments have been received.

Performance Rankings for January 2011

Unrestricted (Large) Firms Score (Jan. 2011) $$ Collected (Jan. 2011)
Van Ru Credit Corporation 93.46 $11,105,721
ConServe 87.27 $9,223,902
EOS-CCA (Collecto Inc.) 85.50 $8,830,543
West Asset Management 85.10 $6,715,923
ERS 84.77 $9,227,308
Windham Professionals 84.45 $7.967,086
Pioneer Credit Recovery (Sallie Mae) 83.91 $9,974,561
Diversified Collection Services 81.08 $8,413,561
FMS Investment Corp. 80.34 $7,392,741
Allied Interstate (iQor) 78.65 $8,353,481
Financial Asset Management Systems 76.23 $8,860,694
GC Services LP 75.06 $7,736,451
NCO Group 73.83 $8,430,820
Account Control Technology 73.51 $7,104,993
Premiere Credit of North America 71.62 $6,763,313
CBE Group 67.92 $6,735,197
Progressive Financial Services 66.86 $6,171,562
Small Businesses Score (Jan. 2011) $$ Collected (Jan. 2011)
Collection Technology, Inc. 94.11 $4,881,491
Coast Professional 89.42 $4,040,513
Immediate Credit Recovery 83.03 $3,204,259
Delta Management Associates 73.24 $2,486,788
National Recoveries 70.12 $2,696,023

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