No, it’s not me. And shame on you for thinking that even for a moment. I’m Martin Andelman, remember? My blog is named Mandelman Matters because when I first started blogging in 2008 on MSNBC’s Newsvine, I was asked to enter a user name and knowing absolutely nothing about what I was about to do, I entered my first initial and last name, which was what I always did when asked for a user name.
The headline, however, is from a true story that I found so shockingly distasteful that I’m not even sure what to say… and I’m not someone known for being at a loss for words all that often. Read on, if you have the stomach for it… but you’re not going to like this one bit.
It’s about a Minnesota company by the name of Educational Credit Management Corporation, or ECMC for short. The company’s revenue model is that it charges fees to borrowers and earns commissions from taxpayers… commissions that can total as much as 31 percent when collecting on defaulted student loans.
Richard Boyle is ECMC’s CEO. In 2010, he took home $1.1 million. Five of the company’s other senior managers each took home over $400,000 that same year, and one guy… Joshua Mandelman… apparently made $454,000 shaking down those that had defaulted on their student loans.
Boy, I can already tell you that I really don’t want to go any further here… this cannot possibly end well… but I’m sort of stuck now. Okay, let’s proceed and see how it goes.
Oh yeah, did I not mention that ECMC is a NONPROFIT? See, and you didn’t think the story could get any more offensive than it was at its inception. Well, wrong-o, Moosebreath. (Didn’t Johnny Carson used to say that when he played the role of Carnac the Magnificent?)
Want it to get that much worse? Then you’re in luck.
Mandelman’s $454,000 in 2010 was more than TWICE the amount we paid to the United States Secretary of Education. Did you just throw up in your mouth a little bit right there? Yeah, I know… sorry about that.
But, we’re still going down… you might want to hold onto something to steady yourself.
Congress rubber-stamped ECMC’s deal, and I do mean the U.S. Congress, 18 years ago.
Oh, good. So, at least it’s only been going on for 18 YEARS? I was starting to worry that this sort of odious crap had been going on for a long time.
The Bloomberg article then said that the “rich rewards,” were “sparking criticism that ECMC and similar collection agencies are reaping a bonanza from former students’ pain.”
Yeah, I’m starting to worry about me. I don’t think I fit in with this country anymore. I’m just saying that because when I read the story for the first time, while I did feel something “sparking,” it sure as hell was not “criticism,” unless by criticism you mean, “uncontrollable ferocious rage.”
It was like I wanted to keep reading, but with my 9 MM Sig Sauer in my hand so I could at least pretend to shoot someone. I made sure it wasn’t loaded because I realized at the time that the “someone” I might want to shoot could end up being me.
So, I guess I dodged a bullet there, wouldn’t you say? (LOL)
Alright, so some criticisms in Congress were sparking… did those entirely ineffective blowhards in Congress do anything about it, or just criticize the situation? Can’t you just imagine hearing them at their critical best in the U.S. House of Representatives?
“And I yield the balance of my time to… wait a minute… what’s this? Just a moment here… and I don’t want to be accused of being unfair or inappropriate, but I think I’d have to say this is somewhat less than optimal. Frankly, I find it troubling and of great concern, absent any other information…”
Oh, sorry… okay, I’ll put it away now.
The Bloomberg story quoted Robert Shireman, a former deputy undersecretary of education under President Barack Obama, as saying that the program…
“… is enriching collection agencies and undermining a goal we all want for society — to encourage people to go to college.”
See what I mean… am I all alone here? It’s “enriching collection agencies?” Is that what it’s doing in this bureaucrat’s seriously warped mind? Shireman, just sit down and shut up, okay. You obviously have nothing to add to this conversation, and my guess is to any conversation.
It’s not fair to single out ECMC here, because the article said that they are “one of 32 little known ‘guaranty agencies’ that play a key role in the world of higher-education finance.”
ECMC explained that their value as an organization, is that they “help keep federal financial-aid programs solvent by recovering taxpayer money.”
Dave Hawn, ECMC’s chief operating officer, told Bloomberg that since 1994, when the company first opened its doors and began making its obviously invaluable contributions to our way of life here in America, they claim to “have returned $4.3 billion to the U.S. Treasury.”
Hawn claims that they help people establish affordable repayment plans, and “funds more than $20 million a year in college scholarships for low-income students and runs financial-literacy and higher-education counseling programs.”
Wait a minute… he forgot to say they were funding black and brown people… um… in Minnesota. I sure hope that’s the case, because both of them could really use a hand up.
“I’m really proud of what we do as an organization,” Hawn said.
Okay, wait… rewind… go back like five paragraphs… where it says “little known” before describing them as “guaranty agencies.” Why the feebles would they be “little known?” Who’s keeping them “little known?” They need to be BIGGER KNOWN, for sure, I think.
Bloomberg then described their day-to-day operations as follows:
“ECMC’s debt collectors earn bonuses as a reward for extracting money from defaulted borrowers.”
See, a minute ago the COO said they “help people establish affordable repayment plans,” and that he was “proud” of what they were doing as an organization. So, I guess that’s how they help the people with the “establishing” part… they do some “extracting.”
Oh, sorry… I was going to put that away. I apologize.
It’s hard for me to comment because I don’t have much context here. You see, I’ve never done any “extracting,” personally. The only person I know who has is my dentist… he does quite a bit of “extracting,” and it’s not a pleasant task, but apparently… if I’m reading this right, and I am… these guys get bonuses for their “extracting,” so they must grow to enjoy “extracting.”
And not just bonuses… but taxpayer funded bonuses. I don’t want to jump at something too soon, but if you want my gut reaction, I don’t think I want to pay anyone a bonus for extracting money from a struggling student who can’t pay his or her student loan payments.
And besides, Bloomberg’s story says that the amounts of the bonuses, at least for the company’s “top” extractors… isn’t that what they’d be called… amount to “as much as 10 times their base salaries, which range from $33,000 to $46,000,” according to ECMC’s tax return.
That return shows that there were four other debt collecting extractors that made something between $301,000 and $389,000 in 2010, which made our boy Mandelman highest paid extractor that year. So, very well done there.
I can’t help but wonder what Mandelman’s secret is. What is it that makes him such a superior extractor as compared with his peers?
Well, the Bloomberg reporter must have been wondering the exact same thing because he apparently interviewed Mandelman outside his home in Minneapolis.
I bet it’s a very nice home in Minneapolis too… I wonder why our boy Mandelman didn’t invite the Bloomberg reporter inside. I hope it wasn’t cold, like it’s not in July and August in Minneapolis. Maybe he was interviewing him two months from now.
And that’s when I found out that Mandelman is 32 years old… which to my way of thinking is a fine age to be if you’re working as an employee of a NONPROFIT company making say… $60,000 to maybe $80,000 a year.
But, if you’re making $454,000 a year in taxpayer funded bonuses earned by extracting money from struggling students… well that makes you a dirtbag that I want to take out back and kick the crap out of before turning you into whoever will put you in jail.
Standing outside his home, Mandelman told the Bloomberg guy that he works 12-hour days “helping borrowers get their finances back on track.” He also said:
“Thank-you notes cover his desk.”
That’s a lot of helpful extracting… are your parents quite proud of you son? And it must be hard to keep all that extracting done with so many “Thank-you notes” COVERING his desk.
I’d be happy to help with that if he needs a right-hand man… and I’m exceptionally good at answering thank-you notes, so I could pretty much assure him that depending on how deep the layers of thank-you notes are that are covering his desk, I could probably free up some significant amount of desk space within a week or two at most.
And I’ll put in the 12-hour days right alongside him, which will actually be nice because that’s six-hours less than I’m putting in now.
In the Bloomberg story it then said: “I did well,” said Mandelman.
Yes, that’s true… you did do quite well son… quite well indeed.
Oh, shoot… sorry, I’ll put it down right now… seriously. I forgot…
Actually, it’s funny because he did even better than the $454,000 from ECMC for being the top extractor, because next I learned that Mandelman also is also, “part-owner of the Amsterdam Bar and Hall, a restaurant and nightclub in St. Paul,” according to Bloomberg.
And Mandelman then said: “I worked hard. I also helped a lot of people.”
Okay, so wait… I’m confused. Did he work 12-hour days because after a long, hard day extracting he had to tend bar at his “Amsterdam Bar and Hall, a restaurant and nightclub in St. Paul?” Is that the sort of thing we’re talking about here?
I’m thinking… not. I looked the place up online and it looks quite lavish, actually. The menu includes such delectable dishes as:
mussels. steamed with vermouth, tomatoes, herbs and garlic crouton and curry mayo – 9
charcuterie plate. house made terrine. daily selection – 8
chicken liver mousse – 4
dutch cheese plate. daily selection – 10
loempias. dutch style indonesian crispy spring rolls, with chicken – 6
marinated octopus – 4.5
Oh, and check out what they serve for desert, besides the “daily desert special”:
pot brownie – 5
They also have a “Hash Bar Menu,” with the following, among other things…
Lebanese Red – Saffron Tomatos, Red Peppers, Roasted Veggies, Onions, Potatoes, Egg, Red Hollandaise – 8.75
XXX Black Hash – Calamari, Shrimp, Mussels, Potatoes, Onions, Egg, Curry Mayo – 9.75
Here are just a few of the brands on draft:
Deschutes Inversion IPA - Bold, balanced by Crystal Carastan malts, 6.8% ABV
Summit EPA - A Gold Medal winning extra pale ale, 5.2% ABV
Bell’s Two-Hearted - An intensely hoppy, malty, but well balanced IPA, 7.0% ABV
Fulton Sweet Child of Vine - It’s an IPA, Fulton-style, 6.4% ABV
Leffe Blonde - An elegant, smooth, fruity taste with hints of orange, 6.6% ABV
Hoegaarden - A Belgian white spiced with orange and coriander, 5.0% ABV
And they also have a menu of 30 Gins, something I’d never seen before. I’ve seen a Tequila Bar, but I didn’t even know there were that many Gins. Here’s just a few…
St George’s Terroir (USA) Made from hand-harvested juniper berries, Douglas fir, coastal sage, fennel, California bay laurel, cinnamon, cardamom, and lemon, Terroir is a unique expression in gin
St George’s Botanivore (USA) Made from 18 botanicals, including caraway, ginger, California bay laurel, wild fennel, dill, celery seed, coriander, this is most similar to a traditional London dry gin
Okay, sorry… I didn’t mean to get us off the subject at hand, but I have to admit, the place is quite impressive for one of its owners to be a 32 year-old Mandelman the Extractor who works 12-hour days at a desk covered with Thank-you notes.
BANG! BANG! BANG!
OMG… well, that was embarrassing. Okay there… it’s in my drawer and shut. Gone.
So… okay… so, then the article went on to talk about the fact that “U.S. higher-education debt is sounding alarms in Washington as defaults more than doubled since 2003, to $67 billion.”
So, that bodes very well for young Mandelman’s future, I’d say. He’s sort of in a growth industry, right? I mean, not growth the way one might normally think about it, more like a mirror image kind of thing. The fewer jobs there are for students after graduating, the worse our economy gets and of course the lives of those students… which is very god indeed if you Mandelman the Extractor.
If defaults doubled since 2003, then I think it’s safe to expect them to double again between now and say 2018, so if my numbers are right here… a 36 year-old Mandelman should be bringing home what do you figure… something in the $750,000 range I’d say looks very conservative.
And that’s not including his partial ownership in the Amsterdam Bar and Hall, a restaurant and nightclub in St. Paul.
Of course, he’s never going to get there if he can’t find anything he’s looking for because of all those thank-you notes covering his desk as he describes. Look, I’m not kidding… my offer stands… say the word and I’m on my way to the Twin Cities to start taking care of those countless thank-yous.
Okay, I did that one on purpose. So, what’s your point? Don’t be such a prude.
And next, the Bloomberg article went into the political aspects of what’s going on. It started out by talking about Obama…
“In March, the Obama administration proposed changing how it regulates the student-loan debt collectors, amid complaints they insist on stiff payments, even when borrowers’ incomes make them eligible for leniency.”
Uh oh… I’m not sure this is the right thing to do… I knew this wasn’t gong to be all fun and games. Let me take a breath for a second… ahhhhhh… okay, not sure about this but go ahead.
Obama “PROPOSED” that, did he? He “PROPOSED” changing how the taxpayer funded extractor bonuses would be handled going forward as our deficit climbs out of control, and the austerity measures kick in all over this country… he PROPOSED changing something.
Did he get down on one knee to make the “PROPOSAL,” at least? Who was he doing all this PROPOSING to? And what was the response to my president’s “PROPOSAL,” I can’t help but wonder? I don’t recall seeing any of this on C-Span. I must have missed it, I guess.
Was his PROPOSAL accepted? Did Congress agree to debate it quietly behind closed doors during the summer when no one is paying attention? According to Bloomberg:
“The Education Department declined to discuss compensation at ECMC, referring questions to the company.”
BANG! BANG! BANG! BANG! BANG! BANG! BANG! BANG! BANG!
And one more… BANG!
Oh, shut up about the gun already.
I have a couple things I have to say about this.
First… NO FRACKING WAY, MR SECRETARY OF EDUCATON. That’s not an acceptable answer here. You don’t get to “DECLINE” to answer questions about this, you pompous prick. Who do you think you are, Larry Summers? Well, you’re not. You better come up with something to say in response or I’m going to… never mind… just go on…
And second… I’m not only in the wrong damn business, but I’m starting to feel like I’ve spent my whole life as a trained seal.
Jealous much? Hell yes, I’m jealous. That little 32 year-old Hash addict Mandelman couldn’t out perform me at anything. I may be older and slower and not as rich and probably not as good looking and not as thin and probably not as knowledgeable or as capable and I’d probably cry all the time if I had to “EXTRACT” money from people who couldn’t pay their student loans… so yeah… that’s all true.
But, on the other side of the coin, I’ve got… um… wait a second… no, I’m serious… I’ve got… damn… wait… well, there was the… but of course he’s probably done that even more, but I’ve also… well, not really anymore… DAMN IT!
Okay, I’ve got something… I’ll bet I can still kick his little Gin drinking behind. I know, he’s certainly younger and probably in much better shape, but I’m 51 and… of course, the way my luck has been running, he’s probably an MMA Cage Fighter on his days off. But so what…
It’s like I’ve always said… guns don’t solve problems, people solve problems. (Kidding, just kidding. I’m a kidder… I kid.)
Okay, so I didn’t even know this was a business, “Nonprofit Student Loan Extracting?” Is there an SIC code for these guys? How come there are only 32 for the entire country? Have you ever heard anything about this? Where did this come from?
Well, according to Bloomberg, ECME’s Boyle is a former executive with SLM Corp., the largest U.S. student-loan company, known as Sallie Mae.
- In 2002, he received $271,000.
- In 2004, his compensation went up to $618,000.
- In 2008, up again to $852,000.
- In 2010? $1.1 million… One of highest paid of these “guaranty agencies.”
This is starting to feel like getting my nose rubbed in the carpet…
Three times a month, he commutes to Minnesota from New Mexico, where he lives on a 715-acre ranch. He also travels monthly to ECMC offices in Sacramento and Indianapolis to check up on his extractors in those areas, I would suspect. He turned down Bloomberg for the interview.
The company’s CFO, probably realizing how I’d be feeling about all this… started backpedaling a bit. He said that:
“Only ‘a small number’ of ECMC’s 90 debt collectors received pay in the $300,000 to $400,000 range. On average, they earn about $77,000 a year.”
Oh, shut up. He went on to tell Bloomberg that “ECMC itself decided that debt-collector bonuses were excessive.”
“We never dreamed we’d have collectors making that much in incentives,” Hawn said.
“Last year, the company changed its incentive policy, making it difficult for collectors to earn more than $150,000 a year. ECMC took action to “get our compensation for that team in line with the market,” Hawn said.”
What market? The student loan collection extracting market?
I can’t keep this up much longer. After this I’ll do what I always do in these sort of circumstances… think of all the things I haven’t accomplished over the last three plus years and what I’ve sacrificed, weigh myself to make sure I’m still steadily gaining… toss down a pint of Old Kessler straight… and then cry myself to sleep.
Check out this next part…
“The company benefits financially from federal student-loan collectors’ powers under U.S. law. Unlike those chasing credit-card borrowers, student-loan collectors can confiscate wages without a court order and seize tax refunds and Social Security checks.”
Oh really? Good to know. So, I’ll just assume that in turn we’ll just start giving a great deal of thought to everything we can do to make 32 year-old Mandelmans and the companies for whom they extract much less effective, much better known… and universally hated. In fact, I think I’ll start today with young Mandelman in St. Paul.
Hang on… I just need to send out a quick MandelGram…
PAGING… MAX GARDNER… PAGING… MAX GARDNER. The Good Mandelman NEEDS YOUR ASSISTANCE. PLEASE CALL ME. REPEAT… PLEASE CALL ME!
(Later I’ll turn on the MAXLIGHT… he looks in the sky, sees it, and my phone rings even at 3:00 AM. He’s amazing and will for sure know what I can do about this.)
And then of course there’s the untraceable steps we could take to significantly increase the chances that 32 year-old Extractor Mandelmans will have terrible accidents. Okay with everyone else? Cool. I guess I’m good to go then. I don’t have any student loans, and now that I know all this… I think I’ll pass going forward.
Bloomberg also pointed out the obvious stuff like there’s no statute of limitations on student loans and they almost never get discharged in bankruptcy.
Also, the article included this little gem of a sentence…
“Like all guaranty agencies, ECMC receives more money collecting from borrowers than it does keeping them from defaulting.”
Oh, good… I’m glad. We’re getting used to that sort of thing with the servicers, so at least we won’t have to learn anything new about the behavior of slugs, squids and vermin. So, what do this extractors make anyway?
1% of borrower’s loan amount for preventing default through counseling. Just making a quick couple of notes for my guide to torturing these people… never let them prevent your default. Okay, got it. Go on…
Under current rules set by our government… these guaranty agencies get to add as much as 25 percent in collection costs to a borrower’s loan balance, and they get to keep 16 percent of any amounts they recover… or, rather, I think the industry term is “extract,” right?
And here’s the one I liked best…
If an agency “rehabilitates” a loan, which is defined as getting a borrower to make 9 payments in a 10 month period — it gets what Bloomberg referred to as “a jackpot.”
(So, making another note… never make 9 payments in a 10 month period. Never.)
Bloomberg says that ECMC reports that it typically collects 31 percent, or $7,750, on a $25,000 loan, which is 31 times what the company would make were it to prevent the default… so, very well done there again.
Bottom-line #1: Scoreboard at ECMC in 2010 shows $131 million from collections… roughly $17 million from default prevention programs.
Bottom-line #2: These NONPROFIT organizations get as much as 37 percent of a borrower’s loan amount… half in collection costs and half funded by taxpayers.
But, that’s enough for me…