Sallie Mae's Pioneer Credit Recovery Top Performer For Federal Loan Collections

From InsideARM:

Performance rankings are out for debt collection agencies under contract with the U.S. Department of Education and once again Pioneer Credit Recovery, Inc. and Coast Professionals outperformed peers in their respective categories.

This time, however, immediate rewards to top performers go beyond bragging rights. Pioneer, of Arcade, NY, and Anaheim, Calif.-based Coast Professional each received a greater number of new accounts than their peers when the education department issued new placements this past weekend. The allocations are proportionate to the agencies’ overall performance between October, 2009 and March 31, 2010, the first few months of the new student loan debt collection contract.

Here is the performance report referred to in the report:  Download Mnthlyrpt0310A1_Collections

The three criteria used to assess performance (and their respective weightings) are:

• Dollars collected (70% of total performance score) as percentage of total defaulted loans transferred to collectors
  
  • Over the past 5 months, the seventeen large private collection agencies collected $43.6 million out of $10.9 billion transferred for a 0.40% recovery rate
  • Collector's recovery rates ranged from .33% at Progressive Financial Services to .58% at Pioneer Credit Recovery
• Account servicing percentage (20%) 
• Administrative resolution percentage (10%) is the number of accounts resolved through approved litigation (68 accounts in last five months), administrative resolutions (14,262) or accounts with payments (73,294).

Here were the top five collectors with their aggregate scores over this five month period (November 1, 2009 to March 30, 2010):

Collector                                             Score

Pioneer Credit Recovery	98.16
NCO Financial Systems	78.74
Van Ru Credit Corp.	78.06
Diversified Collection	76.26
EOS-CCA (Collecto Inc.)	75.7

These collectors are expected to benefit from increased volume of accounts due to the 100% shift to direct lending.  In looking at this report, a few thoughts/questions come to mind:

• Why have so many collectors?  When you look at the difference in collection rates from top to bottom, it would seem more beneficial to taxpayers to have the most efficient collectors getting all the volume rather than spreading it across seventeen contractors. 
• Given concerns from advocates about collection techniques, it would certainly seem easier to ensure contract compliance with a smaller number of contractors.  It also might be useful to track complaints by collector too to highlight any trends or patterns that are worthy of further review.