Mandelman made $454,000 in 1 year as student loan debt collector?
No, itās not me.Ā And shame on you for thinking that even for a moment.Ā Iām Martin Andelman, remember?Ā My blog is named Mandelman Matters because when I first started blogging in 2008 on MSNBCās 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 Iām not even sure what to sayā¦ and Iām not someone known for being at a loss for words all that often.Ā Read on, if you have the stomach for itā¦ but youāre not going to like this one bit.
Itās about a Minnesota company by the name of Educational Credit Management Corporation, or ECMC for short.Ā The companyās revenue model is that it charges fees to borrowers and earns commissions from taxpayersā¦ commissions that can total as much as 31 percent when collecting on defaulted student loans.
Richard Boyle is ECMCās CEO.Ā In 2010, he took home $1.1 million. Ā Five of the companyās other senior managers each took home over $400,000 that same year, and one guyā¦ Joshua Mandelmanā¦ apparently made $454,000 shaking down those that had defaulted on their student loans.
Boy, I can already tell you that I really donāt want to go any further hereā¦ this cannot possibly end wellā¦ but Iām sort of stuck now.Ā Okay, letās proceed and see how it goes.
So, I catch this story on TwinCities.com, and it says that it was written by John Hechinger at Bloomberg News.Ā The headline reads: Oakdale nonprofit rounds up student loan debts.
Oh yeah, did I not mention that ECMC is a NONPROFIT?Ā See, and you didnāt think the story could get any more offensive than it was at its inception. Ā Well, wrong-o, Moosebreath.Ā (Didnāt Johnny Carson used to say that when he played the role of Carnac the Magnificent?)
Want it to get that much worse?Ā Then youāre in luck.
Mandelmanās $454,000 in 2010 was more than TWICE the amount we paid to the United States Secretary of Education.Ā Did you just throw up in your mouth a little bit right there?Ā Yeah, I knowā¦ sorry about that.
But, weāre still going downā¦ you might want to hold onto something to steady yourself.Ā
Congress rubber-stamped ECMCās deal, and I do mean the U.S. Congress, 18 years ago.
Oh, good.Ā So, at least itās only been going on for 18 YEARS?Ā 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 ārich rewards,ā were āsparking criticism that ECMC and similar collection agencies are reaping a bonanza from former students’ pain.ā
Yeah, Iām starting to worry about me.Ā I donāt think I fit in with this country anymore. Ā Iām just saying that because when I read the story for the first time, while I did feel something āsparking,ā it sure as hell was not ācriticism,ā unless by criticism you mean, āuncontrollable ferocious rage.ā
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.Ā I made sure it wasnāt loaded because I realized at the time that the āsomeoneā I might want to shoot could end up being me.
So, I guess I dodged a bullet there, wouldnāt you say?Ā (LOL)
Alright, so some criticisms in Congress were sparkingā¦ did those entirely ineffective blowhards in Congress do anything about it, or just criticize the situation?Ā Canāt you just imagine hearing them at their critical best in the U.S. House of Representatives?
āAnd I yield the balance of my time toā¦ wait a minuteā¦ whatās this?Ā Just a moment hereā¦ and I donāt want to be accused of being unfair or inappropriate, but I think Iād have to say this is somewhat less than optimal. Ā Frankly, I find it troubling and of great concern, absent any other informationā¦”
Oh, sorryā¦ okay, Iāll put it away now.
The Bloomberg story quoted Robert Shireman, a former deputy undersecretary of education under President Barack Obama, as saying that the programā¦
“ā¦ is enriching collection agencies and undermining a goal we all want for society — to encourage people to go to college.”
See what I meanā¦ am I all alone here?Ā Itās āenriching collection agencies?āĀ Is that what itās doing in this bureaucratās seriously warped mind?Ā Shireman, just sit down and shut up, okay.Ā You obviously have nothing to add to this conversation, and my guess is to any conversation.
Itās not fair to single out ECMC here, because the article said that they are āone of 32 little known āguaranty agenciesā that play a key role in the world of higher-education finance.ā
ECMC explained that their value as an organization, is that they āhelp keep federal financial-aid programs solvent by recovering taxpayer money.ā
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 āhave returned $4.3 billion to the U.S. Treasury.ā
Hawn claims that they help people establish affordable repayment plans, and āfunds more than $20 million a year in college scholarships for low-income students and runs financial-literacy and higher-education counseling programs.ā
Wait a minuteā¦ he forgot to say they were funding black and brown peopleā¦ umā¦ in Minnesota.Ā I sure hope thatās 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, waitā¦ rewindā¦ go back like five paragraphsā¦ where it says ālittle knownāĀ before describing them as āguaranty agencies.āĀ Why the feebles would they be ālittle known?āĀ Whoās keeping them ālittle known?āĀ They need to be BIGGER KNOWN, for sure, I think.
Bloomberg then described their day-to-day operations as follows:
āECMC’s debt collectors earn bonuses as a reward for extracting money from defaulted borrowers.ā
See, a minute ago the COO said they āhelp people establish affordable repayment plans,ā and that he was āproudā of what they were doing as an organization.Ā So, I guess thatās how they help the people with the āestablishingā partā¦ they do some āextracting.ā
Oh, sorryā¦ I was going to put that away.Ā I apologize.Ā
Itās hard for me to comment because I donāt have much context here.Ā You see, Iāve never done any āextracting,ā personally.Ā The only person I know who has is my dentistā¦ he does quite a bit of āextracting,ā and itās not a pleasant task, but apparentlyā¦ if Iām reading this right, and I amā¦ these guys get bonuses for their āextracting,ā so they must grow to enjoy āextracting.ā
And not just bonusesā¦ but taxpayer funded bonuses.Ā I donāt want to jump at something too soon, but if you want my gut reaction, I donāt think I want to pay anyone a bonus for extracting money from a struggling student who canāt pay his or her student loan payments.
And besides, Bloombergās story says that the amounts of the bonuses, at least for the companyās ātopā extractorsā¦ isnāt that what theyād be calledā¦ amount to āas much as 10 times their base salaries, which range from $33,000 to $46,000,ā according to ECMCās 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.Ā So, very well done there.
I canāt help but wonder what Mandelmanās secret is.Ā 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 itās a very nice home in Minneapolis tooā¦ I wonder why our boy Mandelman didnāt invite the Bloomberg reporter inside.Ā I hope it wasnāt cold, like itās not in July and August in Minneapolis.Ā Maybe he was interviewing him two months from now.
And thatās when I found out that Mandelman is 32 years oldā¦ which to my way of thinking is a fine age to be if youāre working as an employee of a NONPROFIT company making sayā¦ $60,000 to maybe $80,000 a year.
But, if youāre making $454,000 a year in taxpayer funded bonuses earned by extracting money from struggling studentsā¦ 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 āhelping borrowers get their finances back on track.āĀ He also said:
Ā āThank-you notes cover his desk.ā
Thatās a lot of helpful extractingā¦ are your parents quite proud of you son?Ā And it must be hard to keep all that extracting done with so many āThank-you notesā COVERING his desk.
Iād be happy to help with that if he needs a right-hand manā¦ and Iām exceptionally Ā 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 Iāll put in the 12-hour days right alongside him, which will actually be nice because thatās six-hours less than Iām putting in now.
In the Bloomberg story it then said: “I did well,” said Mandelman.
Yes, thatās trueā¦ you did do quite well sonā¦ quite well indeed.
Oh, shootā¦ sorry, Iāll put it down right nowā¦ seriously.Ā I forgotā¦
Actually, itās 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, āpart-owner of the Amsterdam Bar and Hall, a restaurant and nightclub in St. Paul,ā according to Bloomberg.
And Mandelman then said: “I worked hard. Ā I also helped a lot of people.”
Okay, so waitā¦ Iām confused.Ā Did he work 12-hour days because after a long, hard day extracting he had to tend bar at his āAmsterdam Bar and Hall, a restaurant and nightclub in St. Paul?āĀ Is that the sort of thing weāre talking about here?
Iām thinkingā¦ not.Ā I looked the place up online and it looks quite lavish, actually.Ā 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 ādaily desert specialā:
pot brownie – 5
They also have a āHash Bar Menu,ā with the following, among other thingsā¦
Lebanese Red ā Saffron Tomatos, Red Peppers, Roasted Veggies, Onions, Potatoes, Egg, Red Hollandaise ā 8.75
XXX Black Hash ā Calamari, Shrimp, Mussels, Potatoes, Onions, Egg, Curry Mayo ā 9.75
Here are just a few of the brands on draft:Ā
Deschutes Inversion IPAĀ – Bold, balanced by Crystal Carastan malts, 6.8% ABV
Summit EPAĀ – A Gold Medal winning extra pale ale, 5.2% ABV
Bellās Two-HeartedĀ – An intensely hoppy, malty, but well balanced IPA, 7.0% ABV
Fulton Sweet Child of Vine –Ā Itās an IPA, Fulton-style, 6.4% ABV
Leffe BlondeĀ –Ā An elegant, smooth, fruity taste with hints of orange, 6.6% ABV
Hoegaarden –Ā A Belgian white spiced with orange and coriander, 5.0% ABV
And they also have a menu of 30 Gins, something Iād never seen before.Ā Iāve seen a Tequila Bar, but I didnāt even know there were that many Gins.Ā Hereās just a fewā¦
St George’s Terroir (USA) Ā 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) Ā 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, sorryā¦ I didnāt 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!
OMGā¦ well, that was embarrassing.Ā Okay thereā¦ itās in my drawer and shut.Ā Gone.
Soā¦ okayā¦ so, then the article went on to talk about the fact that āU.S. higher-education debt is sounding alarms in Washington as defaults more than doubled since 2003, to $67 billion.ā
So, that bodes very well for young Mandelmanās future, Iād say.Ā Heās sort of in a growth industry, right?Ā I mean, not growth the way one might normally think about it, more like a mirror image kind of thing.Ā The fewer jobs there are for students after graduating, the worse our economy gets and of course the lives of those studentsā¦ which is very god indeed if you Mandelman the Extractor.
If defaults doubled since 2003, then I think itās safe to expect them to double again between now and say 2018, so if my numbers are right hereā¦ a 36 year-old Mandelman should be bringing home what do you figureā¦ something in the $750,000 range Iād say looks very conservative.
And thatās not including his partial ownership in the Amsterdam Bar and Hall, a restaurant and nightclub in St. Paul.
Of course, heās never going to get there if he canāt find anything heās looking for because of all those thank-you notes covering his desk as he describes.Ā Look, Iām not kiddingā¦ my offer standsā¦ say the word and Iām on my way to the Twin Cities to start taking care of those countless thank-yous.
Okay, I did that one on purpose.Ā So, whatās your point?Ā Donāt be such a prude.
And next, the Bloomberg article went into the political aspects of whatās going on.Ā It started out by talking about Obamaā¦
āIn 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.ā
Uh ohā¦ Iām not sure this is the right thing to doā¦ I knew this wasnāt gong to be all fun and games.Ā Let me take a breath for a secondā¦ ahhhhhhā¦ okay, not sure about this but go ahead.
Obama āPROPOSEDā that, did he?Ā He āPROPOSEDā 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 countryā¦ he PROPOSED changing something.
Did he get down on one knee to make the āPROPOSAL,ā at least?Ā Who was he doing all this PROPOSING to?Ā And what was the response to my presidentās āPROPOSAL,ā I canāt help but wonder?Ā I donāt recall seeing any of this on C-Span.Ā I must have missed it, I guess.
Was his PROPOSAL accepted?Ā Did Congress agree to debate it quietly behind closed doors during the summer when no one is paying attention?Ā According to Bloomberg:
āThe Education Department declined to discuss compensation at ECMC, referring questions to the company.ā
BANG! BANG! BANG! BANG! BANG! BANG! BANG! BANG! BANG!Ā
And one moreā¦ BANG!
Oh, shut up about the gun already.
I have a couple things I have to say about this.
Firstā¦ NO FRACKING WAY, MR SECRETARY OF EDUCATON.Ā Thatās not an acceptable answer here.Ā You donāt get to āDECLINEā to answer questions about this, you pompous prick.Ā Who do you think you are, Larry Summers?Ā Well, youāre not.Ā You better come up with something to say in response or Iām going toā¦ never mindā¦ just go onā¦
And secondā¦ Iām not only in the wrong damn business, but Iām starting to feel like Iāve spent my whole life as a trained seal.Ā Ā
Jealous much?Ā Hell yes, Iām jealous.Ā That little 32 year-old Hash addict Mandelman couldnāt out-perform me at anything.Ā 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 Iād probably cry all the time if I had to āEXTRACTā money from people who couldnāt pay their student loansā¦ so yeah… thatās all true.
But, on the other side of the coin, Iāve gotā¦ umā¦ wait a secondā¦ no, Iām seriousā¦ Iāve gotā¦ damnā¦ waitā¦ well, there was theā¦ but of course heās probably done that even more, but Iāve alsoā¦ well, not really anymoreā¦ DAMN IT!
Okay, Iāve got somethingā¦ Iāll bet I can still kick his little Gin drinking behind.Ā I know, heās certainly younger and probably in much better shape, but Iām 51 andā¦ of course, the way my luck has been running, heās probably an MMA Cage Fighter on his days off.Ā But so whatā¦
Itās like Iāve always saidā¦ guns donāt solve problems, people solve problems. (Kidding, just kidding. Ā I’m a kidder… I kid.)
Okay, so I didnāt even know this was a business, āNonprofit Student Loan Extracting?ā Is there an SIC code for these guys?Ā How come there are only 32 for the entire country?Ā Have you ever heard anything about this?Ā Where did this come from?
Well, according to Bloomberg, ECMEās Boyle is a former executive with SLM Corp., the largest U.S. student-loan company, known as Sallie Mae.
- Ā In 2002, he received $271,000.
- In 2004, his compensation went up to $618,000.
- In 2008, up again to $852,000.
- In 2010?Ā $1.1 millionā¦ One of highest paid of these āguaranty agencies.ā
This is starting to feel like getting my nose rubbed in the carpetā¦
Three times a month, he commutes to Minnesota from New Mexico, where he lives on a 715-acre ranch.Ā He also travels monthly to ECMC offices in Sacramento and Indianapolis to check up on his extractors in those areas, I would suspect.Ā He turned down Bloomberg for the interview.
The companyās CFO, probably realizing how Iād be feeling about all thisā¦ started backpedaling a bit.Ā He said that:
āOnly āa small numberā of ECMC’s 90 debt collectors received pay in the $300,000 to $400,000 range.Ā On average, they earn about $77,000 a year.ā
Oh, shut up.Ā He went on to tell Bloomberg that āECMC itself decided that debt-collector bonuses were excessive.ā
“We never dreamed we’d have collectors making that much in incentives,” Hawn said.
āLast 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.ā
What market?Ā The student loan collection extracting market?
I canāt keep this up much longer.Ā After this Iāll do what I always do in these sort of circumstancesā¦ think of all the things I havenāt accomplished over the last three plus years and what Iāve sacrificed, weigh myself to make sure Iām still steadily gainingā¦ toss down a pint of Old Kessler straightā¦ and then cry myself to sleep.
Check out this next partā¦
āThe 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.ā
Oh really?Ā Good to know.Ā So, Iāll just assume that in turn weāll 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 knownā¦ and universally hated.Ā In fact, I think Iāll start today with young Mandelman in St. Paul.
Hang onā¦ I just need to send out a quick MandelGramā¦
PAGINGā¦ MAX GARDNERā¦ PAGINGā¦ MAX GARDNER.Ā The Good Mandelman NEEDS YOUR ASSISTANCE.Ā PLEASE CALL ME.Ā REPEATā¦ PLEASE CALL ME!
Ā (Later Iāll turn on the MAXLIGHTā¦ he looks in the sky, sees it, and my phone rings even at 3:00 AM.Ā Heās amazing and will for sure know what I can do about this.)
And then of course thereās the untraceable steps we could take to significantly increase the chances that 32 year-old Extractor Mandelmans will have terrible accidents.Ā Okay with everyone else?Ā Cool.Ā I guess Iām good to go then.Ā I donāt have any student loans, and now that I know all thisā¦ I think Iāll pass going forward.
Bloomberg also pointed out the obvious stuff like thereās no statute of limitations on student loans and they almost never get discharged in bankruptcy.
Also, the article included this little gem of a sentenceā¦
āLike all guaranty agencies, ECMC receives more money collecting from borrowers than it does keeping them from defaulting.ā
Oh, goodā¦ Iām glad.Ā Weāre getting used to that sort of thing with the servicers, so at least we wonāt have to learn anything new about the behavior of slugs, squids and vermin.Ā So, what do these extractors make anyway?
1% of borrower’s loan amount for preventing default through counseling. Ā Just making a quick couple of notes for my guide to torturing these peopleā¦ never let them prevent your default.Ā Okay, got it.Ā Go onā¦
Under current rules set by our governmentā¦ 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 recoverā¦ or, rather, I think the industry term is āextract,ā right?
And hereās the one I liked bestā¦
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 āa jackpot.ā
(So, making another noteā¦ never make 9 payments in a 10 month period.Ā 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 defaultā¦ so, very well done there again.
Bottom-line #1:Ā Scoreboard at ECMC in 2010 shows $131 million from collectionsā¦ roughly $17 million from default prevention programs.
Bottom-line #2: These NONPROFIT organizations get as much as 37 percent of a borrower’s loan amountā¦ half in collection costs and half funded by taxpayers.
The Bloomberg article has significantly more in it about the company etc. and I recommend those who are interested read it here: Oakdale nonprofit rounds up student loan debts.
But, thatās enough for meā¦