New Face Tops ED Collection Contract Competition in Second Quarter

Coast Professional had a near-perfect second quarter to unseat Collection Technology, Inc. to win the U.S. Department of Education’s private student loan quarterly performance competition among small businesses. Meanwhile, Diversified Collection emerged as the winner among unrestricted contractors – the first time the Livermore, Calif.-based company has won the quarterly performance competition during the 2009 contract.

As a result, Coast Professional and Diversified received the most new accounts when ED distributed them last month.

Collection Technology Inc. (CTI), of Monterey, Calif. was a strong contender to win the contest for the sixth quarter in a row after it was atop the small business rankings in May. But Coast Professional of West Monroe, La. came close to pulling off a clean sweep in the scoring categories. It lost only the dollars collected portion to CTI by less than 50 basis points.

Coast ended the quarter with 99.67 points. CTI finished second with 96.66 points, and Delta Management Associated finished third with 88.44 points.

Among unrestricted contractors, Diversified Collection scored 98.95 points, while Pioneer Credit Recovery, a division of student loan giant Sallie Mae, and FMS Investment Group scored 95.19 and 92.47 points, respectively.

Performance results for the Education Department’s private collections are determined by a weighted average of contractors’ performance in total dollars collected; total accounts serviced, and total administrative resolutions. The department awards 70 points to the top performer in the dollars collected category. Twenty points are awarded to the top performer in the total accounts serviced category, while the top performer in administrative resolutions receives 10 points. The other agencies are scored against the top performers in each category.

As has been the case in recent months, Diversified won the performance competition by winning the dollars collected category with a 4.37 recovery rate. Pioneer and FMS Investment didn’t win any of the categories outright, but each recovered enough revenue to earn more points in the category than West Asset Management, which won the other two categories.

As of June 30, 2011, the contractors (17 unrestricted and 5 small businesses) have yielded the Education Department almost $1.7 billion in collections — not including other revenue streams such as approved litigation accounts and pending rehabilitated loans.

Performance Scores for the Second Quarter 2011