NCO Group Bests Pioneer for Top Ranking in ED Collection Contract

NCO Group Inc. outperformed Pioneer Credit Recovery to receive the top ranking in July among unrestricted contractors in the U.S. Department of Education‘s student loan collection contract competitive performance report.

The world’s largest accounts receivable management company won the top spot with an overall score of 97.62, well ahead of Pioneer, which scored 82.65 points. ERS climbed 10 spots to finish third with 81.89 points.

Performance rankings among the unrestricted contractors have been the most volatile since ED’s newest collection contract began in October 2009. But July marks the first time that Pioneer, a division of student loan giant Sallie Mae, has not ranked first.

ED’s performance scores are based on a weighted average of total dollars collected, total accounts serviced and administrative resolutions. The top performer in each category receives the maximum score for that category, and the other agencies are scored against the top performer. The department awards 70 points for dollars collected to the top performance, 20 points for total accounts serviced, and 10 points in the administrative resolution category.

NCO outperformed Pioneer in the administrative resolutions and dollars collected category, but gained its biggest lead in the latter category by collecting upwards of $400,000 more than Pioneer in July.

NCO was reserved in comments about its latest standing in the ED contract performance results.

“The first month of a period is not as significant as the results at the end of the period, which will be Sept 30th. NCO would prefer to comment at the end of the full period,” said a company spokesman.

On behalf of Pioneer, spokesman Rick Castellano said, “We are proud of our exceptional performance on behalf of the Department of Education.”

ED contractors say end of quarter results promise even more surprises because those results will include student loans that have been rehabilitated.

Rehabilitated loans are loans that have nine qualifying payments over 10 consecutive months. July results included a fraction of rehabilitated loans for some contractors. But significantly more rehabilitated loans are expected to be included in August results, said James Lincoln, general manager and ED contract administrator for Van Ru Credit Corp.

“This is where you will start to see the separation occur,” Lincoln said, adding that some agencies are expected to add between $6 million to $12 million in rehabilitation loans on top of what they have collected in regular dollars when the rehabilitation loans begin to be factored into the performance results this quarter.

“That’s what will spread out the pack,” he said.

In the small business category, Coast Professional, Inc. reclaimed the top ranking with an overall score of 96.33, replacing Collection Technology, Inc. which finished fourth. National Recoveries was ranked second with 86.67 points and Immediate Credit Recovery scored 82.94 to finish third.

Brian Davis, CEO of Coast Professional said he is pleased that Coast regained the lead, but is taking nothing for granted. The companies in the small business category often are separated by fractions of a point.

“We have a lot of respect for the competitiveness of other contractors. Everyone (at Coast Professional) is aware of what needs to happen and how we get it done,” Davis said.

During the first nine months of the contract, all 22 contractors (17 unrestricted and five small businesses) have collected nearly $140.7 million.