Bloomberg Still Hates Student Loan Collectors

Bloomberg still thinks you look fat in those jeans and is spreading misstatements about you in the lunchroom — “you” being the student loan collection industry, and “Bloomberg” being that Mean Girl we all tried to avoid in high school.

Here’s the story, running on the Bloomberg site: “Taxpayers Fund $454,000 Pay for Collector Chasing Student Loans”

Mixed in with all the wrong-headed hyperbole and factual elisions is a story that isn’t as negative as Bloomberg wants it to be. Let’s work our way through some of the hits and misses:

1) “Joshua Mandelman made $454,000 in a single year as a student-loan debt collector — more than twice the pay of the U.S. secretary of education.”

That’s a non-issue. The U.S. secretary of education doesn’t work on commission. This is an apples-to-oranges comparison, designed to angry the blood of people who aren’t careful readers.

2) “The loan program [collection agencies working for the government who collect defaulted student loan payments] ‘is enriching collection agencies and undermining a goal we all want for society — to encourage people to go to college,’ Robert Shireman, a former deputy undersecretary of education under President Barack Obama, said in a telephone interview.”

Nope. That collection agencies are collecting late unpaid student loans is not what might be discouraging people from going to college. The increase in college tuition incommensurate with the pace of wage increases is one reason. hefty loan payments in a bleak job market is another.

3) “ECMC [Educational Credit Management Corp., a Minnesota nonprofit group] is one of 32 little-known ‘guaranty agencies’ that play a key role in the world of higher-education finance. They oversee student loans for the U.S. Education Department, which began its lending program in 1965. The groups guarantee loans made by banks and other private lenders. They promise to repay the lenders if borrowers don’t. If the agencies can’t recover the money, the federal government takes over the loan, shifting the risk to taxpayers.”

This is a curious paragraph. Again, I think its main focus is to make the reader furious with companies like ECMC — how dare they profit! How dare they collect late or defaulted payments! — instead of assessing the kind of process that puts so many students on the path to financial ruin by encouraging them to, in the words of Ohio Northern University, “pursue their dreams rather than obsess on the sticker price.”

4) “ECMC says it helps keep federal financial-aid programs solvent by recovering taxpayer money. Since its founding in 1994, the company has returned $4.3 billion to the U.S. Treasury, said Dave Hawn, ECMC’s chief operating officer.”

Notice how Bloomberg didn’t lead with this tidbit? It’s a compelling tidbit. Let’s look at $4.3 billion over 18 years next to the article’s opening outrage about a collector making $454,000 in a year.

5) “I’m really proud of what we do as an organization,” Dave Hawn, ECMC’s chief operating officer, said.

And what do they do as an organization? “The agency’s collectors steer borrowers into affordable payment plans, repairing their credit and turning their lives around, Hawn said in a telephone interview. ECMC also funds more than $20 million a year in college scholarships for low-income students and runs financial-literacy and higher-education counseling programs.”

Again: this doesn’t make it into the lede (that’s fancy journalism talk for “opening paragraph” — you’re practically a journalist now and you didn’t have to go to a four-year college for that). It’s buried below. But it’s an incredibly important piece of information — and not just because you and I are comrades in collections. If the argument is “collection agencies are getting too rich working these accounts,” this late-breaking information seven paragraphs in would seem to, if not contradict, at least mitigate a lot of that vitriolic emotion.

6) “ECMC’s debt collectors earn bonuses as a reward for extracting money from defaulted borrowers.”

Emotional Language Alert: “extracting”? Oh, boy.

7) “In an interview outside his home in Minneapolis, Mandelman, 32, said he works 12-hour days helping borrowers get their finances back on track. Thank-you notes cover his desk, he said.”

Again, please pay attention to the distance between this paragraph about Mandelman, and the opening paragraph where it looks like Mandelman is just rolling in cash on the floor of his office doing nothing but “extracting” from poor borrowers. Of course, by the time a reader gets to this part, they’ve already made up their mind about how terrible the whole operation is — and they won’t pay attention to phrases like “get their finances back on track” or “Thank-you notes cover his desk.”

8) “We don’t think anyone working on our behalf should put personal profit ahead of serving the best interests of students,” Justin Hamilton, a department spokesman, said in an e-mail.

There’s a false consequence hiding here. Bloomberg wants to suggest that anyone making a profit collecting student loan debt is not serving the best interest of student. But just looking at the example of ECME — who, again, has returned $4.3 billion to the U.S. Treasury over 18 years — you see that they aren’t mutually exclusive. ECME can be profitable AND serve the best interest of students.

You guys — that’s just page 1. This is a three-page smear job. Page two delves into the property habits of ECMC’s CEO (he owns a super nice house and has cows, and each one of those cows is apparently responsible for a plucky co-ed not getting that pottery degree he wants to borrow a lot of money to earn)

Page three hides this fascinating tidbit: “The National Council of Higher Education Loan Programs, which represents guaranty agencies, says the organizations prevented 88 percent of seriously delinquent loans from defaulting in 2009, the most recent year for which data is available.” Again: information that could have shown up in the lede is buried deep in the article because it takes away from Bloomberg’s point which is: student loan collection is The Worst. The End.

If you’re commenting fingers feel loosened up, you might read the article yourself — your conclusion may be vastly different from the one I came to — and then respectfully share your experiences with Bloomberg readers.