2022 Update: In 2021, the Department of Education announced that all federal loan delinquencies for the loans it controls would be managed by the Default Resolution Group (DRG) instead of by various collection agencies. Read my article on DRG for up-to-date details on how to contact DRG and what to do if your federal loan is moved to collections. The information in this article may no longer be accurate.
If you attended school before 2011 and borrowed federal student loans, the U.S. Department of Education or a guaranty agency was your lender. The lender doesn't handle your payments, answer questions about your student loan debt, or change your loan repayment plan. Instead, that's the job of your loan servicer.
When you miss more than 270 days of payments, your loans default. And when that happens, your servicer starts the process to move your account to a collection agency or, if your loan was insured, to a guaranty agency, which then collects the defaulted loan.
If Educational Credit Management Corporation is contacting you about defaulted student loans, then it is the guaranty agency that insured your loans. Because you're in default, you're at risk of an administrative wage garnishment, tax refund offset, and Social Security Benefit Offset. Here's what to know about ECMC and how to stop those collection activities from happening to you.
Disclaimer: Although I am a student loan lawyer, this article contains general information and should not be taken as legal advice. If you want legal advice that pertains to your specific situation, you should schedule a free consultation with me.
What is Educational Credit Management Corporation?
ECMC is a guarantor of federal student loan debt made under the Federal Family Education Loan Program (FFEL). The company manages a portfolio of more than $1 billion in federal student loans. It also manages other loans held under various ECMC Student Loan Trusts.
What Can ECMC Help You With?
If ECMC is assigned your defaulted student loans, you can contact the company about the following repayment options:
- Settlement: is the only option to save collection fees and reduce some of the accrued interest. Many federal student loan settlements save the borrower about 10-15% of the current loan balance.
- Loan Consolidation: allows you to get out of default fast. You do not need good credit to qualify. Your credit score won't be checked in the application process. Instead, you're eligible to get a Direct Consolidation Loan if you're not under an active administrative wage garnishment and you have at least two loans to include in the application.
- Loan Rehabilitation: gets you out of default, qualifies you for new financial aid, and allows you to clear CAIVRS after making 9 payments in 10 months. This program also stops wage garnishment after you make your fifth payment.
- Voluntary Payments: does not get you out of default. Choose this option only if you're not eligible for consolidation or rehabilitation.
ECMC representatives will either help you directly or refer you to the debt collector they hire for defaulted student loans, Pioneer Credit Recovery.
Can ECMC take my tax refund? ECMC can take your tax refund from the IRS if you're federal student loans are in default. You can request a tax refund offset reversal for extreme financial hardship by contacting ECMC's Customer Service at 888-221-3262.
What ECMC Can't Help You With
Until you get your loans back into good standing, you're ineligible for:
- income-driven repayment plans
- deferment and forbearance
- new Title IV financial aid
- student loan forgiveness programs
- FHA mortgage
How to Stop a Student Loan Wage Garnishment From ECMC?
Federal law allows ECMC to garnish wages without a court order to collect defaulted federal loans.
- Gather documents: before you call, get a copy of your two most recent pay stubs and most recent federal tax return. You'll likely need that financial information if you establish a payment agreement.
- Speak with a representative: ask for your account number, how many loans you have in default, and what's your total balance.
- Learn your options: ask the representative what your options are to stop the wage garnishment. Before the AWG starts, you may be able to negotiate a settlement, apply for loan consolidation, or enter into the loan rehabilitation program. After the garnishment process starts, your options are limited to settlement and loan rehabilitation.
- Submit required documentation: if you chose loan consolidation, submit the consolidation paperwork to your loan servicer. If you chose the loan rehabilitation program, you'd need to submit and do three things: (a) the Loan Rehabilitation Income and Expense Form and proof of income; (b) schedule 9 monthly payments; and (c) sign and return the Loan Rehabilitation Agreement Letter.
- Confirm receipt: after you submit documents and make any necessary payments, call ECMC. Ask the representative if the company's received the documents, payment and if you've completed all the required steps.
How much of your wages can ECMC garnish? ECMC is allowed to garnish up to 15% of your disposable pay per pay period. Your disposable income is the pay that remains after lawful payroll deductions are withheld from your check.
Will ECMC allow me to consolidate an FFEL Consolidation Loan twice? Student loan borrowers can consolidate an FFEL Consolidation Loan into a Direct Consolidation Loan. You can consolidate for free at studentaid.gov.
Which is better for my credit report: consolidation or rehabilitation?
If the student loans aren't on your credit report, both consolidation and rehabilitation will likely have the same effect on your report and credit score. The loans will be added back, but none of the past negative information should return.
If the loans are on your report, rehabilitation will remove the default status and keep the blemishes. Consolidation will give you a new Direct Consolidation Loan and mark the old loans as "paid in full through consolidation."
Can I get ECMC student loans removed from my credit report?
Federal law prohibits inaccurate reporting. So if the information ECMC has reported is wrong in any way, you can try to have it corrected or removed from your credit report. However, if the information is accurate, the company has the right to keep that information on your report. Speak with a professional that handles Fair Credit Reporting Act (FCRA) issues for help.
How to Make Student Loan Payments With ECMC
You can make payments in the following ways:
- Phone: ECMC customer representatives can take payments using a debit card. You can set up the payments by calling the company at its phone number, 855-810-4922.
- Mail: ECMC, PO Box 16408, St Paul, MN 55116-0408
- Online: www.ecmc.org/myaccount
Contact Information for ECMC
You can contact ECMC's customer service department by phone by calling 866-722-3833. The call center is open Monday through Friday from 7 am to 5 pm CST.
You can mail general correspondence to: ECMC, 111 Washington Avenue South, Attention: Customer Service, Suite 1400, Minneapolis, MN 55401.
Can I File Student Loan Bankruptcy on ECMC Educational Loans?
Here are the steps borrowers can take to file student loan bankruptcy against ECMC educational loans:
- File a Chapter 7 or Chapter 13 case with the bankruptcy court near where you live.
- Gather student loan information to satisfy the applicable undue hardship test, Brunner Test, or the totality of the circumstances test.
- File an adversary proceeding complaint (lawsuit) to discharge student loans.
- Negotiate a settlement or wait for the bankruptcy judge to decide if your education loans are discharged pursuant to 11 USC 523(a)(8).
The Brunner Test
The Bankruptcy Code does not define undue hardship. In the absence of a definition, most bankruptcy judges apply the Brunner Test to analyze if you have an undue hardship.
The Brunner Test comes from a 1980s bankruptcy case, Brunner v. New York Higher Education. The test asks three questions:
- Can you maintain a minimal standard of living for you and your dependents while repaying your student loan debt based on your current monthly income?
- Is your financial situation likely to stay the same for a significant portion of the repayment period of the student loans?
- Have you made good faith efforts to repay your student loans?
When you file your adversary proceeding, make sure your personal facts answer each one of these questions.
ECMC Student Loan Forgiveness Programs
ECMC offers many of the same student loan forgiveness and cancellation program offered by the Department of Education. For many of those programs, you have to get out of default before you qualify.
Once you do, you may be eligible for:
- the Public Service Loan Forgiveness Program (PSLF)
- the Income-Driven Repayment Plan forgiveness options
- the Teacher Loan Forgiveness Program
About Educational Credit Management Corporation
ECMC was established in 1994 and is headquartered in Minneapolis, Minnesota. Since its creation, the company's launched several for-profit and nonprofit subsidiary corporations that became involved in the private loan business, management and technology services, and student loan default prevention and management. It has also acquired Corinthian Colleges, which, before being closed, were postsecondary institutions accused by then California Attorney General Kamala Harris of engaging in predatory practices.
How to Complain About ECMC
If you're having difficulty with ECMC that you've been unable to resolve, start by filing a complaint with the company's Ombudsman at email@example.com.
If that fails, you can also file a complaint with the Department of Education's highest customer service office, the FSA Ombudsman. Call 877-557-2575.
If your issue goes unresolved, you can also make complaints about ECMC to:
- the Federal Student Aid Feedback Center
- the Consumer Financial Protection Bureau (CFPB)
- the Better Business Bureau (BBB)
- your congressional representative
- your state attorney general's office
What does ECMC stand for? ECMC stands for Education Credit Management Corporation.
Is ECMC a legitimate company? ECMC is a legitimate company. They provide third-party guarantor services. And they are the designated guarantor in California, Connecticut, Maine, Oregon, South Carolina, Tennessee, and Virginia. ECMC also owns other affiliates:
- ECMC Education
- ECMC Foundation
- ECMC Group
- ECMC Solutions
Is ECMC a collection company? ECMC is a legitimate debt collection agency of government and higher education debt, including federal and private student loan collection accounts, accounts receivables, tuition and fees, housing charges, and other consumer debts. The company provides those collection services to over 200 government institutions, colleges, and universities across the nation. Although ECMC is not BBB accredited, it's not a scam company.
Is ECMC a government agency? ECMC is not a government agency. It is a nonprofit company headquartered in Minneapolis, Minnesota. The company acts as a student loan guaranty agency that provides administration of the Federal Family Education Loan Program (FFELP). It works to reduce student loan borrowers' default rates by increasing financial literacy and advising repayment options.
Is ECMC a collection agency? ECMC is a debt collection agency. They use collection tactics to collect on defaulted federal student loans. They send negative information to your credit report, thereby destroying your credit score. As debt collectors, they also have the power to garnish student debtors' wages and offset their tax refund.
Is ECMC a federal student loan? ECMC handles federal student loans. The company is a guarantor of federal student loans made under the Federal Family Education Loan Program (FFELP). It also provides support services to the federal government for student loan accounts in default or bankruptcy.
Is ECMC the same as Navient? ECMC and Navient are two different entities. ECMC is a nonprofit corporation that guarantees federal student loan obligations. Navient Solutions is a student loan servicer for both federal student loans. It is also a holder of private student loans.
Need help with ECMC? Let's talk
If you want to go over your options, schedule a free 10-minute phone call with me. I've got years of experience helping people like you with their student loans.
Let's talk. I can help you find a way to get out of default while saving the most money and preserving your eligibility for loan forgiveness.