Educational Credit Management Corporation

EDUCATIONAL CREDIT MANAGEMENT CORPORATION (ECMC) PROVIDES FINANCIAL COUNSELING AND EDUCATION TO EMPOWER STUDENTS TO MAKE BETTER CHOICES ABOUT THEIR FUTURES. ECMC, A 501(C)(3) ORGANIZATION, IS A NATIONAL GUARANTY AGENCY DESIGNATED BY THE U.S. SECRETARY OF EDUCATION UNDER AND PURSUANT TO THE PROVISIONS OF THE HIGHER EDUCATION ACT OF 1965, AS AMENDED. IN 2013, ECMC ADDED THE SOLUTIONS PROGRAM, PROVIDING DEFAULT PREVENTION AND FINANCIAL LITERACY TO STUDENT LOAN BORROWERS TO HELP THEM UNDERSTAND THEIR REPAYMENT OPTIONS BEFORE BECOMING DELINQUENT OR DEFAULTING ON THEIR FEDERALLY INSURED STUDENT LOANS. THE PROGRAM INCLUDES RESOURCES FOR POSTSECONDARY INSTITUTIONS TO ASSIST THEM IN MANAGING THEIR COHORT DEFAULT RATE. SERVICES ARE OFFERED TO POSTSECONDARY INSTITUTIONS UNDER A FEE STRUCTURE.

DEFAULT AVERSION, CLAIMS AND COLLECTION PROGRAM: IN EDUCATIONAL CREDIT MANAGEMENT CORPORATION'S (ECMC'S) ROLE AS A FEDERAL STUDENT LOAN GUARANTOR, WE ARE RESPONSIBLE TO PERFORM DEFAULT PREVENTION ACTIVITIES, REIMBURSE LENDERS FOR DEFAULT AND OTHER TYPES OF CLAIMS, AND RECOVER DEFAULTED STUDENT LOANS. DEFAULT PREVENTION PROGRAM: ECMC HAS A ROBUST DEFAULT PREVENTION PROGRAM FOCUSED ON EDUCATING AND COUNSELING DELINQUENT BORROWERS ON REPAYMENT STRATEGIES TO FIND THE ONE THAT BEST FITS THEIR SITUATION SO THEY CAN SUCCESSFULLY REPAY THEIR LOAN. ECMC'S COMMITMENT TO PREVENTING DEFAULTS IS STRONG; OUR POSITIVE RESULTS REFLECT OUR DEDICATION TO THIS PROGRAM. COLLECTION PROGRAM: FOR THOSE BORROWERS WHO FACE THE UNFORTUNATE SITUATION OF STUDENT LOAN DEFAULT, IT IS NOT ONLY OUR FIDUCIARY RESPONSIBILITY TO THE U.S. TREASURY AND THE TAXPAYER TO COLLECT THOSE LOANS, ECMC IS ALSO COMMITTED TO HELPING THE BORROWER RECOVER FROM DEFAULT. FORTUNATELY, CONGRESS HAS GIVEN US TOOLS TO DO SO, SUCH AS THE LOAN REHABILITATION PROGRAM WHERE WE ARE GIVEN SIGNIFICANT LATITUDE TO ESTABLISH AN INCOME-CONTINGENT REPAYMENT ARRANGEMENT WITH THE BORROWER. WITH SUCCESSFUL COMPLETION OF THIS PROGRAM, THE DEFAULT STATUS IS REMOVED FROM THE BORROWER'S RECORD. SINCE INCEPTION, ECMC HAS RETURNED $21.3 BILLION IN STUDENT LOAN RECOVERIES TO THE U.S. TREASURY. IN MARCH 2020, A NOVEL STRAIN OF CORONAVIRUS, REFERRED TO AS COVID-19, WAS DECLARED A GLOBAL PANDEMIC AND CAUSED SIGNIFICANT DISRUPTION IN THE UNITED STATES AND WORLD ECONOMIES. AS A RESULT OF COVID-19, CONGRESS PASSED A SERIES OF LEGISLATIVE STIMULUS BILLS, WHICH CONTAINED PROVISIONS FOR RELIEF FOR SOME STUDENT BORROWERS. ON MARCH 27, 2020, THE CORONAVIRUS AID, RELIEF, AND ECONOMIC SECURITY (CARES) ACT WAS SIGNED INTO LAW. ON APRIL 3, 2020, THE U.S. DEPARTMENT OF EDUCATION (ED) ISSUED ADMINISTRATIVE GUIDANCE TO GUARANTY AGENCIES, WHICH WERE NOT COVERED BY THE CARES ACT, TO STOP COLLECTION ACTIVITIES ON DEFAULTED STUDENT LOANS UNTIL SEPTEMBER 30, 2020. ON MARCH 30, 2021, ECMC RECEIVED VERBAL GUIDANCE FROM ED INTENDED TO EXTEND THE SAME BENEFITS TO DEFAULTED FFELP BORROWERS THAT DIRECT LOAN BORROWERS RECEIVED UNDER THE CARES ACT. ED VERBALLY DIRECTED GUARANTY AGENCIES TO STOP INTEREST ACCRUAL AND INVOLUNTARY COLLECTIONS FOR DEFAULTED FFELP BORROWERS UNTIL SEPTEMBER 30, 2021, SUBSEQUENTLY EXTENDED TO MAY 1, 2022. ON MAY 12, 2021, ED ISSUED A DEAR COLLEAGUE LETTER (DCL) GEN-21-03 CONFIRMING THIS PREVIOUSLY PROVIDED DIRECTION AND EXPRESSLY AUTHORIZING GUARANTORS TO REIMBURSE THEMSELVES FROM THEIR FEDERAL FUND FOR BORROWER REFUNDS, ADJUSTMENTS AND LOST DEFAULT COLLECTIONS REVENUES DUE TO THE COLLECTIONS PAUSE. IN GOOD FAITH, ECMC HAS COMPLIED WITH ALL DCL GUIDANCE AND UTILIZED HISTORICAL RECOVERY RATES TO DERIVE THE ESTIMATED AMOUNTS THAT ARE SUBSTANTIATED BY ECMC'S FINANCIAL REPORTING TO ED. ECMC RECORDED $231.7 MILLION FOR REIMBURSEMENT OF LOST COLLECTIONS REVENUE RESULTING FROM THE COLLECTIONS PAUSE PUBLISHED IN THE DCL, $30.6 MILLION OF WHICH IS A RECEIVABLE AS OF DECEMBER 31, 2021.

LOAN GUARANTEE PROGRAM: EDUCATIONAL CREDIT MANAGEMENT CORPORATION (ECMC) IS THE DESIGNATED GUARANTY AGENCY FOR VIRGINIA, OREGON, CONNECTICUT, CALIFORNIA, TENNESSEE, SOUTH CAROLINA, RHODE ISLAND AND MAINE UNDER THE FEDERAL FAMILY EDUCATION LOAN PROGRAM (FFELP). A GUARANTY AGENCY UNDER FFELP PROVIDES FEDERAL STUDENT LOAN GUARANTEES AND ONGOING PROCESSING SERVICES TO U.S. DEPARTMENT OF EDUCATION-APPROVED FFELP LENDERS AND POSTSECONDARY EDUCATION STUDENTS AND THEIR PARENTS FOR LOANS EXTENDED UNDER FFELP. FFELP WAS ESTABLISHED BY THE U.S. CONGRESS AS A MEANS OF MAKING LOANS AVAILABLE TO STUDENTS ATTENDING QUALIFYING POSTSECONDARY EDUCATIONAL INSTITUTIONS AND TO PARENTS OF SUCH STUDENTS. FFELP PROVIDES FOR THE GUARANTOR TO GUARANTEE THE REPAYMENT OF PRINCIPAL AND ACCRUED INTEREST TO THE LENDER FOR EACH ELIGIBLE LOAN. ADDITIONAL SERVICES PROVIDED BY ECMC IN FULFILLING ITS ROLE AS A GUARANTY AGENCY INCLUDE, BUT ARE NOT LIMITED TO: ASSISTING BORROWERS AND PARENTS IN PREPARING FOR COLLEGE; FINANCIAL LITERACY AND MONEY MANAGEMENT EDUCATION; EDUCATION REGARDING THE OBLIGATIONS ASSOCIATED WITH STUDENT LOANS; AND EDUCATION ON HOW TO AVOID STUDENT LOAN DEFAULT. ON MARCH 30, 2010, THE HEALTH CARE AND EDUCATION AFFORDABILITY RECONCILIATION ACT OF 2010 WAS SIGNED INTO LAW AND AMENDED THE HIGHER EDUCATION ACT BY TERMINATING THE AUTHORITY TO MAKE OR INSURE NEW LOANS UNDER FFELP AFTER JUNE 30, 2010. AS A RESULT, ECMC CEASED GUARANTEEING LOANS EFFECTIVE JULY 1, 2010. ALL EXISTING FFELP LOANS WILL CONTINUE TO BE GUARANTEED AND SERVICED AS FFELP LOANS THROUGHOUT THEIR REMAINING LIFE, WHICH GENERALLY AVERAGES 6 YEARS. AS OF DECEMBER 31, 2021, THE NON-DEFAULT GUARANTEE PORTFOLIO CONSISTED OF $15.4 BILLION IN ORIGINAL OUTSTANDING PRINCIPAL BALANCE. ON NOVEMBER 1, 2016, ECMC ENTERED INTO A THREE-YEAR AGREEMENT WITH THE U.S. DEPARTMENT OF EDUCATION (ED), WHEREBY ECMC WILL PARTICIPATE IN ED'S PROJECT SUCCESS BY PROVIDING SERVICES ON BEHALF OF ED TO CERTAIN MINORITY-SERVING INSTITUTIONS (INSTITUTIONS). THE SERVICES THAT ECMC MAY PROVIDE TO THE INSTITUTIONS INCLUDE INSTITUTIONAL SUPPORT SERVICES TO BENEFIT THE INSTITUTIONS AND SERVICES TO ASSIST THE INSTITUTION'S STUDENTS. ALL OF THE SERVICES PROVIDED MUST RELATE TO FEDERAL STUDENT LOANS. THE SECRETARY HAS AUTHORIZED ECMC TO USE THE GUARANTOR FEDERAL RESERVE FUND TO PAY THE COST OF PROVIDING SERVICES UNDER THE PROJECT SUCCESS PROGRAM, NOT TO EXCEED $20 MILLION FOR THE THREE-YEAR AGREEMENT. THE AGREEMENT WAS RENEWED ON NOVEMBER 1, 2019, FOR AN ADDITIONAL THREE YEARS. THE GUARANTOR FEDERAL RESERVE FUND REIMBURSED ECMC FOR EXPENSES INCURRED IN THE AMOUNT OF $3.0 MILLION FOR THE YEAR ENDED DECEMBER 31, 2021.

BANKRUPTCY SERVICING: EDUCATIONAL CREDIT MANAGEMENT CORPORATION (ECMC) SERVICES AND MONITORS THE BANKRUPTCY CASES ON FFELP STUDENT LOANS CURRENTLY UNDER CHAPTER 7 OR 13 OF THE BANKRUPTCY CODE. THE BANKRUPTCY LOANS ARE TRANSFERRED FROM THE U.S. DEPARTMENT OF EDUCATION (ED) AND OTHER GUARANTY AGENCIES FOR PROCESSING BY ECMC. AT THE REQUEST OF ED, SPECIALTY STUDENT LOAN SERVICES ARE ALSO PERFORMED FOR ED. THE BANKRUPTCY STUDENT LOAN PORTFOLIO AT DECEMBER 31, 2021 CONSISTED OF $948 MILLION IN OUTSTANDING PRINCIPAL, INTEREST AND FEES.