ECMC Student Loan Repayment & Forgiveness Options

If you attended school before 2011 and borrowed federal student loans, the U.S. Department of EducationU.S. Department of Education (ED)The federal agency that oversees federal student aid programs, issues regulations for federal student loans, and is the ultimate lender on Direct Loans. or a guaranty agencyGuaranty AgencyA state or nonprofit agency that administers defaulted FFELP loans and acts on behalf of the federal government in collecting those debts. 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 servicerLoan ServicerThe company that manages a borrower's federal student loan account, processes payments, and handles applications for repayment plans, deferment, forbearance, and forgiveness on behalf of the U.S. Department of Education.. When you miss more than 270 days of payments, your loans defaultDefaultThe status of a federal student loan after the borrower has failed to make required payments for 270 days. Default can trigger collection actions such as wage garnishment, tax refund offset, and damage to credit reports.. 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 garnishmentAdministrative Wage Garnishment (AWG)A process by which the federal government can require a borrower's employer to withhold up to 15% of disposable pay to repay a defaulted federal student loan, without a court order., tax refund offsetTax Refund OffsetThe seizure of a federal tax refund through the Treasury Offset Program to repay a defaulted federal student loan or other delinquent federal debt., and Social Security Benefit Offset. Here's what to know about ECMCECMCEducational Credit Management Corporation, a nonprofit guaranty agency that manages defaulted FFELP loans and is frequently the opposing party in student loan bankruptcy litigation. and how to stop those collection activities from happening to you.

What is Educational Credit Management Corporation?

ECMC is a guarantor of federal student loan debt made under the Federal Family Education Loan ProgramFederal Family Education Loan Program (FFELP)The federal program that guaranteed student loans made by private lenders through 2010. Loans issued under this program are commonly called FFELP loans and are still held by millions of borrowers. (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 rehabilitationRehabilitationA federal program for borrowers in default that requires nine voluntary, on-time monthly payments over ten months. After rehabilitation, the default is removed from credit reports and federal aid eligibility is restored. It is available once per loan..

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 repaymentIncome-Driven Repayment (IDR)A category of federal student loan repayment plans that calculate monthly payments based on income and family size rather than loan balance. Any remaining balance can be forgiven after 20–25 years of qualifying payments. 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.

1. 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.
2. Speak with a representative: ask for your account number, how many loans you have in default, and what's your total balance.
3. 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.
4. 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.
5. 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. Online: https://www.ecmc.org/borrowers/account-resolution-form.html

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:

1. File a Chapter 7 or Chapter 13 case with the bankruptcy court near where you live.
2. Gather student loan information to satisfy the applicable undue hardship test, Brunner TestBrunner TestA three-part legal standard many bankruptcy courts use to decide whether repaying student loans would cause undue hardship. It considers current income, likely future circumstances, and good-faith effort to repay., or the totality of the circumstances test.
3. File an adversary proceeding complaint (lawsuit) to discharge student loans.
4. 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 hardshipUndue HardshipThe legal standard a borrower must meet to discharge federal student loans in bankruptcy under 11 U.S.C. § 523(a)(8). Courts apply different tests, most commonly the Brunner Test or the Totality of the Circumstances Test.. 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:

1. 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?
2. Is your financial situation likely to stay the same for a significant portion of the repayment period of the student loans?
3. 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 ForgivenessPublic Service Loan Forgiveness (PSLF)A federal program that forgives the remaining balance on Direct Loans after 120 qualifying monthly payments made while working full-time for a government or qualifying nonprofit employer. Program (PSLF)
• the Income-Driven Repayment Plan forgiveness options
• the Teacher Loan ForgivenessTeacher Loan ForgivenessA federal program that can forgive up to $17,500 of Direct or FFELP loans for teachers who complete five consecutive years of full-time teaching at a low-income school or educational service agency. 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 ombudsman@ecmc.org. 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

Need help with ECMC? Let's talk

If you want to go over your options, schedule a 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.