WASHINGTON - ECMC, the Minnesota nonprofit hit by the theft of personal data for 3.3 million students last week, expects to lose much of its business as a guarantor of student loans under a new law signed Tuesday by President Obama.
The law, passed along with the new health care bill, puts an end to government guarantees and subsidies of private bank loans for college tuition. Instead, the government will expand its program of direct lending to students.
ECMC, founded 16 years ago as Educational Credit Management Corp., insures about $11 billion in student loans. Much of that activity will be taken over by the government, which will back its own student loans. While the Oakdale-based nonprofit company can't issue new loan guarantees under the government program, it will continue to insure current borrowers, who have an average repayment schedule of 10 years.
"We fully anticipate an orderly wind-down," said Dave Hawn, ECMC's chief business development officer.
Hawn said the company expects to refocus its business on default protection, collection and other loan services. ECMC Group Inc. reported nearly $58 million in revenue in 2008, according to Internal Revenue Service records.
ECMC is one of the top 10 student loan guaranty agencies in the country, according to its website. Long based in St. Paul, it moved its headquarters -- and 320 jobs -- to Imation's campus in Oakdale in 2008.
Last week, the company reported a break-in at its headquarters involving the theft of discs containing "personally identifiable information" on about 3.3 million customers, including names, addresses, dates of birth and Social Security numbers. No bank account or other financial information was included, and company officials said they are not aware of any instances of the data being misused.
Kevin Diaz is a correspondent in the Star Tribune Washington Bureau.
