bank of america student loan
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First Marblehead sinks as B of A defection reported
NEW YORK (Reuters) - First Marblehead Corp. (FMD.N: Quote, Profile, Research) shares fell as much as 12.9 percent on Thursday after an analyst said Bank of America Corp. (BAC.N: Quote, Profile, Research), one of its largest customers, is outsourcing new private student loan products to a competitor.
Matt Snowling, an analyst at Friedman, Billings, Ramsey & Co., said the No. 2 U.S. bank is outsourcing the products to EduCap Inc., a Washington, D.C.-based nonprofit that has been facilitating Bank of America-branded loans since late May.
The analyst said the bank accounts for 27 percent of Boston-based First Marblehead's loans.
"While it is impossible to determine the impact to earnings, the fact that one of First Marblehead's longstanding partners chose a competitor raises issues regarding the company's vulnerability to competitors and pricing," Snowling wrote.
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Go online to save on student loans
College students who need a loan and want to avoid Saturday's big interest rate hike have one last-minute option: the Internet."We have actually been overwhelmed by callers," said Whitney Bank president Tommy Tait. "At this point in time it's too late with all the paperwork we would have to process."Tait recommends applying online through Sallie Mae, the leading provider of student loans.Bank of America, with several branches in the Pensacola Bay Area, also participates in the student loan program. Applicants can seek a last-minute loan through the Bank of America's Web site.Students who want to consolidate their existing loans, or need loans to start school this fall, have every incentive to lock in rates before Saturday.The rate increase will be one of the largest one-year increases in the history of the federally backed student loan program.