Seeking to boost their student loan volume, eight banks are planning a joint venture to automate the financial aid process nationally.
To be known as Educational Loan Management Partners, the venture will provide disbursement, information, and funds directly to colleges participating in the Federal Family Education Loan Program electronically.
"The bottom line to lenders obviously is we're looking for volume, and we're hoping colleges will choose us because of what the product has to offer," said Henry Kowalski Jr., senior vice president, Fleet National Bank.
The banks hope to make processing the loans cheaper in the wake of federal legislation that gutted the profit margin on student loans and put the U.S. Department of Education in direct competition with banks.
Fleet is one of eight banks participating in the consortium.
The others are: BankAmerica Corp., Barnett Bank's ClassCredit; Chemical Banking Corp.'s Educational Financing Group; Citibank's Student Loan Corp.; First National Bank of Chicago; San Francisco-based Union Bank; and Wells, Fargo & Co.
The group includes BAC International, the California Higher Education Loan Authority, Household International, and XAP Co., which developed the computerized application.
Fleet estimates that about 1,000 colleges will participate by June 1995, six months after the joint venture is expected to be launched. A spokesman said that other lenders may be allowed to use the system under a licensing arrangement.
The service will be free to students and colleges.
Mr. Kowalski said it will allow students to obtain financial aid information and send their applications by mailing a diskette to a college or over public information networks.
"Students can even see a needs analysis, school budget, and primary financial aid award package right at their computers," he said.