Banc One Corp. has turned over some of its education loan originations to an outsourcer.

The $124 billion-asset company is the second in four months-Crestar Financial Corp. was the other-to farm out its nongovernment education lending to Servus Financial Corp., Herndon, Va.

In recent years, Servus has also handled some loans for Education First Marketing, a joint venture of Chase Manhattan Corp. and the Student Loan Marketing Association.

Servus, a five-year-old private-label lender, originates and approves loans only via the Internet or telephone. Once an application is filed, the system can pull credit information and make a lending decision within 25 seconds, said Douglas Dolton, president and chief executive officer of Servus.

The firm historically has targeted students seeking loans to buy computers. Another target market has been people interested in taking training classes at companies such as Microsoft.

Nongovernment education loans account for about $2 billion of the $32 billion student lending industry, said Michael McEvoy, senior analyst in Tower Group's consumer credit unit.

The $26 billion-asset Crestar had already offered government-backed loans for students but wanted to take part in the significant growth it anticipated in the nongovernment arena, said Clark McGhee, senior vice president.

Most major banking companies do not outsource their lending, according to Barbara Smiley, research director at Meridien Research Inc.

But Mr. McGhee said his company believed it prudent to work with a seasoned entity.

"Partnering with Servus Financial allowed us to get access to the market in a short period of time with a provider already experienced in the business," said Mr. McGhee.

Crestar has generated several million dollars of loans since the service was begun in March, Mr. McGhee said.

A separate funding bank provides cash for the loans, and Crestar gets a fee.

Servus markets the loans under Crestar's name and grants credit according to the bank's guidelines. The firm also processes the paperwork, sends the checks, and collects the payments.

Applicants are told of the lending decision by Servus agents over the telephone or by e-mail if they apply via the Internet.

The Web-based application is available through the bank's site.

Banc One's program with Servus is similar, except that the bank itself funds the loans originated by Servus-on an expectation that this approach will be more profitable.

Banc One has gotten several thousand telephone queries since setting up the program in late June and expects business to pick up once students enroll for the fall term, said Robert Moore, president of Banc One education finance group.

By outsourcing, Banc One can concentrate on business development rather than building infrastructure, said Steven Alonso, president of the consumer financial services division. It evaluated building rather than buying and found that Servus would let Banc One offer the loans more quickly.

"We wanted to enter the business in a big way," Mr. Moore said.

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