A bright spot in First Union Corp.'s acquisition of Money Store Inc. has been the lender's student loan operation, Educaid.

An Internet-based version, Educaid Online, has expanded its business by 30% a year, and recently announced some new services.

By April, Educaid Online will accept loan applications from students over the Internet and provide immediate responses. Participating schools will be able to certify a student's eligibility for a loan via the Internet, and delay receipt of loan funds from Educaid when necessary.

The current version of Educaid Online provides Internet access to account information for students and school administrators. Financial aid personnel can change or cancel disbursements, update borrower information, verify changes, and determine reasons for processing delays. The service also lets users track promissory notes on the Internet.

In the past two years "we have added data encryption and functionality so that students could change addresses on-line," said Gary Sandler, Educaid Online's product manager.

Money Store, which First Union bought in July, founded Sacramento, Calif.-based Educaid in 1984, and has built its student loan portfolio to $2.1 billion, with 1,400 schools as clients. Educaid Online, the first Internet-based student loan operation, was launched in 1996 and now is used by 350 colleges.

United Student Assistance Group in Indianapolis, a guarantee agency, recently introduced a similar offering called NetWizard. And Sallie Mae, the Student Loan Marketing Association, is due to unveil an Internet-based student loan service in the spring.

Unlike these competitors, "we're not coming out with our first product," Mr. Sandler said. "We're expanding and extending our existing product."

To accommodate a regulation from the Department of Education set to go into effect July 1, Educaid Online will become more flexible in disbursing payments to schools. The regulation narrows the time schools can hold on to students' loan money from 10 days to no more than three.

"This means that schools need the ability to say, 'Don't send us those payments until we're ready for them,'" Mr. Sandler said. "All those features for schools to manage disbursement flow will be ready in April, in plenty of time before July," he added.

Educaid sends loan money to client schools by check or wire transfer. "Now we're giving schools the ability to change on-line how they receive payments, either by electronic funds transfer or paper checks," said Mr. Sandler. "The evolution has given additional controls and functionality to schools to manage and maintain loan accounts via the Internet."

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