First Marblehead was founded in 1991 to help schools and lenders create more affordable educational loan products. The company became private years later in August 2016 after spending over a decade as a publicly traded firm.
The First Marblehead Corporation tries providing loan programs from lender clients to undergraduate and grad students. These programs might be enticing to those who need to refinance college loans (or paying off their old loans with a new loan and interest rate), get a hold on their tuition billing (making sure they understand what they’re paying for), and learning more about potential refunds.
The company also works to help with payment technology services for universities and schools.
Upgrading to Cognition Financial Corporation
As of May 2017, First Marblehead Corporation changed their name to Cognition Financial Corporation. Daniel Meyers, Chairman and Chief Executive Officer, spoke on the new business model.
“In our third decade of business, the business model of the company has changed dramatically. We’re no longer just a student loan company,” said Meyers. Tuition Management Systems, the payment subsidiary, has done over $50 billion in education payments for universities, colleges, and private schools.
Meyers student-lending niche has become the norm since the average cost of college education has continued to rise over the years. Meyers helped start the company sixteen years ago and now it’s one of the biggest lenders in the industry.
Debt levels for new college graduates have doubled over the past decade. It’s also led to additional regulations from Congress. Some companies within the field have been exposed for financial kickbacks, but not First Marblehead.
Meyers defended First Marblehead’s practices within expanding trade through direct-to-consumer (DTC) loans over the Internet. The company urges students to access federal aid first, but they do offer loans for those in need.
Overall, Meyers has confirmed that the company works hard to help more people than it hurts, unlike many credit card or other loan companies. The goal is to finance higher education rather than focus on profit alone.
Under the name Cognition Financial, the newest version of the company is pushing forward with various plans of innovation. In addition to the new name, the company also moved back to their original Boston headquarters.
$65.5 Million Total Transaction
The First Marblehead Corporation entered a merger agreement to be acquired by FP Resources USA Inc. for $5.05 per share, paid in cash. The entity is owned by John Carter Risley of Nova Scotia, Canada. The total numbers hit $65.5 million and the board unanimously approved the transaction.
In the beginning, Cognition Financial worked to change the way educational institutional loans were facilitated. Then, they were able to change the availability of and access to loans for higher education, for students as well as their families.
Within the Monogram Loan platform, Cognition Financial managed to change their flexibility and structure for private student loans. While partnering with Cognition Lending, they can also increase the availability of these funds.
Now, Cognition Financial helps students finance higher education through various services and products. These services are offered directly to students as well as for regional and national partners.
In the future the company will work to wed capital needs with capital resources. Together, these two sides can partner to create new, highly inventive products and services. This comes from the experience of facilitating $20 billion in private student loans and processing an additional $51 billion in tuition payments
An Overall Company History
The financial lending company began in the early 1990s:
- 1991 – First Marblehead launches to work with schools and families
- 1994 – Partner with lenders and private student loans
- 1998 – K-12 private student loan (prepGATE) forms
- 2001 – Purchases student loan origination platform and database
- 2002 – Company launches consumer-based loan products
- 2003 – First Marblehead goes public on NY Stock Exchange
- 2009 – Company launches Monogram Loan Platform
- 2010 – Purchase of Tuition Management Systems
- 2016 – Goes private, launches First Marblehead Education Resources
- 2017 – Company moves to Boston, now Cognition Financial (formerly First Marblehead) and Cognition Lending (formerly First Marblehead Education Resources)
Cognition Financial has over 25 years of experience where they have worked to facilitate $20 billion in private students loans for various lender clients in partnership with thousands of schools, colleges, and universities.
In addition, Tuition Management Systems has over 30 years of experience working with $50 billion in tuition payments for hundreds of other schools. In total, the companies have worked to help over a million families pay for schooling.
Record numbers of students are enrolling in colleges, and tuition costs are rising faster than inflation or median household incomes. Federal and state governments are also cutting back on financial aid, that’s where companies like Cognition Financial and Cognition Lending come in, they help these students get the money needed for school.
Author: Jeff Gitlen
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