Boston-based student loan packager The First Marblehead Corp. has entered into a loan program agreement with Kinecta Federal Credit Union, a California-based federal credit union with more than $3.5 billion in assets.

The agreement is effective immediately, and the loan program is expected to be fully implemented in August.

Pursuant to the agreement, the company will perform a range of services in support of a school-certified private education loan program to be funded by Kinecta, including loan processing and management, and program administration services. The company expects to facilitate up to $75 million in loans over the two-year term of the program.

"This is our second lender deal to feature our Monogram product offering. We have enabled Kinecta to create a loan program tailored to its specific needs, as it enters the private student loan market for the first time," said Daniel Meyers, Fist Marblehead’s chairman and chief executive officer.

"The capital markets have improved considerably, but we are committed to a revenue model that is flexible enough not to rely solely on securitizations. In each of our past two lender deals, we expect to generate ongoing monthly service revenue for the life of the lenders’ loan portfolios even as the loans remain on the lenders’ balance sheets," said Meyers.

The company has agreed to provide credit enhancement in connection with the program by funding a capped first-loss reserve for defaulted program loans. In exchange, the company will receive a substantial portion of the interest yield generated from the loan portfolio.

"We are happy to be able to offer this new private loan program to our 220,000 member-owners across the country. With the help of First Marblehead, we were able to build a private loan product that minimizes credit risk and operational resources while providing our customers with a loan product that can help them fund their education," said Gary Harman, vice president for consumer lending at Kinecta.