1262279--9/3/2009--FIRST_MARBLEHEAD

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Risks Related to Asset-Backed Securitizations and Other Funding Sources We have historically derived a significant portion of our revenue and substantially all of our income from structuring securitization transactions; our financial results and future growth may continue to be adversely affected if we are unable to structure securitizations or alternative financings. A number of factors, some of which are beyond our control, have adversely affected and may continue to adversely affect our securitization activities and thereby adversely affect our results of operations. Capital markets dislocations, and the timing, size and structure of any future capital markets transactions, will greatly affect our quarterly financial results. We may need to pursue alternatives to securitizations, which may not be available or the terms of which may not be attractive. In structuring and facilitating securitizations of our clients' loans, administering securitization trusts or as holders of rights to receive residual cash flows in non-NCSLT Trusts, we may incur liabilities to investors in the asset-backed securities those trusts issue. Risks Related to Our Financial Reporting and Liquidity If the estimates we make, or the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may vary materially from those reflected in our financial statements. Our liquidity could be adversely affected if the sale of the Trust Certificate does not result in the tax consequences that we expect. Changes in interest rates could affect the value of our additional structural advisory fees, asset servicing fees and residuals receivable, as well as demand for private education loans and our services. If sufficient funds to finance our business, including Union Federal, are not available to us when needed or on acceptable terms, then we may be required to delay, scale back or alter our strategy. Our assumptions regarding the future cost of funding of auction rate notes affect the valuation of our service receivables. Risks Related to the TERI Reorganization The TERI Reorganization has had, and will likely continue to have, a negative effect on our client relationships, which will adversely affect our revenue and results of operations. The TERI Reorganization will adversely affect our ability to facilitate the securitization of TERI-guaranteed loans, and could adversely affect our cash flows from the securitization trusts. The Creditors Committee is challenging the enforceability of certain of the trusts' security interests, which may result in additional delay and expense, as well as a significant reduction in collateral available to the trusts. Risks Related to Our Industry, Business and Operations Challenges exist in implementing revisions to our business model. The outsourcing services market for education lending is competitive and if we are not able to compete effectively, our revenue and results of operations may be adversely affected. The growth of our business could be adversely affected by changes in government education loan programs or expansions in the population of students eligible for loans under government education loan programs. Access to alternative means of financing the costs of education may reduce demand for private education loans. Continuation of the current economic conditions could adversely affect the private education loan industry. If our clients do not actively or successfully market and fund private education loans, our business will be adversely affected. If we fail to manage effectively our cost reductions, our business could be disrupted and financial results could be adversely affected. If competitors acquire or develop a private education loan database or advanced loan information processing systems, our business could be adversely affected. If we are unable to protect the confidentiality of our proprietary database and information systems and processes, the value of our services and technology will be adversely affected. The loan origination process is becoming increasingly dependent upon technological advancement, and we could lose clients and market share if we are not able to keep pace with rapid changes in technology. Our business could be adversely affected if PHEAA fails to provide adequate or timely services or if our relationship with PHEAA terminates. An interruption in or breach of our information systems may result in lost business. If we experience a data security breach and confidential customer information is disclosed, we may be subject to penalties imposed by regulators, civil actions for damages and negative publicity, which could affect our customer relationships and have a material adverse effect on our business. In addition, current state and federal legislative proposals, if enacted, may impose additional requirements on us to safeguard confidential customer information, which may result in increased compliance costs. Risks Relating to Regulatory Matters We are subject to regulation as a savings and loan holding company, and Union Federal Savings Bank is regulated extensively. Failure to comply with recent OTS enforcement agreements could adversely affect our business, financial condition and operating results We may become subject to state registration or licensing requirements. If we determine that we are subject to the registration or licensing requirements of any jurisdiction, our compliance costs could increase significantly and other adverse consequences may result. We may be exposed to liability for failures of third parties with which we do business to comply with the registration, licensing and other requirements that apply to them. Failure to comply with consumer protection laws could subject us to civil and criminal penalties or litigation, including class actions, and have a material adverse effect on our business. Recent litigation has sought to re-characterize certain loan marketers and other originators as lenders; if litigation on similar theories were successful against us or any third-party marketer we have worked with in the past, the loans that we securitize would be subject to individual state consumer protection laws. Risks Relating to Ownership of Our Common Stock The price of our common stock may be volatile. Insiders have substantial control over us and could limit your ability to influence the outcome of key transactions, including a change of control. Some provisions in our restated certificate of incorporation and amended and restated by-laws may deter third-parties from acquiring us. Section 203 of the Delaware General Corporation Law may delay, defer or prevent a change in control that our stockholders might consider to be in their best interests.

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1262279--9/3/2009--FIRST_MARBLEHEAD_CORP