Interview with: Edwin J. McGuinn, Jr., Chairman and CEO - featuring: their private and federal loans to students on a principal basis through the MyRichUncle brand.

MRU Holdings, Inc. (OTC Bulletin Board:  MHOI.OB)

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MRU Holdings has just unveiled the first private student loan product, Preprime™, geared for students without credit history/creditworthy co-borrowers

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Student Loan
(OTC Bulletin Board:  MHOI.OB)

MRU Holdings, Inc.

1114 Avenue of the Americas, 30th Floor
New York, NY  10036
Phone: 212-398-1780

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Edwin J. McGuinn, Jr.
Chairman & CEO

Interview conducted by:
Lynn Fosse, Senior Editor
July 7, 2006

Edwin J. McGuinn, Jr.
Chairman & CEO

Joining co-founders Raza Khan and Vishal Garg in 2004, Ed McGuinn is chairman and chief executive officer of MRU Holdings Inc., the specialty finance company that powers the MyRichUncle™ brand. Ed brings the experience and knowledge that a career spanning more than 30 years in dynamic financial markets can provide.

Since 1998, Ed has been involved in a number of entrepreneurial ventures, namely the development of electronic trading systems for fixed income securities, as well as serving as president and chief executive officer for two companies: and eLOT, Inc. (formerly known as Executone, Inc.).


Prior to his appointments and from 1992-1997, Ed was senior managing director and head of the equity capital markets and corporate finance for two investment banking boutiques specializing in consumer services, health care and technology. Also a senior managing director for equity and equity-related sales, research and trading at Mabon Securities, Ed orchestrated Rodman and Renshaw’s purchase of Mabon Securities.


From 1981 to 1992, Ed was managing director and a member of Lehman Brothers Fixed Income Operating Committee. While at Lehman Brothers, he was responsible for developing global presence in domestic fixed income arbitrage and international fixed income trading, sales and research. 


A graduate of Colgate University, Ed entered the MBA/CPA program at New York University, in which liberal arts students were sponsored by major accounting firms to transition into Finance and Management consulting.    This led to a great tenure with what is now Ernst & Young, in the audit and management consulting divisions. 


Ed’s entrepreneurial spirit has been part of his career path all along. During the late 70’s and early 80’s, Ed ran a private snow removal company servicing Metro North. Ed was also involved in the restaurant business, overseeing five restaurants in the Wall Street area and two in suburbs of New York City, among them two of the largest in Manhattan: the Hudson River Club and Morans.


Currently, Ed also sits on the Board of Directors of eLOT, Inc. and Enigma Software, and on advisory boards of a venture capital company and several development-stage companies specializing in financial technology and Internet services. He has also lectured extensively on the topics of electronic trading and best business practices for the financial services industry. In addition, he is actively involved in several charitable organizations such as Tuesday’s Children (for children affected by the events of 9/11/01), Greenwich Youth Lacrosse and several Colgate University-related organizations.


Ed received a Bachelor of Arts in Mathematics and Economics from Colgate University and a Master of Science in Accounting from New York University. He holds NASD Series 7, 8, and 24 licenses along with a CPA license from the State of New York. He and his wife Donna reside in Greenwich, CT with their three children Michael, Cristin, and Meghan.

Company Profile:
MRU Holdings, Inc. (OTCBB: MHOI) is a publicly traded specialty finance company that provides students with funds for higher education, and is the innovative force behind “MyRichUncle™”. Using a blend of FICOŽ-based underwriting practices and its own proprietary analytic models and decision tools, MRU Holdings offers private and federal loans to students on a principal basis through the MyRichUncle brand, at A highly scalable origination infrastructure enables the company to develop progressive financial products that facilitate a student’s ability to fund his or her education.

CEOCFO: Mr. McGuinn, what was your vision when you joined MRU Holdings, and where are you today?
Mr. McGuinn: “The vision for this company came from my two partners, the president and CFO of MRU Holdings: Raza Khan and Vishal Garg, respectively. Both of these young men are extraordinary, visionary businessmen who six years ago embarked on the development of a new and much more holistic method of underwriting educational finance products for college and graduate students. For the first four years, they were developing their credit underwriting databases and the operating technology, which we have just recently brought out to the marketplace. They created a credit underwriting process that would enable this company to look at a student as more than just a credit score and to look at borrowers’ educational tracks and student behaviors, and consider these factors when lending.

The traditional competitors within this field are Sallie Mae and large banks, such as Citibank and Key Bank. All of these financial intermediaries have historically used, for student loans, what is essentially a credit card or a car loan underwriting engine, and because students often do not have credit histories, this would require a parent to co-sign the student’s loan. When students do not have credit histories or creditworthy co-borrowers to co-sign their loans, they are usually denied funds by these lenders. We saw an opportunity here.  We are now very active in becoming a major player in the private loan area of the educational financial industry.

To give you a quick overview, the overall educational spending for college and for postgraduate education is about $225 billion, of which about $95 billion must be paid by students and their parents. Private, as opposed to federal student loans are a $15 billion subset of that $95 billion. Ten years ago, private loans barely existed—the market has grown to $15 billion in just a decade. Therefore, we are talking about an enormous growth rate and it is projected to grow at 30% per year over the next ten years. What has created this gap between federal loans and grants and the total cost of education has been runaway tuition increases, which have been averaging over 7% per year for the last ten years, and a limit or cap set by the government on federal subsidized loans. That is a broad overview of the industry and where we are at.”

CEOCFO: Can you tell us how your product compares to what is though of as the traditional student loan?
Mr. McGuinn: “The traditional private student loan is a loan in the student’s name, where more often than not, the parent is the guarantor of the loan. The student is responsible for paying back the loan, but the parent co-signs the loan because the student does not usually have an established credit history and the loan would be too high-risk for lenders without the co-borrower. The traditional big players, the banks and Sallie Mae, have not made any real efforts to try to fund those students who do not have a credit history or a creditworthy co-borrower in a natural manner. We see these un-served students as neglected. We consider them to be a demographic of borrowers who have not yet had time to establish a credit history but who are on their way towards establishing one. Our Preprime™ loan is a product that we just unveiled about 3 or 4 days ago, which is a loan to students who have not traditionally been able to obtain financing because they lack a credit history or creditworthy co-borrower. Because these students do not have the traditional borrower qualities used to underwrite loans, our origination platform considers student behaviors and qualities such as area of study, academic history, and educational institution, among others. This financing product is the first of its kind in the marketplace, relevant to and needed by upwards of two million students and we believe the market opportunity is in the area of $35 billion.

Right now our primary focus from a corporate standpoint is to enable students to obtain funds. We offer students prime loans, and if they do not have the necessary credit qualities, we can also offer our Preprime™ product. We’ve been making private student loans since May 2005 and just unveiled our Preprime™ loan, which is, again, the first student loan of its kind in the marketplace.”

CEOCFO: How do you reach the students?
Mr. McGuinn: “We actually have three different channels through which we offer our product, and the most important for us is the direct to consumer channel, our MyRichUncle™ brand. The MyRichUncle brand resonates best with students, and parents appreciate that our funding comes from Merrill Lynch, and that we are actually principals in the marketplace and not brokers. The word of mouth and the buzz among the students relative to our brand has been quite spectacular and we’ve been very pleased. Our second marketing channel is the school channel, where we have a team of salespeople that are actively talking to financial aid offices at the various universities and colleges. Lastly, we have an affinity sales channel, where we develop private label-branded products on behalf of established banks or educational finance sales teams. They may be very actively involved in federal consolidation products, which are guaranteed by the Federal Government, but do not have the underwriting or the principal capabilities to be involved in the private loan market. In that case, we are effectively using their sales forces to represent our product in a particular school or educational finance channel.”

CEOCFO: “In the prime market, why should students be turning to the private rather than to some of the other sources and why MRU Holdings?
Mr. McGuinn: “Private loans are an excellent source of gap funding and offer flexibility to the borrower. When paying for college, students should first and foremost, go after grants and scholarships. Federal loans and private loans are the next route. With Federal loans moving to a fixed rate on July 1, 2006 (Stafford moves to a fixed 6.8% and PLUS to a fixed 8.5%), it is imperative for a student to understand the cost of what he or she needs to borrow to pay for education. In many cases, a private loan may end up saving the student money. We offer extremely competitive rates and a suite of loan products to fund the widest demographic of student borrowers.”

CEOCFO: Why MyRichUncle™?
Mr. McGuinn: “Our operating focus is to provide better rates for better students. Essentially, the underwriting models used in student lending generally use conservative models that aren’t too different from those used for car loans and mortgages. The result is limited individual pricing because the borrower is being assessed within a limited tier set. This works for other lenders because they do not run much risk, but it does not work for students who need funding. With MyRichUncle, we have placed a stronger focus on knowing understanding our borrowers as individuals and that gives us a significant competitive edge. Through innovation, we are able to be more distinctive with regard to rates.  Our ability to underwrite in this manner is significant, as private loans today are averaging around $10,000 to $13,000, which is a substantial investment for any student.”

CEOCFO: Has your approach been tried before or is this a totally new approach?
Mr. McGuinn: “This is really a new approach to student lending. We are setting a trend here. Student lending is one of the most dynamic areas of consumer finance. The size and growth trajectory of the private loan market is driving student lending in a new direction. We have a significant head start on other lenders. By taking a more holistic view of students and creating innovative underwriting models, we are in an exceptional position to develop market share. We certainly expect to see all of our competitors focusing on what we are bringing to the marketplace.”

CEOCFO: So you are ahead of the curve.
Mr. McGuinn: “Yes!”

CEOCFO: Funding for your Achiever Fund for the first to market student loan product is primarily from European financial institutions; is there any significance there?
Mr. McGuinn: “We in the states don’t always look at consumer credit trends in Europe, but there is a very well-developed credit market in Europe. There are many micro-payment loan strategies available to get financial data from; and there is a very mature consumer loan market, but in some cases, it is not as well-branded as what we see here with the likes of Citibank and J. P. Morgan Chase. We were approached by a consortium of investors that have a tremendous amount of background in the European finance circles, who were very interested in our operating mantra, ‘better rates for better students”, and were very impressed with the granularity of our credit underwriting models. Hence, they were interested in this marketplace. We do plan to introduce United States financial institution investors into this structure, but this is the kickoff and it certainly gives us the impetus to go ahead and get the product out at the onset of this student loan season. The student loan market is a seasonal market that starts in late April and runs through Labor Day. In April, students have just got into school and they are getting notes from the Bursars as to what will have to be paid in July or August. As such, students and families are beginning to look around to figure out financing tourniquets they are going to have to use. They have to decide whether they are going to take out federal loans, a private loan or some other personal finance decision such as a home equity loan. There is also a much smaller season that starts in December and January for people that are paying on a semester-to-semester basis.”

CEOCFO: In closing, MRU Holdings is a public company; why should investors be interested over and above what you’ve already said, what doesn’t jump off the page when people first look at you?
Mr. McGuinn: “We are a public company, but certainly we are a small company with seventy employees. We are blessed to have major financial sponsors that are investors in the company such as Merrill Lynch Investment Managers (“MLIM”) Private Equity Partners; and Nomura Holdings, one of the largest global investment banking and securities firms is also a major investor in the company. We also have Battery Ventures, which is one of the top ten venture capital companies; they are very actively involved. We have strong financial sponsorship and lines of credit from Merrill Lynch of $175 million; we also have $165 million from Nomura, which enables us to act as a principal in the marketplace. As discussed, we have a very holistic and forward-thinking underwriting model. We also have a strong management team that has a great mix of educational finance experience along with traditional Wall Street underwriting and capital markets capabilities. We have the MyRichUncle brand, which is directed towards students as well as their parents. We are in a growth market; we have a dynamic suite of products and we are the first lender to offer products that can fund the Prime market as well as a demographic of students who have not yet established their credit histories.”


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“We have the MyRichUncle brand, which is directed towards students as well as their parents. We are in a growth market; we have a dynamic suite of products and we are the first lender to offer products that can fund the Prime market as well as a demographic of students who have not yet established their credit histories.” - Edwin J. McGuinn, Jr. does not purchase or make
recommendation on stocks based on the interviews published.