US Dept of Education Contract

Pearson PLC
08 February 2005



8 February 2005

                PEARSON AWARDED FEDERAL STUDENT AID CONTRACT BY
                          U.S. DEPARTMENT OF EDUCATION

The U.S. Department of Education's Federal Student Aid (FSA) office today
announced the award of a contract to Pearson Government Solutions which combines
providing information to college students about financial aid, processing aid
applications and disbursing grants and loans. The one-year contract is valued at
$80 million and has nine one-year options, so that the total value over the life
of the contract could approach $800 million.

FSA provides more than $69 billion in postsecondary financial aid to more than
10 million students every year, including more than $51 billion in new student
loans and more than $11 billion in Pell Grants. FSA directly manages or oversees
approximately $357 billion in outstanding student and parent loans for more than
25 million borrowers.

Pearson Government Solutions will design, build, and operate a new system that
brings together services currently delivered through four separate contracts.
The new program will integrate the front end of the student financial aid
process and manage it in a more streamlined and cost-effective manner. In
addition, it will improve customer service by simplifying and integrating
service delivery to students, their parents, and student aid delivery partners.

"As a performance-based organization, FSA is committed to improving its customer
service and achieving real results," said FSA Chief Operating Officer Terri
Shaw. "We are excited to better serve students, parents, and schools through an
integrated, cost-effective application, origination, and disbursement solution."

"FSA and Pearson share the goal of providing opportunities for people to enrich
their lives through education," said Marjorie Scardino, chief executive of
Pearson. "We are proud to play a part in helping the Department of Education put
America's students through college, and we look forward to continuing our
partnership for years to come."

Pearson Government Solutions currently provides FSA with financial aid
application processing systems. Services moving into the new Front End Business
Integration contract include:

   • Customer interaction services providing responses to millions of student
     inquiries regarding financial aid;

   • Eligibility determination services processing over 18 million
     applications a year, calculating financial aid eligibility, and notifying
     students and educational institutions of the results.

Nearly 80 percent of all federal aid applicants submit a FAFSA (Free Application
for Federal Student Aid) via FAFSA on the Web (www.fafsa.ed.gov). The 2003
American Customer Satisfaction Survey Index rated this service comparable to
UPS, Amazon.com, and Mercedes. More than 5,000 educational institutions and
financial aid servicers use EDExpress software to manage financial aid
applications and payment information.

In addition to these services, Pearson will also integrate Direct Loan and Pell
Grant origination and disbursement functionality into the new system.
Approximately 5,500 institutions of higher education participating in the Pell
Grant and Direct Loan programs will use this system to originate and disburse
aid for more than 5 million recipients, totaling approximately $20 billion in
federal assistance each year.

To integrate and improve these services, Pearson Government Solutions has
partnered with several key subcontractors, including Electronic Data Systems
(EDS), IBM, ORC Macro, Bearing Point, Tier 1, and Applied Engineering Management
(AEM).

Pearson Government Solutions has worked with FSA to provide student financial
aid services for more than 20 years. Over that period, the volume of applicants
has increased from 6 million in 1984 to 13 million in 2004. Since the
introduction of web-based services in 1997, accuracy levels have climbed to
nearly 100 percent.

"Pearson Government Solutions has designed the best solution for financial aid
services using our understanding of FSA's needs and challenges, and our
commitment to being the premier provider of integrated service solutions for
critical government programs," said Pearson Government Solutions President and
CEO Mac Curtis.

For more information: Luke Swanson/ Charlotte Elston [phone]


About Pearson Government Solutions

With nearly 5,000 employees worldwide, Pearson Government Solutions, based in
Arlington, Va., serves customers in the U.S. federal, state and local, and
international government; higher education institutions and student financial
aid entities; and the worldwide telecommunications industry. The company
designs, builds, and operates solutions that optimize public sector entities'
performance in delivering information, benefits, and services to their
constituents. Clients include the Federal Communications Commission; the U.S.
Departments of Defense, Education, Health and Human Services, Homeland Security,
Justice, Labor, and Veterans Affairs; the Equal Employment Opportunity
Commission, and the U.S. Office of Personnel Management.
Pearson Government Solutions is a business of Pearson (LSE: PSON; NYSE: PSO),
the international media company. Pearson's primary operations include Pearson
Education, the world's largest education company, the Financial Times Group, and
the Penguin Group.

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