Pearson could net pounds 431m from US education contract

PEARSON, THE education and publishing giant, won its biggest ever contract yesterday, in a deal with the US government to handle grant applications from America's low-income students.

The initial 12-month agreement could be extended for 10 years, potentially netting Pearson $800m (pounds 431m). Under the contract, Pearson has won new business with the US department of education and extended an existing agreement.

The company, which publishes the Financial Times, already handles applications for America's extensive financial aid programme for less well off students. It also establishes whether students meet the criteria for receiving help with the costs of college education in the US. Pearson will now also be responsible for integrating the system, joining the application process with the payments made by the government or colleges to eligible students.

America's Federal Student Aid (FSA) system provides $69bn in financial aid to more than 10 million students every year, including more than $51bn in new student loans and more than $11bn in government grants to college students.

The contract win comes at a key time for Pearson. This is expected to be a key year in the US, with many states due to make major decisions about their education programmes. Pearson is America's largest education publisher. It is also No 1 in providing services for academic tests. This area could also become more lucrative due to the "No child left behind" programme being pushed by President George Bush to improve educational standards.

Marjorie Scardino, the chief executive of Pearson, said: "FSA and Pearson ... look forward to continuing our partnership for years to come."