**Exhibit 10.3**

THIS EMPLOYMENTAGREEMENT AND MUTUAL GENERAL RELEASE (the “Agreement”), made as of November 1,2006, is entered into by The First Marblehead Corporation, a Delaware corporation with itsprincipal place of business at The Prudential Tower, 800 Boylston Street,Boston, MA 02199-8157 (the “Company”), and Donald R. Peck, residingat [intentionally omitted] (the “Employee”).

The Companydesires to continue to employ the Employee in the capacity set forth below, andthe Employee desires to be so employed by the Company. In consideration of themutual covenants and promises contained herein, and other good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged bythe parties hereto, the parties agree as follows:

# 1.                                       Termof Employment.  The Company herebyagrees to employ the Employee, and the Employee hereby accepts employment withthe Company, upon the terms set forth in this Agreement, for the periodcommencing on November 1, 2006 (the “Commencement Date”) and ending on January2, 2007 (such period constitutes the “Employment Period”), unless soonerterminated in accordance with the provisions of Section 6.

# 2.                                       Title;Capacity.  The Employee shall serve asSenior Advisor to the Company’s Chief Executive Officer (the “CEO”). TheEmployee shall provide services in connection with transition of theresponsibilities of the Chief Financial Officer to his successor, and shallwork under the supervision of, and shall have such authority as is delegated tohim by, the CEO.

The Employeehereby accepts such employment and agrees to undertake such duties andresponsibilities inherent in the position of Senior Advisor and such relatedduties and responsibilities as the CEO shall from time to time reasonablyassign to him. The Employee 

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agrees to devote such business time, attention and energies to thebusiness and interests of the Company during the Employment Period as necessaryto perform his obligations.

The Employeeagrees to abide by the written rules, regulations, instructions, personnelpractices and policies of the Company generally applicable to senior levelexecutives and any changes therein which may be adopted from time to time bythe Company. The Employee acknowledges that he has been made aware that theCompany’s written rules and policies are available on line and may be accessedby him now or at any time during the Employment Term.

# 3.                                       Invention,Non-Disclosure, Non-Competition and Non-Solicitation Agreement.  The Employee will remain bound by the termsof the Invention, Non-Disclosure, Non-Competition and Non-SolicitationAgreement signed on September 12, 2005 (the “Non-Competition Agreement”). TheNon-Competition Agreement is hereby amended to provide that the restrictionsset forth in Section 4 thereof shall remain in effect until December 31, 2007.

# 4.                                       Exclusivity.  The Company and the Employee agree that theEmployee’s position as Senior Advisor to the CEO shall be exclusive in nature.Specifically, during the Employment Period the Employee shall not be permittedto provide services, whether as an employee, independent contractor orotherwise, for entities, employers or individuals other than the Company.

# 5.                                       Compensationand Benefits.

## 5.1                                 Salary.  The Company shall pay the Employee a semi-monthlysalary of $17,708.34 for the Employment Period, to begin on the CommencementDate. On the last day of the Employment Period, the Company shall pay the Employeea lump sum payment equal to six months of salary subject to adjustment forapplicable taxes (the “Final Payment”).

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## 5.2                                 FringeBenefits. During the Employment Period, the Employee shall be entitled toall fringe benefits generally available to the Company’s senior executiveofficers. Effective as of the end of the Employment Period, the Employee shallbe considered to have elected to continue receiving group medical insurancepursuant to the federal “COBRA” law, 29 U.S.C. et seq. During the six monthperiod following the end of the Employment Period, the Company shall pay theentire premium for such coverage as long as and to the extent the Employeeremains eligible for COBRA continuation. The Company will provide the Employeematerials explaining COBRA benefits. The Company shall provide to the Employeeat the Company’s expense employment transition services through KeystonePartners, or through a provider of the Employee’s choice. Should the Employeechoose an alternate provider, the Company shall pay up to $10,000 toward suchalternate provider’s fee. Except as provided in this Section 5, the Employeeshall not be entitled to participate in any other benefit or bonus programssponsored or made available by the Company following the Employment Period.

## 5.3                                 Reimbursementof Expenses.  The Company shallreimburse the Employee for all reasonable travel, entertainment and otherexpenses incurred or paid by the Employee in connection with, or related to,the performance of his duties, responsibilities or services under thisAgreement, upon presentation by the Employee of documentation, expense statements,vouchers and/or such other supporting information as the Company may request,provided, however, that the amount available for such travel, entertainment andother expenses may be fixed in advance by the Company.

## 5.4                                 StockOptions.  Any stock optionspreviously granted by the Company to the Employee prior to November 1, 2006shall be governed by the Stock Option Plan or individual Stock Option Agreementunder which such stock options were granted, provided,

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## however, that Section 2.01(v) of the Grant ofIncentive Stock Option dated April 3, 2003 (the “Option Agreement”) between theCompany and the Employee is hereby amended to provide that the Employee mayexercise the Option (as defined in the Option Agreement) with respect to 15,000shares of Common Stock scheduled to vest on the fourth anniversary of the Dateof Grant (such number of shares reflecting all stock splits and dividends sinceApril 3, 2003) anytime from the date hereof until the date determined inaccordance with the provisions of Section 3.02 of the Option Agreement andshall be considered fully vested as of the date hereof for purposes of Section3.02 of the Option Agreement. The 15,000 shares referred to in the precedingsentence shall be adjusted to reflect any stock splits and stock dividends witha record date after the date hereof and before the exercise of the Option. Itis expressly understood by the parties that this Agreement shall have no effecton any vested and unexercised options provided under the Option Agreementexcept for those described in Section 2.01(v) of the Option Agreement.

# 6.                                       EmploymentTermination.  The employment of theEmployee by the Company pursuant to this Agreement shall terminate upon theoccurrence of any of the following:

## 6.1                                 Atthe expiration of the Employment Period, at which time the Employeeacknowledges that the Company will have no obligation to employ him in anycapacity whatsoever;

## 6.2                                 Thedeath of the Employee; or

## 6.3                                 Atthe election of the Employee upon not less than ten (10) days’ prior writtennotice of termination.

# 7.                                       Effectof Termination.

## 7.1                                 Terminationat the Expiration of the Employment Period, or at the Election of the Employee.Upon termination at the expiration of the Employment Period, the

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## Company shallpay to the Employee the compensation and benefits otherwise payable to himunder Section 5 including any accrued but unused vacation time through December31, 2006, and the Final Payment. Upon termination at the election of theEmployee pursuant to Section 6.3, the Company shall pay to the Employee thecompensation and benefits otherwise payable to him under Section 5 includingany accrued but unused vacation time through the last day of his actualemployment by the Company, and the Final Payment.

## 7.2                                 Terminationfor Death .  If the Employee’semployment is terminated by death, the Company shall pay to the estate of theEmployee the compensation which would otherwise be payable to the Employee upto the end of the month in which the termination of his employment because of deathoccurs, and the Final Payment.

## 7.3                                 ContinuingObligations.  The Non-CompetitionAgreement shall survive the termination of the Employee’s employment pursuantto this Agreement.

# 8.                                       Litigation Cooperation.  TheEmployee agrees to continue to serve the****Companyas a litigation consultant and in connection therewith, to cooperate with theCompany in (i) the defense or prosecution of any claims or actions involvingmatters in which he was involved while employed by the Company or about whichhe has knowledge, which already have been brought or which may be brought inthe future against or on behalf of the Company, and (ii) responding to,cooperating with, or contesting any governmental audit, inspection, inquiry,proceeding or investigation, which relate to events or occurrences thattranspired during his employment with the

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# Company. The Employee’scooperation in connection with such claims or actions shall include, withoutimplication of limitation: promptly notifying the Company in writing of anysubpoena, interview, investigation, request for information, or other materialcontact concerning events or occurrences that transpired during his employmentwith the Company that relate to litigation or imply that it may relate tolitigation, consulting with counsel for the Company to prepare for discovery ortrial; to testify truthfully as a witness when reasonably requested and atreasonable times requested by the Company; to meet with counsel or otherdelegated representatives of the Company; to assist in the preparation ofresponses to and to cooperate with the Company’s processing of governmentalaudits, inspections, inquiries, proceedings or investigations related to eventsor occurrences that transpired during his employment with the Company. TheCompany agrees that it will attempt to accommodate the Employee’s work schedulewhen requesting his participation in the above activities and to reimburse theEmployee for any reasonable out-of-pocket expenses, including reasonableattorneys’ fees, that he incurs in connection with such cooperation,****subject to reasonable****documentation. The Company will exerciseits rights under this Section so as not to interfere unreasonably with theEmployee’s personal schedule or ability to engage in****gainful employment.

# 9.                                       Releases

# 9.1                                 Releaseby the Employee.  The Employee herebyfully, forever, irrevocably and unconditionally releases, remises anddischarges the Company, its officers, directors, stockholders, corporateaffiliates, agents and employees (each in their individual and corporate capacities)(hereinafter the “Released Parties”) from any and all claims, charges,complaints, demands, actions, causes of action, suits, rights, debts, sums ofmoney, costs, accounts, reckonings, covenants, contracts, agreements, promises,doings, omissions, damages, executions, obligations, liabilities, and expenses(including attorneys’ fees and costs), of every kind and nature which he everhad or now has against the Company, its officers, directors, stockholders,corporate affiliates, agents and employees in such capacities, including, butnot limited to, all claims arising out of his employment, all employmentdiscrimination claims under

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# Title VII of the Civil Rights Act of 1964,42 U.S.C.§2000e et seq., the Age Discrimination inEmployment Act, 29 U.S.C., §621 et seq.,the Americans With Disabilities Act, 42 U.S.C., §12101 et seq., the Massachusetts Fair Employment Practices Act, M.G.L.c.151 B, § 1 et seq., all claims arisingout of the Massachusetts Civil Rights Act, M.G.L. c.12 §§11H and 11I, the MassachusettsEqual Rights Act, c.93 §102 and 103 and M.G.L. c.214, §1C , all damages arisingout of all employment discrimination claims, wrongful discharge claims or othercommon law claims and damages including but not limited to, actions in tort,defamation and breach of contract; all claims to any non-vested ownershipinterest in the Company contractual or otherwise, including but not limited toclaims to stock or stock options, except as described in Section 5.4, and anyclaim or damage arising out of your employment with or separation from theCompany (including a claim for retaliation) under any common law theory or anyfederal. State or local statute or ordinance not expressly referenced above;provided however that nothing in this Agreement prevents you from filing,cooperating with or participating in any proceeding before the EEOC or a stateFair Employment Practices Agency (except that you acknowledge that you may notbe able to recover any monetary benefits in connection with any such claim,charge or proceeding). Notwithstanding the foregoing, this release does notinclude and will not preclude: (a) claims for unemployment compensation; (b)rights, if any, to defense and indemnification from the Company for actionstaken by you in the course and scope of your employment with the Company andits subsidiaries and affiliates; and/or (c) claims, actions or rights arisingunder or to enforce the terms of this Agreement.

9.2                                 Releaseby the Company.  In consideration ofthe exchange of the promises contained herein and for such other goodconsideration, the receipt and sufficiency of which is hereby acknowledged, theCompany hereby fully, forever, irrevocably and unconditionally

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releases, remises and discharges the Employee fromany and all claims, charges, complaints, demands, actions, causes of action,suits, rights, debts, sums of money, loans, judgments, liens, costs, accounts,reckonings, covenants, contracts, agreements, promises, doings, omissions,damages (including compensatory, punitive or liquidated damages), executions,obligations, liabilities****andexpenses (including attorneys’ fees and costs), of every kind and nature thatit ever had or now has against the Employee, known or unknown, at law orequity or otherwise, including, but not limited to, all claims arising outof the Employee’s employment with and/or separation from the Company;provided, however, that nothing in this Agreement prevents theCompany from bringing a claim: (a) that arises from any intentional misconductengaged in by the Employee as an employee, officeror director of the Company, including, but not limited to,misappropriation, theft or fraud; (b) for breach of fiduciary duty as anemployee, officer or director of the Company; (c) in defense of or inresponse to any claim by the Employee for indemnification and/oradvancement of fees; or (d) arising under this Agreement.

# 10.                                 Acknowledgments.  The Employee acknowledges that he has beengiven twenty-one (21) days to consider this Agreement and that the Companyadvised him to consult with an attorney of his own choosing prior to signingthis Agreement. The Employee may revoke this Agreement for a period of seven(7) days after the execution of this Agreement, and the Agreement shall not beeffective or enforceable until the expiration of this seven (7) day revocationperiod. The Employee understands and agrees that by entering into thisAgreement he is waiving any and all rights or claims he may have under The AgeDiscrimination in Employment Act, as amended by the Older Workers BenefitProtection Act, and that he has received consideration beyond that to which hewas previously entitled.

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# 11.                                 VoluntaryAssent.  The Employee affirms that noother promises or agreements of any kind have been made to or with him by anyperson or entity whatsoever to cause him to sign this Agreement, and that hefully understands the meaning and intent of this Agreement. The Employee statesand represents that he has had an opportunity to fully discuss and review theterms of this Agreement with an attorney. The Employee further states andrepresents that he has carefully read this Agreement, understands the contentsherein, freely and voluntarily assents to all of the terms and conditionshereof, and signs his name of his own free act.

# 12.                                 Notices. All notices required or permitted underthis Agreement shall be in writing and shall be deemed effective upon personaldelivery or upon deposit in the United States Post Office, by registered orcertified mail, postage prepaid, addressed to the other party at the addressshown above, or at such other address or addresses as either party shalldesignate to the other in accordance with this Section 12.

# 13.                                 Pronouns.  Whenever the context may require, anypronouns used in this Agreement shall include the corresponding masculine,feminine or neuter forms, and the singular forms of nouns and pronouns shallinclude the plural, and vice versa.

# 14.                                 Non-Disparagement.  The Employee agrees not to make anystatement, written or oral, which disparages the Company, its respectiveofficers, or management and business practices, or which disrupts or impairsthe Company’s normal operations. The provisions of this Section 14 shall notapply to any truthful statement required to be made by the Employee in anylegal proceeding, required filing under the securities laws, or pursuant to anygovernmental or regulatory investigation. Likewise, the Company agrees that itsdirectors and officers shall not make any statement, written or oral, whichdisparages the Employee. The Company agrees to provide a positive writtenletter of recommendation for the Employee on request.

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# 15.                                 EntireAgreement.  This Agreementconstitutes the entire agreement between the parties and supersedes all prioragreements and understandings, whether written or oral, relating to the subjectmatter of this Agreement.

# 16.                                 Amendment.  This Agreement may be amended or modifiedonly by a written instrument executed by both the Company and the Employee.

# 17.                                 GoverningLaw.  This Agreement shall begoverned by and construed in accordance with the laws of the Commonwealth ofMassachusetts (without reference to the conflicts of laws provisions thereof).Any action, suit or other legal proceeding arising under or relating to anyprovision of this Agreement shall be commenced only in a court of theCommonwealth of Massachusetts (or, if appropriate, a federal court locatedwithin Massachusetts), and the Company and the Employee each consents to thejurisdiction of such a court.

# 18.                                 Successorsand Assigns.  This Agreement shall bebinding upon and inure to the benefit of both parties and their respectivesuccessors and assigns, including any corporation with which, or into which,the Company may be merged or which may succeed to the Company’s assets orbusiness, provided, however, that the obligations of the Employee are personaland shall not be assigned by him.

# 19.                                 Waivers.  No delay or omission by the Company inexercising any right under this Agreement shall operate as a waiver of that orany other right. A waiver or consent given by the Company on any one occasionshall be effective only in that instance and shall not be construed as a bar orwaiver of any right on any other occasion.

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# 20.                                 Captions.  The captions of the sections of thisAgreement are for convenience of reference only and in no way define, limit oraffect the scope or substance of any section of this Agreement.

# 21.                                 Severability.  In case any provision of this Agreement shallbe invalid, illegal or otherwise unenforceable, the validity, legality andenforceability of the remaining provisions shall in no way be affected orimpaired thereby.

IN WITNESS WHEREOF, the parties hereto have executedthis Agreement as of the day and year set forth above.
|        | THE FIRST MARBLEHEAD CORPORATION |
|--------|----------------------------------|
|   |                             |
|   | By:                              |   /s/ Peter B. Tarr |
|   |                             | Peter B. Tarr |
|   |                             | Chairman and  General Counsel |
|   |                             | Date Signed:  November 1, 2006 |
|   |                             |   |
|   |                             |   |
|   |                             |   /s/ Donald R. Peck          November  1, 2006 |
|   |                             | Donald R. Peck                      Date  Signed |

 

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