<PAGE>

                                                                    EXHIBIT 10.3

                       BAILMENT NOTICE AND ACKNOWLEDGMENT

                                                                  April 16, 2003

Great Lakes Educational Loan Services, Inc.
2401 International Lane
Madison, Wisconsin 53704

Re:     Student Loan Notes, Applications and Cash Proceeds Owned by Education
        Funding Capital Trust-II; Lender Identification Number 834042, Portfolio
        #s 854042, 855042, 856042 and 890042 (including any other subportfolio
        or client numbers used in connection therewith).

Ladies and Gentlemen:

        Reference is made to that certain Indenture of Trust, dated as of April
1, 2003 (the "Indenture"), among Education Funding Capital Trust-II, as Issuer
("Issuer"), Fifth Third Bank, as Indenture Trustee (the "Indenture Trustee"),
and Fifth Third Bank as Eligible Lender Trustee for the Trust (the "Eligible
Lender Trustee"). The Indenture secures the payment of the principal of and
interest on certain Education Loan Backed Notes (the "Notes").

        Pursuant to the Great Lakes Educational Loan Services, Inc. Student Loan
Origination and Servicing Agreement, dated as of April 16, 2003, as amended from
time to time (the "Servicing Agreement") among you, the Issuer, the Eligible
Lender Trustee and Education Lending Services, Inc. as Master Servicer (the
"Master Servicer"), you are or will be holding, from time to time, certain
student loans consisting of promissory notes and loan applications and cash
proceeds collected in connection with such student loans. Pursuant to the
Servicing Agreement, the Master Servicer will from time to time (i) identify
certain of such student loans as being held under the Indenture, which
identified student loans will be assigned Lender Identification Number 834042
(including any subportfolio or client numbers used in connection therewith), and
(ii) deliver to you the promissory notes and loan applications relating to those
student loans.

        You are hereby notified that, pursuant to the Indenture and effective as
of April 16, 2003, each of Issuer and the Eligible Lender Trustee, as the case
may be, has or will convey, transfer, assign, pledge, and grant a lien on and a
security interest in, unto the Indenture Trustee for the benefit of the
Noteholders (as defined in the Indenture), all right, title and interest of
Issuer and the Eligible Lender Trustee, as the case may be, in the Trust Estate
(as defined in the Indenture), which Trust Estate includes the student loans
assigned the Lender Identification Number 834042, Portfolio #s 854042, 855042,
856042 and 890042 (including any subportfolio or client numbers used in
connection therewith).

<PAGE>

        You are also hereby notified that, to the extent that you hold or
possess (either now or in the future) any of the student loans assigned the
Lender Identification Number 834042, Portfolio #s 854042, 855042, 856042 and
890042 (including any subportfolio or client numbers used in connection
therewith), including without limitation, the promissory notes, loan
applications and proceeds relating thereto, you are holding such assets as
bailee for the Indenture Trustee who, pursuant to the Indenture, is secured
party for the benefit of the Noteholders.

        You are also hereby notified that, pursuant to the Indenture, each of
Issuer and the Eligible Lender Trustee has assigned or will assign to the
Indenture Trustee its successor or successors and its or their assigns, for the
benefit of the Noteholders, all right, title and interest of Issuer and the
Eligible Lender Trustee, as the case may be, under the Servicing Agreement
(including their right to Revenues, as defined in the Indenture) with respect to
the student loans in the Indenture Trust Estate assigned the Lender
Identification Number 834042, Portfolio #s 854042, 855042, 856042 and 890042
(including any subportfolio or client numbers used in connection therewith) and
serviced by you under the Servicing Agreement.

        The Indenture Trustee hereby acknowledges that you will comply with the
terms of the Servicing Agreement. The Indenture Trustee also acknowledges that
all Revenues it receives from the Servicer will be deposited into the Collection
Account created pursuant to the Indenture.

        Please acknowledge your receipt of this written notification and your
acceptance of the bailment described hereinabove by executing and returning to
the Indenture Trustee and the Eligible Lender Trustee a duly executed form of
the Acknowledgment and Acceptance attached hereto. This notice and the bailment
described hereinabove shall be effective as of April 16, 2003.

                                        Very truly yours,

                                        EDUCATION FUNDING CAPITAL TRUST-II
                                        (the "Issuer")

                                        By: Fifth Third Bank as Co-Owner Trustee

                                        By:  /s/ Brian J. Gardner
                                             -----------------------------------
                                        Name: Brian J. Gardner
                                              ----------------------------------
                                        Title: AVP & SR. TRUST OFFICER
                                               ---------------------------------

                                        FIFTH THIRD BANK
                                        (the "Eligible Lender Trustee")

                                        By:  /s/ Brian J. Gardner
                                             -----------------------------------
                                        Name: Brian J. Gardner
                                              ----------------------------------
                                        Title: AVP & SR. TRUST OFFICER
                                               ---------------------------------

                                        2

<PAGE>

                                        FIFTH THIRD BANK
                                        (the "Indenture Trustee")

                                        By:  /s/ Brian J. Gardner
                                             -----------------------------------
                                        Name: Brian J. Gardner
                                              ----------------------------------
                                        Title: AVP & SR. TRUST OFFICER
                                               ---------------------------------

                                        3

<PAGE>

                          ACKNOWLEDGMENT AND ACCEPTANCE

        1.      Acknowledgment and Acceptance of Bailment. The undersigned, on
behalf of Great Lakes Educational Loan Services, Inc. ("Servicer"), hereby
acknowledges and accepts the bailment set forth in the preceding Bailment Notice
and Acknowledgment (the "Notice") and agrees to act in accordance with the terms
thereof as bailee for the Indenture Trustee. The undersigned, on behalf of
Servicer, hereby acknowledges that the bailment set forth in the Notice shall
remain in effect until receipt of written notice from the Indenture Trustee of
its termination.

        2.      Assignment of Servicing Agreement. In addition, the undersigned,
on behalf of Servicer, consents to Issuer and the Eligible Lender Trustee
granting a security interest in their respective right, title and interest under
the Servicing Agreement in favor of the Indenture Trustee for the benefit of the
Noteholders with respect to the Indenture Trust Estate.

        3.      No Transfer Without Consent, Etc. Until written notice from the
Indenture Trustee of the termination of the Indenture, the undersigned on behalf
of Servicer, hereby agrees that Servicer, in its capacity as bailee, will hold
all student loans (including the promissory notes, loan applications and
proceeds relating thereto) in its possession assigned Lender Identification
Number 834042, Portfolio #s 854042, 855042, 856042 and 890042 (including any
subportfolio or client numbers used in connection therewith) under its exclusive
dominion and control as agent for the Indenture Trustee in accordance with this
bailment. During the term of the Servicing Agreement, and in the event it is
terminated by any party thereto, Servicer shall not convey, transfer, assign or
release, or accept any other bailment notice with respect to, any of the student
loans assigned the Lender Identification Number 834042, Portfolio #s 854042,
855042, 856042 and 890042 (including any subportfolio or client numbers used in
connection therewith), or any of the promissory notes, loan applications or
proceeds relating thereto, without the prior written consent of the Indenture
Trustee (other than any transfer required (i) in connection with the
consolidation of such loans or (ii) for collection under any guaranty or
insurance agreement). In addition, until receipt of written notice from the
Indenture Trustee of termination of the Indenture, the undersigned will notify
the Indenture Trustee of any default by the Master Servicer under the Servicing
Agreement.

        4.      Funds To Be Deposited With Trustee. Until written notice from
the Indenture Trustee of the termination of the Indenture, the undersigned, on
behalf of Servicer, hereby agrees that Servicer will turn over to the Indenture
Trustee (i) all funds that are received by Servicer from or on behalf of a
person obligated to make payment of any amounts owed in respect of a student
loan assigned Lender Identification Number 834042, Portfolio #s 854042, 855042,
856042 and 890042 (including any subportfolio or client numbers used in
connection therewith), and (ii) all funds received pursuant to the Servicing
Agreement with respect to a student loan assigned Lender Identification

                                        4

<PAGE>

Number 834042, Portfolio #s 854042, 855042, 856042 and 890042 (including any
subportfolio or client numbers used in connection therewith).

        5.      Due Authorization. The undersigned hereby certifies that he is
the Chief Servicing Officer of Servicer and is duly authorized and is an
appropriate officer to execute this Acknowledgement and Acceptance.

        6.      Acknowledgement by Bailee. The undersigned hereby acknowledges
pursuant to Section 9-313 of the Uniform Commercial Code that it holds
possession and will hold possession of the student loans assigned Lender
Identification Number 834042 (including the promissory notes, loan applications
and proceeds relating thereto) for the benefit of the Indenture Trustee,
Noteholders and any Counterparty (as defined in the Indenture).

        7.      Effective Date. This Acknowledgment and Acceptance shall be
effective as of April 16, 2003.

                                             Acknowledged and agreed to by:

                                             Great Lakes Educational Loan
                                             Services, Inc. ("Servicer")

                                             By: /s/ Michael J. Noack
                                                 -------------------------------
                                             Name:   Michael J. Noack
                                             Title: Chief Servicing Officer

STATE OF WISCONSIN  )
                    ) SS:
COUNTY OF DANE      )

        Before me, a Notary Public in and for said County, personally appeared
the within named Michael J. Noack, the Chief Servicing Officer of Great Lakes
Educational Loan Services, Inc., a Wisconsin corporation ("Servicer"), who
acknowledged that he did sign the foregoing Acknowledgment and Acceptance, that
the same is the free act and deed of such person acting on behalf of said
Servicer and that such person is duly authorized to execute the foregoing
Acknowledgment and Acceptance as such officer.

        IN TESTIMONY WHEREOF, I have hereunto set my hand and official seal in
Madison, Wisconsin, this 15th day of April, 2003.

                                              /s/ Diane M. DeBusk
                                             -----------------------------------
                                                     Notary Public

                                        5