exv10w32



 







EXHIBIT 10.32






Guarantee Agreement




Between




Massachusetts Higher Education Assistance Corporation





And







The Bank of New York as eligible Lender Trustee for Higher
Education Funding I




     WHEREAS, The Massachusetts Higher Education Assistance Corporation doing business as
American Student Assistance (hereinafter “ASA”), at 330 Stuart Street, Boston, Massachusetts 02116,
a private nonprofit corporation created by Chapter 298 of the Acts of 1956 of the Commonwealth,
administers several loan guarantee programs providing financial assistance to and on behalf of
students enrolled in programs of higher education; and



     WHEREAS, The Bank of New York as Eligible Lender Trustee for Higher Education Funding I
(hereinafter “LENDER”), qualifies as an eligible lender under one or more of these programs,
fulfilling such criteria as have been set forth by federal and state statute and regulation, and
those set forth by the Board of Directors of ASA pertaining to the particular program; and



     WHEREAS, LENDER is willing to make loans to eligible borrowers as such are defined in this
agreement and in the policies of ASA, and ASA is willing to guarantee the payment of principal and
interest in the event of the borrower’s default of repayment in accordance with the terms and
conditions set forth herein.



     NOW THEREFORE, in consideration of the mutual covenants contained herein, ASA and LENDER agree
as follows:



Section 1. DEFINITIONS




     1. These definitions are meant to incorporate and be consistent
with the more detailed definitions within the Federal Family Education Loan
Program Regulations located at 34 C.F.R. § 682 et seq.



     2. “AGREEMENT” — shall mean this GUARANTEE agreement to the extent
that LENDER and ASA have indicated the willingness of each to participate in
the programs as evidenced by signature or initial.



     3. “BORROWER” — shall mean any person or persons executing a
promissory note individually or jointly for the purpose of obtaining funds from
LENDER under one of the programs authorized by this Agreement.











 












	4.  	“DEFAULT” — shall mean the failure of the BORROWER to repay
borrowed amounts when due, and/or the failure of the BORROWER to comply with
the terms of the promissory note.
	 
	5.  	“DUE DILIGENCE” — shall mean the utilization by LENDER of
policies, practices and procedures in the origination, servicing and collection
of loans which are consistent with LENDER’s policies, practices and procedures
applicable to its other consumer loan and credit portfolios and which comply
with the requirements of federal and state statute and regulation and ASA
policies. DUE DILIGENCE includes, but is not limited to, the remission of
guarantee fees to ASA in an amount and time frame as specified by ASA.
	 
	6.  	“FEDERAL STUDENT LOAN RESERVE FUND” (referred to as Federal
Fund) shall mean the reserve account maintained by ASA as a source from which
to pay insurance claims and to assure LENDER of the ASA’s ability to perform
its commitments to LENDER under this Agreement.
	 
	7.  	“FORMS” — shall mean such application forms, promissory notes
and administrative forms as are provided by and/or required by ASA for
participation in any of the programs authorized by this AGREEMENT.
	 
	8.  	“GUARANTEE” — shall mean the guarantee of payment given by ASA
to LENDER by which ASA covenants to pay to LENDER such principal and interest
as may be provided by the terms of each program after being assured that LENDER
has exercised DUE DILIGENCE in its origination, servicing and collection and
that the necessary documents have been submitted to ASA in the form required.
	 
	9.  	“LIMITATION, SUSPENSION OR TERMINATION” — shall mean the
restrictions imposed by ASA upon LENDER’s continued participation in any of the
programs authorized by this AGREEMENT. The cause of such restrictions, the
process by which such restrictions may be imposed, and their nature and scope
are set forth in Section 3 of this AGREEMENT.
	 
	10.  	“SCHOOL” — Shall mean an institution of higher education as
that term is defined in section 481 of the ACT and 34 CFR 682.200, whose
programs satisfy the definition of “eligible program” in 34 CFR 668 and which
has in effect a current agreement with the Secretary under 34 CFR 682.600.
	 
	11.  	“FEDERAL FAMILY EDUCATION LOAN PROGRAM” shall mean the Federal
Stafford Loan, Federal PLUS Loan, Federal Supplementary Loans for Students,
Federal Consolidation Loan and other federal education loan programs
administered by ASA.






	   	Section 2. TERMS AND CONDITIONS OF LOANS ORIGINATED AND HELD UNDER THE FEDERAL FAMILY EDUCATION
LOAN PROGRAM ADMINISTERED BY ASA













	1.  	Statutes governing the FEDERAL FAMILY EDUCATION LOAN PROGRAM
are enacted as Part B of Title IV of The Higher Education Act of 1965, as
amended (20 United States Code Section 1071 et seq.). Regulations affecting
program administration are adopted by




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the Secretary of the United States
Department of Education and are published in the Code of Federal Regulations.
Proposed revisions to such Regulations are published in the Federal Register.



	2.  	ASA participates in the FEDERAL FAMILY EDUCATION LOAN PROGRAM
as a private nonprofit guarantee agency pursuant to contractual agreements with
the United States Department of Education. These agreements confer eligibility
upon BORROWERS to receive full or partial interest subsidy, upon lenders to
receive interest and special allowance payments and upon ASA to receive
insurance and reinsurance payments in the event of death, disability,
bankruptcy, closed school, false certification or DEFAULT. ASA hereby
represents and covenants that it will structure and operate its programs in
such a manner as to preserve to the full extent possible the benefits of these
federal agreements.






	3.  	LENDER covenants that it will comply with all applicable
requirements of federal and state statutes and regulations and with all
requirements and policies of ASA. Furthermore, LENDER will administer the
FEDERAL FAMILY EDUCATION LOAN PROGRAM in conformity with sound lending
practices and standards of DUE DILIGENCE as applied to the programs.






	4.  	In its administration of the FEDERAL FAMILY EDUCATION LOAN
PROGRAM, LENDER shall utilize forms approved and distributed by ASA and/or by
the United States Department of Education. LENDER will also be authorized to
collect and shall collect such fees as may be required of the BORROWER, by ASA,
or the United States Department of Education, and shall apply the payment or
allocation of such fees as directed.






	5.  	In the event of the DEFAULT, death, total and permanent
disability, closed school, false certification or discharge in bankruptcy of a
BORROWER, as such events are defined in applicable law and regulation, ASA will
accept a claim for payment upon its GUARANTEE and, if satisfied that the loan
is based on an enforceable note and that standards of DUE DILIGENCE have been
met, make payment to LENDER in an amount equal to the outstanding and unpaid
principal amount plus interest accrued since the date of last payment or
maturity to the date of payment by ASA, to the extent that such interest does
not exceed the maximum number of days authorized by ASA or federal law and
regulations.






	6.  	LENDER agrees that it will prepare and make available such
reports or other information as may be reasonably required by ASA or the United States Department of Education and further, that independent auditors or
authorized representatives of ASA or such Department shall have access to
the operations and financial records and procedures pertaining to the
Stafford, PLUS, SLS and Consolidation programs or any other federal program
administered by ASA.

	 
	7.  	If LENDER shall violate, or fail to comply with, any of the
terms of this Agreement, it shall become liable to ASA in an amount equal to
the damages sustained by ASA by virtue of such violation or failure to comply.
ASA may, at its option, and in addition to any other remedies available to it
at law or in equity, invoke and apply the provisions of Section 3 of this
AGREEMENT relating to LIMITATION, SUSPENSION OR TERMINATION.



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Section 3. LIMITATION, SUSPENSION OR TERMINATION OF LENDER PARTICIPATION





	1.  	As a lender participating in the FEDERAL FAMILY EDUCATION LOAN
PROGRAM administered by ASA, LENDER shall administer its loan portfolio(s) in
accordance with applicable federal and state law and regulations, with ASA
policies, and with sound lending practices.






	2.  	In the event that ASA determines that LENDER’s administration
of such programs does not satisfy the required levels of DUE DILIGENCE or that
the DEFAULT or delinquency rate of loans originated or held by LENDER is
excessive, ASA will inform LENDER of the noted deficiencies and of corrective
actions required in order to continue participation.






	3.  	LENDER shall implement the recommended corrective action and/or
take other action to rectify each of the administrative deficiencies noted by
ASA within the time specified by ASA or as agreed to by LENDER and ASA.






	4.  	In the event that LENDER fails to rectify such deficiencies in
a timely and prudent manner, ASA may, in its discretion, impose LIMITATION,
SUSPENSION OR TERMINATION sanctions as it may deem appropriate, after affording
LENDER an opportunity to respond. However, ASA may impose such sanctions on
LENDER without a hearing if ASA determines that emergency action is necessary
in order to prevent monetary loss to ASA and the federal government. LENDER
may appeal any LIMITATION, SUSPENSION OR TERMINATION sanctions by ASA.






	5.  	LIMITATION sanctions provide for the continued participation of
LENDER but subject to such special conditions, procedures or timetables as may
be established by ASA.
	 
	6.  	SUSPENSION sanctions include the temporary termination of
LENDER’s eligibility for participation for a specified period of time or until
LENDER satisfies the standards established by ASA to remove the SUSPENSION.






	7.  	TERMINATION sanctions may be invoked by ASA where the
administrative deficiencies are substantial and where LENDER has not taken
timely corrective action. TERMINATION of LENDER’S eligibility for
participation will be effected after having provided LENDER with an opportunity
for a hearing. Restoration of LENDER’s eligibility for participation can be
accomplished only upon submission of a new application for such participation
and ASA’s approval of such application after consideration of eligibility
standards then required by the Board of Directors.





     Any LIMITATION, SUSPENSION OR TERMINATION hereunder shall be prospective only and shall
not affect the obligations of the parties hereto which were incurred prior to such LIMITATION,
SUSPENSION OR TERMINATION.



     The AGREEMENT may be modified only by written agreement of the parties hereto. Any
waiver, modification or failure to insist upon the strict performance of the duties of either


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party to this AGREEMENT shall not be construed as a waiver or modification generally or of
such particular condition in a subsequent instance.




     This AGREEMENT may be terminated by either party at anytime by providing at least thirty (30)
days’ written notice of such termination to the other party hereto. Such termination, however,
shall be prospective only and shall not affect the obligations of the parties hereto, which were
incurred prior to such termination.



     IN WITNESS WHEREOF, ASA and LENDER have caused this instrument to be executed by duly
authorized officers and affixed with the corporate seal of each as of the day and year indicated
below.



     By checking below, LENDER signifies its intent to participate in the programs checked.




	 	[X]   	Participation in the Federal (Subsidized and Unsubsidized) Stafford Loan
Programs
	 
	 	[X]    	Participation in the Federal PLUS Loan Program
	 
	 	[X]    	 Participation in the Federal Consolidation Loan Program
	 
	 	[  ]   	 Participation in the Federal Loan Rehabilitation Program
	 
	 	[  ]   	 Participation in the ASA Lender of Last Resort Program





MASSACHUSETTS HIGHER EDUCATION ASSISTANCE CORPORATION doing business as AMERICAN STUDENT ASSISTANCE




	 	 	 	 	 
	

	 	By:
	 	/s/ Debra J. Chromy
	

	 	 	 	

	 
	 	 	 	 
	

	 	Printed Name:
	 	Debra J. Chromy
	 
	 	 	 	 
	

	 	Title:
	 	Vice President
	 
	 	 	 	 
	

	 	Date:
	 	February 5, 2004
	
	 	 	 	 






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THE BANK OF NEW YORK AS ELIGIBLE LENDER TRUSTEE FOR HIGHER EDUCATION FUNDING I




	 	 	 	 	 
	

	 	By:
	 	/s/ Craig S. Wenzler
	

	 	 	 	

	 
	 	 	 	 
	

	 	Printed Name:
	 	Craig S. Wenzler
	 
	 	 	 	 
	

	 	Title:
	 	Assistant Vice President
	 
	 	 	 	 
	

	 	Date:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	EIN #:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Lender Code:
	 	834117
	

	 	 	 	 






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CERTIFICATE OF COMPREHENSIVE INSURANCE




For Consolidation Loans made in accordance with The Federal Family Education Loan Program (“FFELP”)
of the Higher Education Act of 1965, as amended and formerly known as the Guaranteed Student Loan
programs.




Massachusetts Higher Education Assistance Corporation doing business as American Student Assistance
(“ASA”), herein referred to as the “Agency,” authorizes that all Consolidation Loans made in
conformity with the requirements of the FFELP of the Higher Education Act of 1965, as amended
(“Act”), by The Bank of New York as Eligible Lender Trustee for Higher Education Funding I, herein
referred to as the “Lender,” are fully insured against loss of principal and interest by the
Agency, provided:





	 	1.  	The Lender has determined to its satisfaction, in accordance
with reasonable and prudent business practices, that for each loan being
consolidated -






	 	(a)  	the loan is a legal, valid, and binding
obligation of the borrower;
	 
	 	(b)  	such loan was made and serviced in compliance
with applicable laws and regulations; and
	 
	 	(c)  	the insurance on such loan is in full force and
effect.






	 	2.  	The Consolidation Loan(s) are made on or after July 1, 1987,
unless limited by the Act.
	 
	 	3.  	The total unpaid principal amount of all Consolidation Loans
made under this certificate is equal to or less than $1,000,000,000.
	 
	 	4.  	If the Lender, prior to expiration of this certification (which
occurs upon reaching of the dollar limit), no longer proposes to make
Consolidation Loans, the Lender shall notify the Agency so that the certificate
may be terminated. Such termination shall not affect the insurance on any
Consolidation Loan made prior to such termination.
	 
	 	5.  	The Lender’s loan consolidation program practices are subject
to the Agency’s FFELP Lender Participation Limitation, Suspension or
Termination procedures. The insurance on any loan(s) made under this
certificate prior to the Agency’s imposition of a limitation, suspension or
termination action shall not be affected by such action.
	 
	 	6.  	The Lender complies with the Agency’s Federal Consolidation
Loan policies and procedures. (As published in the Common Manual and/or
provided by the guarantor).




 









 






	 	7.  	The Lender notifies the Agency of the alternative repayment
terms which will be offered by the Lender.





Please note that the Agency reserves the right to change or modify the total amount of insurance
granted to the Lender under this Certificate, provided the Agency so notifies the Lender promptly
thereafter.




The Agency’s office at 330 Stuart Street, Boston, Massachusetts 02116 is designated as the office
which will process claims and perform other related administrative functions.




	 	 	 
	/s/ Debra J. Chromy

	 	2-5-04
	


	 	

	Debra J. Chromy

	 	Date