IV.  Report of Independent Accountants


       USA Group Loan Services, Inc.

       30 South Meridian Street
       Indianapolis, Indiana  46204

       We have examined management's assertions of USA Group Loan Services, Inc.
       (Loan   Services)  that  Loan  Services   complied  with  the  compliance
       requirements described in management's assertions in their representation
       letter dated  December 9, 1997 and included in Section III of this Lender
       Audit Guide report,  relative to Loan Services'  preparation of quarterly
       Lender's  Interest  and  Special  Allowance  Request and Reports (ED Form
       799s) prepared and either submitted to its customers for their submission
       to the U.S.  Department of Education (ED) or submitted  directly to ED on
       behalf  of  certain  customers  (see  Exhibit  A) during  the year  ended
       September  30,  1997,  and  about  the  effectiveness  of Loan  Services'
       internal  control  over  compliance  with the  aforementioned  compliance
       requirements as of September 30, 1997. Management is responsible for Loan
       Services'  compliance  with, and the  effectiveness  of the Loan Services
       internal   control  over  compliance  with,   those   requirements.   Our
       responsibility is to express an opinion on management's  assertions about
       Loan Services'  compliance with, and the  effectiveness of Loan Services'
       internal   control  over  compliance   with,  the  specified   compliance
       requirements based on our examination.

       Our  examination   was  made  in  accordance  with  Government   Auditing
       Standards,  issued  by the  Comptroller  General  of the  United  States;
       standards  established  by the American  Institute  of  Certified  Public
       Accountants;   and  the  Audit  Guide,   Compliance  Audits  (Attestation
       Engagements)  for  Lenders  and  Lender  Servicers  Participating  in the
       Federal Family Education Loan Program (the "Audit Guide"),  issued by the
       U.S.  Department  of  Education,   Office  of  Inspector  General,   and,
       accordingly,  included obtaining an understanding of the internal control
       over compliance with the specified compliance  requirements;  testing and
       evaluating  the design and operating  effectiveness  of internal  control
       over  compliance;  examining,  on  a  test  basis,  evidence  about  Loan
       Services'  compliance with those  requirements  and performing such other
       procedures as we considered  necessary in the  circumstances.  We believe
       that our  examination  provides a reasonable  basis for our opinion.  Our
       examination  does not  provide a legal  determination  on Loan  Services'
       compliance with specified requirements.

       Because of inherent limitations in any internal control structure, errors
       or irregularities may occur and not be detected. Also, projections of any
       evaluation  of the internal  control over  compliance  with the specified
       requirements  to future  periods  are  subject to the risk that  internal
       control  over  compliance  may  become  inadequate  because of changes in
       conditions,  or that the degree of  compliance  with control  policies or
       procedures may deteriorate.

                                                         1

<PAGE>



       In our opinion,  management's assertions that Loan Services complied with
       the  aforementioned  requirements  relative to the quarterly ED Form 799s
       prepared by Loan  Services  during the year ended  September 30, 1997 and
       Loan Services  maintained an effective  internal  control over compliance
       with the aforementioned  compliance requirements as of September 30, 1997
       are fairly stated, in all material respects.

       The report is intended  solely for the use of Loan Services'  management,
       Loan Services' customers and their independent accountants. However, this
       report is a matter of public record and its distribution is not limited.



       /s/ Coopers & Lybrand L.L.P.

       Indianapolis, Indiana

       December 9, 1997