ERNST & YOUNG LLP   (letterhead)






                                    Independent Auditor's Report on Compliance
                                           SMS Student Loan Trust 1996-A

USA Group Secondary Market Services, Inc.
8350 Craig Street
Indianapolis, Indiana 46250

     and
Bankers Trust Company
Four Albany Street
New York, New York 10006

     and
The First National Bank of Chicago
One First National Plaza, Ste. 0126
Chicago, Illinois 60670


We are independent public accountants with respect to USA Group Secondary Market
Services,  Inc. (SMS) within the meaning of the Code of  Professional  Ethics of
the American Institute of Certified Public Accountants.

We have audited, in accordance with generally accepted auditing  standards,  the
consolidated  balance  sheets of SMS and subsidiary as of September 30, 1996 and
the related  consolidated  statements of income,  shareholder's  equity and cash
flows for the year then ended, and have issued our report thereon dated November
20, 1996.

In connection  with our audit,  nothing came to our attention  that caused us to
believe  that SMS failed to comply  with the  terms,  covenants,  provisions  or
conditions of Sections 2(a) through 2(h) of the  Administration  Agreement ("the
Agreement") dated as of April 1, 1996 between SMS, as administrator, and Bankers
Trust Company, ("the Trustee") as indenture trustee on behalf of the noteholders
and  certificateholders of SMS Student Loan Trust 1996-A ("the Issuer"), for the
period April 24, 1996 to September 30, 1996 insofar as they relate to accounting
matters.  However,  our  audit  was  not  directed  primarily  toward  obtaining
knowledge of such  noncompliance.  Further, we make no representations as to the
sufficiency of the foregoing procedures for your purposes.


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We have performed the procedures  enumerated below, which were agreed to by SMS,
the Eligible Lender  Trustee,  and the Indenture  Trustee,  solely to assist you
with  respect  to  SMS's   administration  of  the  Student  Loan  Trust  1996-A
receivables pursuant to sections 2 (c) (vii), 2 (d), 2 (e) (i), 2 (f) (i), 2 (g)
and 2 (h) of the Agreements. This engagement to apply agreed-upon procedures was
performed in accordance with standards  established by the American Institute of
Certified  Public  Accountants.  The sufficiency of the procedures is solely the
responsibility  of the specified users of the report.  Consequently,  we make no
representation  regarding the  sufficiency  of the  procedures  described  below
either for the purpose for which this report has been requested or for any other
purpose.

Our procedures were as follows:

1.   We obtained  access to all bank  statements  and  reconciliations  of trust
     accounts  performed by SMS pursuant to section 2 (c) (vii) of the Agreement
     and, on a test basis,  compared balances to the Monthly Servicing Reports -
     SMS  Student  Loan  Trust  1996-A  for the period  April 24,  1996  through
     September 30, 1996, noting such amounts to be in agreement.

2.   We compared the initial deposit to the reserve account required by sections
     2 (e) (i) of the Agreement to the respective bank  statements,  noting such
     amounts to be in agreement.

3.   We obtained the Monthly  Servicing  Reports - SMS Student Loan Trust 1996-A
     for the period April 24, 1996 through  September  30, 1996  prepared by SMS
     pursuant to section 2 (d) and 2 (h) of the Agreement  and, on a test basis,
     performed the following:

     a.  We  compared  the  balances  and  percentages  reported  in  segment  I
         "Original  Deal  Parameter  Inputs",  segment II "Inputs From  Previous
         Quarterly  Servicer  Reports"  and segment III  "Inputs  From  Previous
         Monthly  Servicer  Reports"  on a test basis,  to the SMS Student  Loan
         Trust 1996-A  prospectus,  noting such amounts and percentages to be in
         agreement.

     b.  We compared the individual monthly balances accumulated and reported in
         segment IV  "Interest  Rate  Calculation",  on a test basis,  to system
         reports  prepared by USA Group Loan Services  (Loan  Services),  noting
         agreement.  We  added  the  "net  expected  interest  collections"  and
         recalculated  the  interest  rates in segment IV (M) through IV (T) and
         compared  the  resulting  amounts and  percentages  to those  reported,
         noting such amounts and percentages to be in agreement.

     c.  We compared the individual monthly balances accumulated and reported in
         segments V "Servicing Fee Calculation", VI "Cash Inputs" and VII "Other
         Inputs (from Servicer)", on a test basis, to system reports prepared by
         Loan Services, noting such amounts to be in agreement.



<PAGE>


     d.  We compared the individual monthly balances accumulated and reported in
         segment  VIII "Inputs  From Other  Sources,"  on a test basis,  to bank
         statements and reports  prepared by Loan Services,  noting such amounts
         to be in agreement.

     e.  We added the  balances  in the Monthly  Servicing  Report - SMS Student
         Loan   Trust   1996-A   segments   "Monthly   Cash",   "Distributions",
         "Reconciliation  of Reserve  Account",  "Reconciliation  of  Collateral
         Reinvestment  Account",  "Reconciliation of Class A-1 Interest Account"
         and "Other  Reporting  Requirements",  and  compared  the totals to the
         inputs in segments I through VIII, noting amounts to be in agreement.

We were not engaged  to, and did not  perform an audit of the Monthly  Servicing
Reports of the Student Loan Trust  1996-A,  the  objective of which would be the
expression of an opinion on the specified  elements,  accounts or items thereof.
Accordingly,  we do not express  such an opinion.  Had we  performed  additional
procedures,  other matters might have come to our attention that would have been
reported to you.

For your  information,  we have audited,  in accordance with generally  accepted
auditing  standards,  the statement of financial position of Loan Services as of
September  30,  1996 and the related  statement  of revenues  and  expenses  and
changes in net assets,  and the statement of cash flows for the year then ended,
and have issued our report  thereon  dated  November 20, 1996. At the request of
SMS,  however,  we did not perform any tests of Loan Services'  servicing of the
Student Loan Trust 1996-A receivables,  because a separate single auditor report
of Loan Services'  servicing  systems has been issued by other auditors.  Had we
performed additional  procedures or had we made an examination of Loan Services'
servicing of the Student Loan Trust  1996-A,  other matters may have come to our
attention that would have been reported to you.

This report is intended  solely for the use of the specified  users listed above
and should not be used by those who have not agreed to the  procedures and taken
responsibilities for the sufficiency of the procedures for their purposes.

                                    /s/  Ernst & Young LLP


November 20, 1996