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ERNST & YOUNG (Letterhead)

                                Independent Auditor's Report on Compliance
                                      SMS Student Loan Trust 1997-A


USA Group Secondary Market Services, Inc.
30 South Meridian
Indianapolis, Indiana  46204


         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, 1997 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
24, 1997.

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(g) of the  Administration  Agreement ("the
Agreement") dated April 1, 1997 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 1997- A ("the  Issuer"),  for the
period  April 29, 1997  through  September  30,  1997  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.

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


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administration of the Student Loan Trust 1997-A receivables pursuant to sections
2 (c) (i through iii) (vii), 2 (d), 2 (e) (i) and 2 (g) of the  Agreement.  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:

We obtained access to all bank statements and  reconciliations of trust accounts
performed by SMS pursuant to section 2 (c) (i through iii) of the Agreement and,
on a test basis,  compared  balances  to the  Quarterly  Servicing  Report - SMS
Student Loan Trust 1997-A for the period  April 24, 1997 through  September  30,
1997, noting that such amounts agree.

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

We obtained the Quarterly  Servicing  Report - SMS Student Loan Trust 1997-A for
the period April 24, 1997 through September 30, 1997 prepared by SMS pursuant to
section 2 (d) and 2 (g) of the Agreement and performed the following:

We compared the balances and  percentages  reported in segments I "Original Deal
Parameter Inputs," and II "Inputs from Previous Quarterly Servicer Reports,"on a
test basis,  to the SMS Student Loan Trust 1997-A  prospectus,  noting that such
amounts and percentages agree.

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,  Inc. (Loan Services),  noting agreement.  We added the
"Net Expected Interest  Collections" and recalculated the percentages in segment
IV (L) through IV (P) and  compared the  resulting  amounts and  percentages  to
those reported, noting that such amounts and percentages agree.

We compared the individual monthly balances accumulated and reported in segments
III  "Inputs  for  Servicing  Fee  and  Administration  Fee," V  "Servicing  Fee
Calculation,"  VI "Cash  Inputs,"  VII "Other  Inputs (from  Servicer),"  and IX
"Principal  Inputs,"  on a test  basis,  to  system  reports  prepared  by  Loan
Services,  noting that such amounts agree. We  recalculated  the "Net Reduction/
(Increase) in Student Loan Principal  Balance" and compared the resulting amount
to that reported, noting agreement.

We compared the individual monthly balances  accumulated and reported in segment
VIII "Inputs from Other  Sources," on a test basis, to bank  statements,  noting
such amounts agree.

We compared the individual monthly balances  accumulated and reported in segment
X "Uninsured Loss and Recoveries  Reporting for the Period," on a test basis, to
system  reports  prepared  by  Loan  Services,  noting  such  amounts  to  be in
agreement.

We  recalculated  the balances in the Quarterly  Servicing  Report - SMS Student
Loan Trust 1997-A segments "Quarterly Cash," "Distributions," "Reconciliation of
Reserve  Account,"   "Reconciliation   of  Collateral   Reinvestment   Account,"
"Additional  Reporting  Requirements,"  and "Bond and Pool Balances and Factors"
and  compared the totals to the inputs in segments I through X, noting that such
amounts agree.

We were not engaged to, and did not perform an audit of the Quarterly  Servicing
Report - SMS Student  Loan Trust  1997-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,  1997 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 24, 1997. At the request of
SMS,  however,  we did not perform any tests of Loan Services'  servicing of the
Student Loan Trust 1997-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  1997-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 24, 1997