ERNST & YOUNG (Letterhead)

                   Independent Auditors Report on Compliance
                          SMS Student Loan Trust 1999-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
153 West 51st Street, 8th Floor
New York, New York  10019


         and
General Re Financial Products Corporation
Rockefeller Center
630 Fifth Avenue, Suite 450
New York, New York  10111


     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 sheet of SMS and  subsidiary as of September 30, 1999
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, 1999.

     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 (g) of the  Administration  Agreement  ("the
Agreement")  dated February 1, 1999 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 1999-A ("the Issuer"), for the
period  February 1, 1999  through  September  30, 1999 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  administration  of the  Student  Loan  Trust  1999-A
receivables  pursuant to sections 2 (c) (i through iii), 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.
<PAGE>

Our procedures and findings were as follows:


     1. 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
amount to be in agreement.

     2. We obtained  the  Quarterly  Servicing  Report - SMS Student  Loan Trust
1999-A for the collection period February 1, 1999 through June 30, 1999 prepared
by SMS pursuant to section 2 (d) and 2 (g) of the  Agreement  and  performed the
following:

          a. We compared the January 31, 1999 amounts and  percentages  reported
     in segment I "Deal  Parameters" (A) through (D)(iv) to amounts derived from
     the SMS Student Loan Trust 1999-A prospectus, noting agreement. We compared
     the  January 31,  1999  amounts  reported in segment I (D)(v) and E)(ii) to
     bank statements, noting agreement.

          b. We  compared  the  amounts  reported  in segment  II  "Inputs  from
     Previous  Quarterly  Servicer  Reports" (A) through (O) to amounts  derived
     from the SMS Student Loan Trust 1999-A  prospectus,  noting  agreement.  We
     compared the amount reported in segment II (P) to bank  statements,  noting
     agreement.

          c. We compared  the  "Interest  Period  Index  Value - 3 Month  Libor"
     percentage  in segment IV "Interest  Rate  Calculation"  to a quoted market
     rate,  noting  agreement.  We compared the amounts  reported in segment III
     "Inputs for Servicing,  Administrative  and Consolidation  Rebate Fees" (D)
     through (F) and IV (D) through  (F) and (J) to system  reports  prepared by
     USA Group Loan Services,  Inc.  ("Loan  Services"),  noting  agreement.  We
     compared the amount in segment IV (L) to external  verification  of the net
     swap payment,  noting agreement.  We recalculated the amounts in segment IV
     (G) through (I) and "Net Expected  Interest  Collections" and the "Adjusted
     Student  Loan Rate"  percentage  and  compared  the  resulting  amounts and
     percentage to those reported, noting agreement.

          d. We compared  the amounts  reported  in  segments V  "Servicing  Fee
     Calculation" (A) and (D); VI "Cash Inputs" (A) and (B); VII "Other Servicer
     Inputs" (A)(ii) through (A)(iv), (C)(i), and (C)(ii); IX "Quarterly Flow of
     Loan Principal" (A)(i) through (A)(iv), (B)(ii), (C)(i), and (C)(ii); and X
     "Quarterly  Uninsured  Loss and  Recoveries  Reporting"  (A)(ii) and (B) to
     system reports prepared by Loan Services, noting agreement. We compared the
     amount in segment  VII(A)(i) to the Student  Loan Trust 1999-A  prospectus,
     noting  agreement.  We recalculated  the amounts reported in segment V (C),
     (E), and (F);  segment VII (A)(v);  segment IX (A)(vi),  B)(iv),  (C)(iii),
     (D), and (E); and segment X (A)(i), (A)(iii), (C), and (D) and compared the
     resulting amounts to those reported, noting agreement.
<PAGE>

          e. We compared the amounts reported in segment VIII "Inputs from Other
     Sources"  (A)  through  (C)  to  bank  statements,   noting  agreement.  We
     recalculated the amount reported in segment VIII (E), (F), (H), and (I) and
     compared amounts to that reported, noting agreement.

          f.  We  recalculated  the  amounts  and  percentages  in the  segments
     "Summary  of  Quarterly  Cash   Generation  and  Usage"  (A)  through  (O);
     "Distributions  of Cash"  (A)(i),  (A)(iii),  (B)(i),  (B)(iii),  (C)(iii),
     (C)(v), (D)(i), and (D)(iii); "Reconciliation of Reserve Account" (A), (B),
     and (E); and "Reconciliation of Collateral  Reinvestment Account" (A), (B),
     and (D) through (I); and "Additional Reporting Requirements" (A), (B), (D),
     (E),  and (G) and compared the amounts and  percentages  to that  reported,
     noting agreement.

          g. We compared the amounts in the segments  "Reconciliation of Reserve
     Account" (E) and "Reconciliation of Collateral Reinvestment Account" (I) to
     the  reconciliations of trust accounts performed by SMS pursuant to section
     2 (c) (i through iii) of the Agreement,  noting agreement.  We compared the
     bank balances per the reconciliations of trust accounts to bank statements,
     noting agreement.

     We were not  engaged  to,  and did not  perform  an audit of the  Quarterly
Servicing  Report - SMS Student Loan Trust 1999-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, 1999 and the related  statements  of revenues and
expenses  and changes in net assets and cash flows for the year then ended,  and
have issued our report  thereon dated  November 18, 1999. At the request of SMS,
however, we did not perform any tests of Loan Services' servicing of the Student
Loan Trust 1999-A receivables,  because a separate single auditor report of Loan
Services'  servicing  systems  has  been  issued.  Had we  performed  additional
procedures  or had we made an  examination  of Loan  Services'  servicing of the
Student Loan Trust 1999-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.

Ernst & Young LLP /s/

Indianapolis, Indiana
November 24, 1999