<PAGE>


                                                                  EXHIBIT 99.4



          RISK FACTORS (PAGES 1-13) AND GLOSSARY OF TERMS (PAGES 146-
          161) SECTIONS OF THE COMPANY'S FORM S-3 REGISTRATION
          STATEMENT FILED IN OCTOER 1996


                                  RISK FACTORS

     In connection with the Notes offered hereby, prospective investors should
consider, among other things, the following factors regarding the purchase of
the Notes.

NATURE OF THE NOTES

     The Issuer is a special purpose corporation and the Notes represent
obligations solely of the Issuer.  The Notes are not insured or guaranteed by
any government agency or instrumentality, by any affiliate of the Issuer, by any
insurance company or by any other person or entity.  The Issuer will have no
significant assets other than its interest in the Financed Eligible Loans and
the other property granted to the Trustee for the benefit of the Registered
Owners.  Payments on the Notes will depend solely on the amount and timing of
payments and collections in respect of the Financed Eligible Loans, interest
paid or earnings on the various accounts established pursuant to the Indenture,
the payment priority of Notes previously issued and any Additional Notes to be
issued in the future, and amounts on deposit in the Reserve Fund and other Funds
and Accounts and any other form of credit enhancement described in the related
Prospectus Supplement.  There will be no additional recourse to the Issuer or
any other Person if such proceeds are insufficient.  As a result, except as may
be specified with respect to a Series in the related Prospectus Supplement,
Registered Owners must depend on the cash flow with respect to the Financed
Eligible Loans and funds on deposit in the Reserve Fund and other Funds and
Accounts for payment of principal of and interest on the Notes.  

     Generally, after each required payment of Trustee fees and expenses,
servicing fees and expenses and interest on the Notes, and other required fees,
expenses, taxes and indemnities, including any required deposits to the Reserve
Fund have been made in full, any balance remaining from payments with respect to
the Financed Eligible Loans generally will be: (i) prior to the date specified
in the related Prospectus Supplement, applied to acquire Financed Eligible
Loans, (ii) on and after such date specified in the related Prospectus
Supplement, applied to the amortization of the Notes, until the aggregate
outstanding principal amount of Financed Eligible Loans exceeds the aggregate
Outstanding principal balance of the Notes; and (iii) thereafter, remitted to
the Issuer.  If the payments with respect to the Financed Eligible Loans and
amounts on deposit in the Reserve Fund and other Funds and Accounts (including
any applicable credit enhancement) are insufficient to make payments on the
Subordinate Notes, other assets of the Issuer will not be available for payment
of any such deficiency.

SUBORDINATION; LIMITED ASSETS

     Payments of interest and principal on the Subordinate Notes are
subordinated in priority of payment to payments of interest and principal due on
the Senior Notes and payments of interest and principal on the
Junior-Subordinate Notes are subordinated in priority of payments of interest
and 


                                      1

<PAGE>

principal due on the Subordinate Notes.  Under certain redemption situations, 
as set forth herein and as may be set forth in the related Prospectus 
Supplement with respect to any Series, principal on certain Classes of the 
Subordinate Notes may be redeemed while the Senior Notes and certain Prior 
Notes remain Outstanding and the principal on the Subordinate Notes may be 
redeemed while the Senior Notes and certain of the Subordinate Notes remain 
Outstanding.  See "Description of the Notes--Notice and Partial Redemption of 
Notes."  The Subordinate Notes are also subordinated to the Senior Notes and 
the Junior-Subordinate Notes are also subordinate to the Subordinate Notes as 
to the direction of remedies upon an Event of Default.  The Trust Estate will 
not have, nor is it permitted or expected to have, any significant assets or 
sources of funds other than from payments with respect to the Financed 
Eligible Loans, the Reserve Fund and other Funds and Accounts.

FAILURE TO COMPLY WITH LOAN ORIGINATION 
AND SERVICING PROCEDURES FOR ELIGIBLE LOANS

     The Higher Education Act of 1965, as amended (the "Higher Education Act"),
including the respective implementing regulations thereunder, require lenders
and their assignees making and servicing Eligible Loans and guarantors
guaranteeing Eligible Loans to follow specified procedures, including due
diligence procedures, to ensure that the Eligible Loans are properly made and
disbursed to, and repaid on a timely basis by or on behalf of, borrowers. 
Certain of those procedures, which are specifically set forth in the Higher
Education Act, are summarized herein.  See "Issuer's Student Loan Purchase
Program" and "Description of the Federal Family Education Loan Program" herein. 
Generally, those procedures require that completed loan applications be
processed, a determination of whether an applicant is an eligible borrower
attending an eligible institution under the Higher Education Act be made, the
borrower's responsibilities under the loan be explained to him or her, the
promissory note evidencing the loan be executed by the borrower and then that
the loan proceeds be disbursed in a specified manner by the lender.  After the
loan is made, the lender must establish repayment terms with the borrower,
properly administer deferrals and forbearances and credit the borrower for
payments made.  If a borrower becomes delinquent in repaying a loan, a lender
must perform certain collection procedures (primarily telephone calls and demand
letters) which vary depending upon the length of time a loan is delinquent.

     THE SERVICER HAS AGREED PURSUANT TO THE SERVICING AGREEMENT TO PERFORM (OR
PROVIDE FOR THIRD PARTY SERVICER TO PERFORM) SERVICING AND COLLECTION PROCEDURES
ON BEHALF OF THE ISSUER.  HOWEVER, FAILURE TO FOLLOW THESE PROCEDURES OR FAILURE
OF ANY SELLER OR ANY OTHER ORIGINATOR OF THE FINANCED ELIGIBLE LOANS TO FOLLOW
PROCEDURES RELATING TO THE ORIGINATION OF ANY ELIGIBLE LOANS MAY RESULT IN THE
DEPARTMENT'S REFUSAL TO MAKE REINSURANCE PAYMENTS TO THE GUARANTEE AGENCIES OR
TO MAKE SPECIAL ALLOWANCE PAYMENTS TO THE TRUSTEE WITH RESPECT TO SUCH ELIGIBLE
LOANS OR IN THE GUARANTEE AGENCIES' REFUSAL TO HONOR THEIR GUARANTEE AGREEMENTS
WITH THE TRUSTEE WITH RESPECT TO SUCH ELIGIBLE LOANS.  FAILURE OF THE GUARANTEE
AGENCIES TO RECEIVE REINSURANCE PAYMENTS FROM THE DEPARTMENT COULD ADVERSELY
AFFECT THE GUARANTEE AGENCIES' ABILITY OR LEGAL OBLIGATION TO MAKE PAYMENTS
UNDER THE GUARANTEE AGREEMENTS ("GUARANTEE PAYMENTS") TO THE TRUSTEE.  LOSS OF
ANY SUCH GUARANTEE PAYMENTS, SPECIAL ALLOWANCE PAYMENTS OR FEDERAL INTEREST
SUBSIDY PAYMENTS WITH RESPECT TO ELIGIBLE LOANS, COULD ADVERSELY AFFECT THE
AMOUNT OF REVENUES AND THE ISSUER'S ABILITY TO PAY PRINCIPAL AND INTEREST ON THE
NOTES.  SEE "DESCRIPTION OF THE FEDERAL FAMILY EDUCATION LOAN PROGRAM" HEREIN.



                                      2

<PAGE>

RELIANCE UPON SELLERS

     The Issuer expects to acquire additional Financed Eligible Loans from the
Sellers from time to time, all pursuant to the Student Loan Purchase Agreement
under which each Seller has agreed to sell to the Issuer Eligible Loans which
comply with certain representations and warranties with respect to each Financed
Eligible Loan and certain overall portfolio characteristics in connection with
such acquisitions.  No assurance can be given that the Issuer would be able to
acquire Eligible Loans in an equivalent amount, with similar characteristics or
at comparable prices from sources other than the Sellers in the event that the
Sellers were unable to sell additional Eligible Loans to the Issuer or in the
event that any Seller was required to repurchase Financed Eligible Loans.  See
"Risk Factors--Certain Legal Aspects," "--Failure to Comply with Loan
Origination and Servicing Procedures for Eligible Loans" and "Seller
Representations and Warranties" herein.

PERFECTION OF SECURITY 
INTEREST IN FINANCED ELIGIBLE LOANS

     As required by the Uniform Commercial Code, the perfection of the security
interest in the Financed Eligible Loans granted by the Issuer to the Trustee is
to be accomplished by possession of the promissory notes evidencing the Financed
Eligible Loans by the Trustee and by the filing of financing statements.  Under
the Uniform Commercial Code, possession may be either by the secured party or by
an agent on the secured party's behalf.  With respect to the Indenture,
possession by the Trustee, as secured party, is to be accomplished by delivery
of such promissory notes to UNIPAC, acting as custodial agent for the Trustee. 
UNIPAC is an affiliate of Union Bank.  In the event UNIPAC acted contrary to its
obligations under the Custodian Agreement, by reason of such affiliate
relationship or otherwise, and relinquished possession of the promissory notes
to any party other than the Trustee or the Trustee's agent, the security
interest of the Trustee in the Financed Eligible Loans released may become
unperfected.  In addition, while the Issuer has received an opinion of counsel,
subject to the assumptions and limitations set forth therein, that the Trustee
has a first priority perfected security interest in the Financed Eligible Loans,
because of the affiliation between UNIPAC and Union Bank, the perfection of the
Trustee's security interest in the Financed Eligible Loans by UNIPAC taking
possession is not entirely free from doubt and such perfection may be challenged
by a receiver or other creditor of Union Bank in the event of Union Bank's
insolvency or otherwise.  See "Certain Relationships Among Financing
Participants" herein.

CERTAIN INSOLVENCY CONCERNS

     The Issuer has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by a Seller or Union Financial Services, Inc., (the "Sponsor") under
the United States Bankruptcy Code or other insolvency laws, as the case may be
("Insolvency Laws") will not result in consolidation of the assets and
liabilities of the Issuer with those of any Seller or the Sponsor.  These steps
include the creation of the Issuer as a separate, limited-purpose subsidiary of
the Sponsor pursuant to a certificate of incorporation containing certain
limitations (including restrictions on the nature of the Issuer's business and a
restriction on the Issuer's ability to commence a voluntary case or proceeding
under any Insolvency Law without the prior unanimous affirmative vote of all of
its directors, including at least one director who must be Independent of the
Issuer and its affiliates).  However, there can be no assurance that the
activities of the Issuer would not result in a court concluding that the asset
and liabilities of the Issuer should be consolidated with those of any Seller or
the Sponsor in a proceeding under any Insolvency Law.  If a court were to reach
such a conclusion or a filing were made under any Insolvency Law by or against
the Issuer, or if an attempt were made to litigate any of the 



                                      3

<PAGE>

foregoing issues, then delays in distributions on the Notes could occur or 
reductions in the amounts of such distributions could result.  See "The 
Issuer."  

     It is intended by the Issuer that the transfer of the Financed Eligible
Loans by any Seller to the Issuer constitute a true sale of the Student Loans to
the Issuer.  If the transfer constitutes such a true sale, the Financed Eligible
Loans and the proceeds thereof would not be the property of the respective
Seller should it become the subject of any Insolvency Law subsequent to the
transfer of the Financed Eligible Loans to the Issuer.

     Each Seller will warrant to the Issuer in the related Student Loan Purchase
Agreement that the sale of the Financed Eligible Loans by such Seller to the
Issuer is a valid sale of the Financed Eligible Loans by such Seller to the
Issuer.  Notwithstanding the foregoing, if a Seller were to become subject to an
Insolvency Law and a creditor or trustee-in-bankruptcy of such Seller itself
were to take the position that the sale of Financed Eligible Loans by such
Seller to the Issuer should instead be treated as a pledge of such Financed
Eligible Loans to secure a borrowing of such Seller, delays in payments of
collections of Financed Eligible Loans to the related Noteholders could occur or
(should the court rule in favor of such Seller or such trustee or creditor),
reductions or delays in the amounts of such payments could result.  If the
transfer of Financed Eligible Loans by a Seller to the Issuer is treated as a
pledge instead of a sale, a tax or government lien on the property of such
Seller arising before the transfer of such Financed Eligible Loans to the Issuer
may have priority over the Trust Estate's interest in such Financed Eligible
Loans.

     If an Insolvency Event occurs with respect to the Issuer, the Financed
Eligible Loans will be liquidated after the date of such Insolvency Event or as
otherwise specified in the related Prospectus Supplement.  The proceeds from any
such sale, disposition or liquidation of Financed Eligible Loans will be treated
as collections on the Financed Eligible Loans and deposited in the Student Loan
Holding Fund.  If the proceeds from the liquidation of the Financed Eligible
Loans and any amounts on deposit in the Reserve Fund (if any) and any amounts
available from any credit enhancement, if any, are not sufficient to pay the
Notes of the related Series in full, the distributions of principal to such
Noteholders will be reduced and Noteholders will incur a loss.  See "Summary of
Certain Provisions of the Indenture--Events of Default."

CHANGING ASSETS OF THE TRUST ESTATE

     During the period beginning on the Date of Issuance and ending no later
than the date set forth with respect to a Series in the related Prospectus
Supplement, the Issuer intends to purchase Financed Eligible Loans from the
Sellers.  Each Financed Eligible Loan must meet certain characteristics and each
portfolio of Financed Eligible Loans added to the Financed Eligible Loans
portfolio in accordance with the terms of the Student Loan Purchase Agreement
and the Indenture must, as of the applicable Cutoff Date, together with each
portfolio previously added to the Financed Eligible Loans portfolio, as of their
respective Cutoff Dates, meet certain pool characteristics set forth in the
Student Loan Purchase Agreement.  However, the actual characteristics of the
Financed Eligible Loans portfolio will change from time to time due to factors
such as adjustments made in the normal course of business, changes in the
classifications of Eligible Loans, sale or purchase of Eligible Loans by the
Issuer, scheduled amortization, prepayment or the occurrence of delinquencies or
defaults.



                                      4

<PAGE>

VARIABILITY OF REVENUES

     Amounts received with respect to the Financed Eligible Loans for a
particular period may vary in both timing and amount from the payments actually
due on the Financed Eligible Loans for a variety of economic, social and other
factors, including both individual factors, such as additional periods of
deferral or forbearance prior to or after a borrower's commencement of
repayment, and general factors, such as a general economic downturn which could
increase the amount of defaulted Financed Eligible Loans.  Failures by borrowers
to pay timely the principal and interest on the Financed Eligible Loans will
affect the amount of Revenues, which may reduce the amount of principal and
interest available to be paid to the Registered Owners.  In addition, failures
by borrowers of student loans generally to pay timely the principal and interest
due on such student loans could obligate the Guarantee Agencies to make payments
thereon, which could adversely affect the solvency of the Guarantee Agencies and
their ability to meet their guarantee obligations (including with respect to the
Financed Eligible Loans).  The inability of any Guarantee Agency to meet its
guarantee obligations could reduce the amount of principal and interest paid to
the Registered Owners.  The effect of such factors, including the effect on a
Guarantee Agency's ability to meet its guarantee obligations with respect to the
Financed Eligible Loans or the Issuer's ability to pay principal and interest
with respect to the Notes, is not possible to predict.  Pursuant to the 1992
amendments under Section 432(o) of the Act, if the Department has determined
that a Guarantee Agency of an Eligible Loan is unable to meet its insurance
obligations, the loan holder may submit claims directly to the Department and
the Department is required to pay the full Guarantee payment due with respect
thereto in accordance with guarantee claim processing standards no more
stringent than those applied by a Guarantee Agency of Eligible Loans.  However,
the Department's obligation to pay guarantee claims directly in this fashion is
contingent upon the Department making the determination referred to above. 
There can be no assurance that the Department would ever make such a
determination with respect to a Guarantee Agency or, if such a determination was
made, whether such determination or the ultimate payment of such guarantee
claims would be made in a timely manner.

     If an Event of Default occurs under the Indenture, subject to certain
conditions, the Trustee is authorized, without the consent of the Registered
Owners, to sell the Financed Eligible Loans.  There can be no assurance,
however, that the Trustee will be able to find a purchaser for the Financed
Eligible Loans in a timely manner or that the market value of such Financed
Eligible Loans would, at any time, be equal to the aggregate outstanding
principal amount of the Notes then Outstanding and accrued interest thereon.  If
the net proceeds of any such sale, together with amounts then on deposit in the
Reserve Fund and other Funds and Accounts, do not exceed the aggregate
outstanding principal amount of Notes then Outstanding and accrued interest
thereon, Registered Owners of any Class of Notes not paid in full will likely be
unable to recover the full amount of their investment.  In addition, the amount
of principal required to be paid to Registered Owners under the Indenture is
generally limited to amounts available to be so paid.  Therefore, the failure to
pay principal on any Class or Series of Notes may not result in the occurrence
of an Event of Default until the Stated Maturity date of such Class or Series of
Notes.

PREPAYMENT CONSIDERATIONS

     Principal prepayments with respect to the Notes may be influenced by a
variety of economic, geographic, social and other factors.  The Financed
Eligible Loans may be prepaid at any time without penalty.  The Issuer believes
that in a fluctuating interest rate environment a factor affecting the
prepayment rate on a large pool of loans similar to the Financed Eligible Loans
is the difference between the interest rates on the loans (giving consideration
to the cost of any refinancing) and prevailing interest rates generally.  In
general, if interest rates fall below the interest rates on the 



                                      5

<PAGE>

Financed Eligible Loans, the rate of prepayment would be expected to 
increase. Conversely, if interest rates rise above the interest rates on the 
Financed Eligible Loans, the rate of prepayment would be expected to 
decrease.  The Issuer does not have available sufficient prepayment 
information on Financed Eligible Loans similar to those to be included in the 
Trust Estate to estimate the rate of prepayment with respect to the Financed 
Eligible Loans in the Financed Eligible Loans portfolio.  Other factors 
affecting prepayment of loans include changes in the borrower's job, 
transfers, unemployment and servicing decisions, and refinancing 
opportunities which may provide more favorable repayment terms such as those 
offered under various consolidation loan programs, including the federal 
direct consolidation loan programs.  In addition, the rate of the payments of 
principal on the Notes will be directly related to the actual amortization 
schedule of the Financed Eligible Loans.  See "Risk Factors--Changes in 
Legislation" herein.

     The rate of principal payments on the Notes, the amount of principal and
interest payments on the Notes and the yield to maturity of the Notes will be
directly related to the rate of payments of principal on the Financed Eligible
Loans.  The timing of changes in the rate of prepayments may significantly
affect an investor's actual yield to maturity, even if the average rate of
principal prepayments is consistent with an investor's expectations.  In
general, the earlier a prepayment of principal of a Financed Eligible Loan, the
greater the effect on an investor's yield to maturity.  The effect on an
investor's yield as a result of principal payments occurring at a rate higher
(or lower) than the rate anticipated by the investor during the period
immediately following the issuance of the Offered Notes will not be offset by a
subsequent like reduction (or increase) in the rate of principal payments.  See
"Weighted Average Life of the Notes" herein.

PRINCIPAL BALANCE OF NOTES MAY EXCEED 
AGGREGATE PRINCIPAL BALANCE OF FINANCED 
ELIGIBLE LOANS

     As may be specified with respect to a Series in the related Prospectus
Supplement, on the Date of Issuance of such Series, the aggregate initial
principal amount of the Notes, together with all other Notes outstanding, may be
greater than the sum of the aggregate principal balance of the Financed Eligible
Loans and other assets on deposit in the Funds and Accounts in the Trust Estate
as of the Cutoff Date with respect thereto.  Each Financed Eligible Loan with
respect to such Series may be purchased by the Issuer for an amount greater than
the principal balance thereof (including any accrued interest thereon expected
to be capitalized upon repayment) as of such Cutoff Date.  In addition, under
the existing Loan Purchase Agreements with Union Bank each Eligible Loan
acquired during the recycling period with respect thereto will be purchased by
the Issuer for an amount greater than the principal balance thereof (including
any accrued interest thereon expected to be capitalized upon repayment) as of
the related Cutoff Date.  As a result, if an Event of Default should occur under
the Indenture and the Financed Eligible Loans were liquidated at a time when the
outstanding principal amount of such Notes exceeded the aggregate principal
balance of the Financed Eligible Loans and other assets on deposit in the Funds
and Accounts in the Trust Estate, unless such Financed Eligible Loans are
liquidated at a premium, Noteholders may suffer a loss as a result thereof. 
However, in the absence of any such default, any excess Note principal balance
is expected to be reduced from interest payments received on the Financed
Eligible Loans.

UNSECURED NATURE OF FINANCED ELIGIBLE LOANS; 
FINANCIAL STATUS OF GUARANTEE AGENCIES  

     The Higher Education Act requires all Financed Eligible Loans to be
unsecured.  As a result, the only security for payment of the Financed Eligible
Loans are the Guarantee Agreements between 



                                      6

<PAGE>

the Trustee and each Guarantee Agency.  A deterioration in the financial 
status of the Guarantee Agencies and their ability to honor guarantee claims 
with respect to the Financed Eligible Loans could result in a delay in making 
or a failure to make Guarantee Payments to the Trustee.  One of the primary 
causes of a possible deterioration in a Guarantee Agency's financial status 
is directly related to the amount and percentage of defaulting Financed 
Eligible Loans guaranteed by a Guarantee Agency.  Moreover, with respect to 
Eligible Loans, to the extent that the Department pays reimbursement claims 
submitted by a Guarantee Agency for any fiscal year exceeding certain 
specified levels, the Department's obligation to reimburse the Guarantee 
Agency for losses will be reduced on a sliding scale from a maximum of 98% to 
a minimum of 78% of Guarantee Agency payments.  Under Section 432(o) of the 
Act, if the Department has determined that a Guarantee Agency is unable to 
meet its guarantee obligations, the loan holder may submit claims directly to 
the Department and the Department is required to pay the full guaranty claim 
amount due with respect thereto in accordance with guaranty claim processing 
standards no more stringent than those of the Guarantee Agency.  See 
"Description of the Federal Family Education Loan Program" herein.

CHANGES IN LEGISLATION

     There can be no assurance that the Higher Education Act or other relevant
federal or state laws, rules and regulations and the programs implemented
thereunder will not be amended or modified in the future in a matter that will
adversely impact the programs described herein and the loans made thereunder,
including the Financed Eligible Loans, or the Guarantee Agencies.  In addition,
existing legislation and future measures to reduce the federal budget deficit
may adversely affect the amount and nature of federal financial assistance
available with respect to these programs.  In recent years, federal budget
legislation has provided for the recovery of certain funds held by guarantee
agencies in order to achieve reductions in federal spending.  There can be no
assurance that future federal budget legislation or administrative actions will
not adversely effect expenditures by the Department, the Secretary or the
financial condition of the Guarantee Agencies.  

     Under the Omnibus Budget Conciliation Act of 1993, Congress made a number
of changes that may adversely affect the financial condition of the Guarantee
Agencies, including reducing to 98% the maximum percentage of Guarantee payments
the Department will reimburse for loans first disbursed on or after October 1,
1993, reducing substantially the premiums and default collections that Guarantee
Agencies are entitled to receive and/or retain and giving the Department broad
powers over Guarantee Agencies and their reserves.  These powers include the
authority to require a Guarantee Agency to return all reserve funds to the
Department if the Department determines such action is necessary to ensure an
orderly termination of such Guarantee Agency, to serve the best interests of the
federal programs or to ensure the proper maintenance of such Guarantee Agency's
funds or assets.  The Department is also now authorized to direct a Guarantee
Agency to return a portion of its reserve funds which the Department determines
is unnecessary to pay the program expenses and contingent liabilities of such
Guarantee Agency and/or to cease any activities involving the use of such
Guarantee Agency's reserve funds or assets which the Department determines is a
misapplication or otherwise improper.  The Department may also terminate the
reinsurance agreement of a Guarantee Agency if the Department determines that
such action is necessary to protect the federal fiscal interest or to ensure an
orderly transition to full implementation of direct federal lending.  In such
event, however, the Department is required to assume the functions of such
Guarantee Agency as described herein in "Description of the Federal Family
Education Loan Program" herein.  These various changes create a significant risk
that the resources available to the Guarantee Agencies to meet their guarantee
obligations will be significantly reduced.  IN ADDITION, THIS LEGISLATION
GREATLY EXPANDS THE FEDERAL DIRECT STUDENT LOAN PROGRAM VOLUME TO A TARGET OF
APPROXIMATELY 60% OF STUDENT LOAN DEMAND IN ACADEMIC YEAR 1998-1999, WHICH COULD
RESULT IN 



                                      7

<PAGE>

INCREASING REDUCTIONS IN THE VOLUME OF LOANS MADE UNDER THE FEDERAL PROGRAM.  
AS THE FEDERAL DIRECT STUDENT LOAN PROGRAM EXPANDS, THE SERVICER MAY 
EXPERIENCE INCREASED COSTS DUE TO REDUCED ECONOMIES OF SCALE TO THE EXTENT 
THE VOLUME OF NEW LOANS SERVICED BY THE SERVICER IS REDUCED.  SUCH COST 
INCREASES COULD AFFECT THE ABILITY OF THE SERVICER TO SATISFY ITS OBLIGATIONS 
TO SERVICE THE FINANCED ELIGIBLE LOANS OR TO PURCHASE FINANCED ELIGIBLE LOANS 
IN THE EVENT OF CERTAIN BREACHES OF COVENANTS.  SEE "RISK FACTORS--RELIANCE 
UPON SELLERS" AND "--THE FINANCED ELIGIBLE LOANS AND THE STUDENT LOAN FUND" 
HEREIN.  Such volume reductions could further reduce revenues received by the 
Guarantee Agencies available to pay claims on defaulted Eligible Loans.  
Finally, the level of competition currently in existence in the secondary 
market for loans made under the federal programs could be reduced, resulting 
in fewer potential buyers of the Eligible Loans and lower prices available in 
the secondary market for those loans.  Further, the Department is 
implementing a direct consolidation loan program, which program may further 
reduce the volume of loans made under the federal programs.  See "Description 
of the Federal Family Education Loan Program" herein.

THE FINANCED ELIGIBLE LOANS 
AND THE STUDENT LOAN FUND

     The Issuer has previously acquired or will acquire Financed Eligible Loans
with the funds on deposit in the Student Loan Fund.  Any conveyance of
additional Eligible Loans is subject to the following conditions, among others:
(a) each such additional Eligible Loan must satisfy the eligibility criteria
specified in the applicable Student Loan Purchase Agreement, and (b) with
respect to Financed Eligible Loans acquired on the Scheduled Sale Date and other
dates of acquisition, the additional Financed Eligible Loans, as of the
applicable Cutoff Date, together with the Financed Eligible Loans previously
added to the portfolio, as of the respective Cutoff Date, must meet certain pool
characteristics set forth in the Student Loan Purchase Agreement.  See "Seller
Representations and Warranties--Representations and Warranties--Portfolio
Characteristics" and "--Representations and Warranties--Eligible Loans" herein.

     Unless otherwise specified with respect to a Series in the related
Prospectus Supplement, to the extent that amounts on deposit in the Loan Account
designated with respect to a Series of the Student Loan Fund have not been fully
applied to the acquisition of additional Eligible Loans by the date specified in
the related Prospectus Supplement, the Registered Owners of such Notes will
receive as a prepayment of principal, in the priorities described herein or in
the related Prospectus Supplement, an amount equal to the amount remaining in
the Loan Account designated with respect to a Series of the Student Loan Fund on
the respective Interest Payment Dates on or next succeeding the date specified
in the related Prospectus Supplement, with respect to the Senior Notes of such
Series, and the date specified in the related Prospectus Supplement with respect
to the Subordinate Notes and the Junior-Subordinate Notes of such Series, after
all such Senior Notes have been redeemed.  The Issuer expects that the amount of
the additional Eligible Loans to be acquired with respect to any Series will
approximate 100% of the amount deposited in the Loan Account designated with
respect to a Series of the Student Loan Fund in the related Prospectus
Supplement.

ISSUANCE OF ADDITIONAL NOTES

     The Issuer may, pursuant to the provisions of the Indenture, authenticate
and deliver from time to time Additional Notes secured by the Trust Estate on a
parity with or subordinate to any of the Senior Notes and senior to, on a parity
with or subordinate to the Subordinate Notes, as determined by the Issuer;
provided, however, that any such Additional Notes shall be issued pursuant to a
Supplemental Indenture, without the consent or approval of the Registered Owners
of any Notes then Outstanding, but with, among other things, written evidence
from each Rating Agency then 



                                      8

<PAGE>

rating any Outstanding Notes that such rating or ratings will not be reduced 
or withdrawn as a result of the issuance of the proposed Additional Notes.  
See "Additional Notes" herein.

MATURITY AND PREPAYMENT ASSUMPTIONS

     Financed Eligible Loans may be prepaid by the borrowers at any time.  (For
this purpose the term "prepayments" includes prepayments in full or in part
(including pursuant to Consolidation Loans) and liquidations due to default
(including receipt of Guarantee payments).)  In addition, under certain
circumstances, a Seller will be obligated to repurchase, or the Servicer will be
obligated to purchase, Financed Eligible Loans from the Trust Estate pursuant to
the respective Student Loan Purchase Agreement as a result of breaches of their
respective representations, warranties or covenants.  Moreover, to the extent
borrowers of Financed Eligible Loans elect to borrow money through Consolidation
Loans with respect to such Financed Eligible Loans from a Seller or from another
lender, Registered Owners of the Notes will collectively receive as a prepayment
of principal the aggregate principal amount of such Financed Eligible Loans. 
There can be no assurance that borrowers with respect to the Financed Eligible
Loans will not seek to obtain Consolidation Loans with respect to such Financed
Eligible Loans.  See "Risk Factors--Changes in Legislation" herein.

     Scheduled payments with respect to, and maturities of, the Financed
Eligible Loans may be extended, including pursuant to the applicable Deferral
Phase and certain other grace periods authorized by the Higher Education Act
("Grace Periods") and, under certain circumstances, periods of forbearance
("Forbearance Periods") or as a result of refinancings through Consolidation
Loans having longer maturities, which may lengthen the remaining term of the
Financed Eligible Loans and the average life of each Class of Notes.  Any
reinvestment risks resulting from a faster or slower incidence of prepayment of
Financed Eligible Loans will be borne entirely by the Registered Owners.

BASIS RISK

     The interest rate with respect to the Notes of various Classes may
fluctuate from one interest period to another in response to changes in LIBOR or
Treasury security rates (the "Index Rates") described in a Prospectus
Supplement.  The Issuer can make no representation as to what the Index Rates
may be in the future.  In addition, the Financed Eligible Loans bear interest at
the rates (the "Loan Rates") described herein under "Description of the Federal
Family Education Loan Program."  To the extent that the Loan Rates decrease or
do not increase as fast as the Index Rates, the interest rates with respect to
certain Senior Notes, Subordinate Notes or Junior-Subordinate Notes may be
limited to the weighted average rate received on the Financed Eligible Loans or
may be deferred to future periods.  Further, if there is a decline in the Loan
Rates, the amount of funds representing interest deposited into the Trust Estate
may be reduced and, even if there is a similar reduction in the variable Index
Rates applicable to any Series, there may not necessarily be a similar reduction
in the other amounts required to be funded out of such funds (such as certain
administrative expenses), causing such amounts to be deferred to future periods.
There can be no assurances given that sufficient funds will be available in
future periods to make up for any shortfalls in the current payments of Index
Rates or expenses of the Trust Estate.

CERTAIN LEGAL ASPECTS

     Each Seller will intend that the transfers of Financed Eligible Loans by it
to the Issuer under the respective Student Loan Purchase Agreement constitute
valid sales and assignments of such Financed Eligible Loans.  In the event of
insolvency of such Seller, however, its affairs, if a bank, might become subject
to Federal Deposit Insurance Corporation ("FDIC") receivership.  In such case,



                                      9

<PAGE>

the FDIC, as a receiver, or a court could treat the transfer of the Financed
Eligible Loans to the Issuer as an assignment of collateral as security for the
benefit of the Issuer as a creditor of such Seller.  If the transfer of the
Financed Eligible Loans to the Issuer is deemed to create a security interest
therein, a tax or government lien on property of such Seller arising before the
Financed Eligible Loans were transferred may have priority over the Issuer's
interest in such Financed Eligible Loans.  If such Seller becomes subject to
receivership, to the extent that the transfer of the Financed Eligible Loans is
deemed to create a security interest, and that such interest was validly
perfected before such Seller's insolvency and was not taken in contemplation of
insolvency or with the intent to hinder, delay or defraud such Seller or its
creditors, such security interest should not be subject to avoidance and
payments to the Issuer or its assignees with respect to the Financed Eligible
Loans should not be subject to recovery by such Seller's creditors.  The Issuer
has received an opinion of counsel, subject to the assumptions and limitations
set forth therein, that the provisions of the Indenture and the Custodial
Agreement and the actions required thereunder in connection with the acquisition
of Financed Eligible Loans are sufficient to create both a perfected security
interest in favor of the Trustee against any such Seller in the Financed
Eligible Loans, if the transfer of Financed Eligible Loans by such Seller to the
Issuer is considered as an assignment of collateral as security for an
obligation, which interest is prior to that of any creditor of such Seller, as
well as a perfected security interest in favor of the Trustee against the Issuer
in the Financed Eligible Loans, which interest is prior to that of any other
creditor of the Issuer.  No assurance can be given, however, that delays in
receipt of funds with respect to the Financed Eligible Loans will not occur in
such circumstances.  Moreover, no assurance can be given that the FDIC would not
seek to effect the release of the Financed Eligible Loans to it, as receiver, by
accelerating such Seller's "debt" and repaying the outstanding amount thereof. 
See "Risk Factors--Reliance Upon Seller" and "--Perfection of Security Interest
in Financed Eligible Loans" herein.

     With respect to a Seller that is not a bank or an insurance company, the
Issuer will structure the sale of the Financed Eligible Loans of such Seller to
the Issuer as a "true sale" for purposes of any voluntary or involuntary
petition for relief under the United States Bankruptcy Code or any similar
applicable federal or state law of such Seller (an "Insolvency Proceeding"),
such that upon the occurrence of any such Insolvency Proceeding, such Financed
Eligible Loans would not be consolidated into the bankruptcy estate of such
Seller.  No assurance can be given, however, that such a consolidation would not
occur.  A court might, however, treat the sale as an assignment of collateral
with respect to the Financed Eligible Loans as security for the benefit of the
Noteholders.  If such sale is deemed to create a security interest in the
Financed Eligible Loans, a tax or governmental lien on property of such Seller
arising before the Financed Eligible Loans came into existence may have priority
over the Trustee's interest in such loans.  If the Seller becomes subject to an
Insolvency Proceeding, to the extent that the transfer of the Financed Eligible
Loans is deemed to create a security interest and that interest was validly
perfected before such Seller's insolvency or bankruptcy and was not taken in
contemplation of insolvency or bankruptcy or with the intent to hinder, delay or
defraud such Seller or its creditors, such security interest should not be
subject to avoidance, and payments to the Trustee with respect to the Financed
Eligible Loans should not be subject to recovery by such Seller's creditors.  No
assurance can be given, however, that delays in receipt of funds with respect to
the Financed Eligible Loans of such Seller will not occur in such circumstances.
See "Risk Factors--Reliance Upon Seller" and "--Perfection of Security Interest
in Financed Eligible Loans" herein.

     Numerous federal and state consumer protection laws and related regulations
impose substantial requirements upon lenders and servicers involved in consumer
finance.  Also, some state laws impose finance charge ceilings and other
restrictions on certain consumer transactions and 



                                     10

<PAGE>

require contract disclosures in addition to those required under federal law. 
These state laws are, however, to a large part, preempted by the Higher 
Education Act.

BOOK-ENTRY REGISTRATION

     Unless otherwise specified with respect to a Series in the related
Prospectus Supplement, it is expected that each Class of Notes of any Series
will be initially represented by one or more certificates registered in the name
of Cede & Co., the nominee for DTC, and will not be registered in the names of
the holders of such Notes or their nominees.  Because of this, unless and until
definitive securities are issued, holders of such Notes will not be recognized
by the Trustee as "Registered Owners" (as such terms are used in the Indenture).
Hence, until definitive securities are issued, holders of such Series of Notes
will only be able to exercise the rights of Registered Owners indirectly through
DTC and its participating organizations.  See "Book Entry Registration" herein.

REPURCHASE OF FINANCED ELIGIBLE LOANS

     Upon the occurrence of a breach of representations and warranties with
respect to a Financed Eligible Loan, the respective Seller is obligated to
repurchase the related Financed Eligible Loan from the Issuer.  If such Seller
were to become insolvent or otherwise be unable to repurchase such Financed
Eligible Loan, it is unlikely that a repurchase of such Financed Eligible Loan
from the Issuer would occur.  The failure of such Seller to repurchase a
Financed Eligible Loan would constitute a breach of the respective Student Loan
Purchase Agreement, enforceable by the Trustee on behalf of the Registered
Owners, but would not constitute an Event of Default under the Indenture or
permit the exercise of remedies thereunder.  See "Risk Factors--Reliance Upon
Sellers," "Seller Representations and Warranties" and "The Issuer's Student Loan
Purchase Program" herein.

RATINGS OF THE NOTES

     It is a condition to issuance of the Notes that they be rated as indicated
under the caption "Summary of the Offering--Ratings" in the related Prospectus
Supplement.  Ratings are based primarily on the credit underlying the Financed
Eligible Loans, the level of subordination, the amount of credit enhancement and
the legal structure of the transaction.  The ratings are not a recommendation to
purchase, hold or sell any Class of Notes inasmuch as such ratings do not
comment as to the market price or suitability for a particular investor.  There
can be no assurance as to whether any additional rating agency will rate the
Notes, or if it does, that the rating that would be assigned by any such other
rating agency would be equivalent to the initial rating described in the related
Prospectus Supplement.  There is no assurance that the ratings will remain for
any given period of time or that ratings will not be lowered or withdrawn by any
Rating Agency if in such Rating Agency's judgment circumstances so warrant.  



                                     11

<PAGE>

GLOSSARY OF TERMS

     There follows definitions of certain capitalized terms used in this
Prospectus.  Words importing the masculine gender include the feminine gender. 
Words importing persons include firms, associations and corporations.  Words
importing the singular number include the plural number and vice versa.  The
Indenture contains the definition of certain terms not included herein and
reference is made thereto for such definitions.  The following definitions shall
be applicable with respect to each Series unless otherwise specified in the
related Prospectus Supplement.

     "ACCOUNT" shall mean any of the accounts created and established within any
Fund by the Indenture.

     "ADDITIONAL NOTES" shall mean any notes, other than the Offered Notes, the
Prior Class A Notes and the Prior Class B Notes, issued pursuant to the
Indenture.

     "AGGREGATE MARKET VALUE" shall mean on any calculation date the sum of the
Values of all assets of the Trust Estate, less moneys in any Fund or Account
which the Issuer is then entitled to receive for deposit into the Operating Fund
or the General Fund but which has not yet been removed from the Trust Estate.

     "AUTHORIZED DENOMINATIONS" shall mean with respect to any Class or subclass
of Notes, $100,000 or any integral multiple thereof.

     "AUTHORIZED OFFICER" shall mean, when used with reference to the Issuer,
its President, its Vice President, its Secretary, or any other officer or agent
authorized in writing by the Board to act on behalf of the Issuer.

     "BOARD" or "BOARD OF DIRECTORS" shall mean the Board of Directors of the
Issuer.

     "BUSINESS DAY" shall mean any day on which banks located in the City of New
York, New York and banks located in the city in which the Principal Office of
the Trustee is located are not required or authorized by law to remain closed
and on which The New York Stock Exchange is not closed. 

     "CASH FLOW CERTIFICATE" shall mean a report or reports prepared by the
Issuer showing, with respect to the period covered by the Cash Flow Certificate,
which period shall extend from the date of the Cash Flow Certificate to the
latest maturity of the Notes then Outstanding, (a) all Revenue expected to be
received during such period from the Trust Estate, (b) the application of all
such Revenue in accordance with the Indenture and (c) the resulting periodic
balances on each Interest Payment Date, and showing that anticipated Revenue
will exceed, by a margin of $250,000 plus any additional amount, if any,
required by any Supplemental Indenture, the amount necessary to pay the
principal of and interest on the Notes when due and all expenses payable under
the Indenture when due and to maintain the Reserve Fund Requirement at a level
which will not cause the Rating Agencies to withdraw or reduce their respective
ratings on the Notes Outstanding, under all scenarios included in the Cash
Flows.  Each Cash Flow Certificate shall be accompanied by all supporting Cash
Flows, shall be based solely upon assumptions acceptable to each Rating Agency
and shall be approved in writing by each Rating Agency.



                                     12

<PAGE>

     "CASH FLOWS" shall mean cash flow schedules prepared by the Issuer or its
designee including a listing of all assumptions used in the preparation of such
cash flow schedules.  Such assumptions will include those contained in
Exhibits E-1 and E-2 to the Indenture or such other assumptions at the time such
Cash Flows are prepared as shall be reasonable in the judgment of the Issuer and
each Rating Agency.

     "CERTIFICATE OF INSURANCE" shall mean a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary pursuant to
the provisions of the Act.

     "CLASS A NOTES" shall mean the Issuer's Taxable Student Loan Asset-Backed
Notes issued pursuant to the Indenture and designated as Class A.

     "CLASS A-1 NOTES" shall mean, with respect to the Series 1996A Notes, the
$48,300,000 of Class A Notes designated as Class A-1.

     "CLASS A-2 NOTES" shall mean, with respect to the Series 1996A Notes, the
$48,300,000 of Class A Notes designated as Class A-2.

     "CLASS A-3 NOTES" shall mean, with respect to the Series 1996B Notes, the
$73,700,000 of Class A Notes designated as Class A-3.

     "CLASS A-4 NOTES" shall mean, with respect to the Series 1996B Notes, the
$54,300,000 of Class A Notes designated as Class A-4.

     "CLASS B NOTES" shall mean the Issuer's Taxable Student Loan Asset-Backed
Notes issued pursuant to the Indenture and designated as Class B.
     
     "CLASS B-2 NOTES" shall mean the Issuer's Taxable Student Loan Asset-Backed
Notes issued pursuant to the Indenture and designated as Class B-2.

     "CLOSING CASH FLOW PROJECTION" shall mean the Cash Flow Certificate
delivered on the Date of Issuance with respect to any Series as attached to the
Indenture as Exhibit F-2.

     "CODE" shall mean the Internal Revenue Code of 1986, as amended from time
to time.  Each reference to a section of the Code herein shall be deemed to
include the United States Treasury Regulations, including temporary and proposed
regulations, relating to such section which are applicable to the Notes of the
use of the proceeds thereof.  A reference to any specific section of the Code
shall be deemed also to be a reference to the comparable provisions of any
enactment which supersedes or replaces the Code thereunder from time to time.

     "COMPLIANCE CERTIFICATE" shall mean a certificate substantially in the form
of Exhibit D attached to the Indenture signed by an Authorized Officer and all
documents, opinions and certificates required thereby.

     "CONSOLIDATION LOAN" shall mean a Student Loan authorized under Section
428C of the Higher Education Act consolidating Eligible Loans.

     "CONTRACT OF INSURANCE" shall mean the contract of insurance between the
Eligible Lender and the Secretary.



                                     13

<PAGE>

     "COST OF ISSUANCE FUND" shall mean the Fund by that name created in the
Indenture and further described in the Indenture.

     "CUSTODIAN AGREEMENT" shall mean, collectively, the Custodian Agreement
dated as of March 1, 1996, between the Trustee and the Custodian, and the
custodian agreements with any Servicer related to Financed Eligible Loans.

     "CUTOFF DATE" shall mean, with respect to the Date of Issuance with respect
to any Series, the date specified in the related Prospectus Supplement and with
respect to each Scheduled Sale Date or other date of acquisition thereafter, the
close of business on the Business Day preceding such Scheduled Sale Date or date
of acquisition, as the case may be.

     "DATE OF ISSUANCE" shall mean, with respect to any Offered Notes or
Additional Notes, the date of delivery of such Offered Notes or Additional Notes
to the placement agent or the underwriter.

     "ELIGIBLE BORROWER" shall mean a borrower who is eligible under the Higher
Education Act to be the obligor of a loan for financing a program of education
at an Eligible Institution or for consolidating two or more such loans,
including without limitation a borrower who is eligible under the Higher
Education Act to be an obligor of a loan made pursuant to Section 428A, 428B or
428C of the Act.

     "ELIGIBLE INSTITUTION" shall mean (a) an institution of higher education;
(b) a vocational school; or (c), with respect to students who are nationals of
the United States, an institution outside the United States which is comparable
to an institution of higher education or to a vocational school and which has
been approved by the Secretary.

     "ELIGIBLE LENDER" shall mean any "ELIGIBLE LENDER," as defined in the Act,
permitted to participate as a seller of Student Loans to the Issuer under the
Program and which has received an eligible lender designation from the Secretary
with respect to Insured Student Loans or from the Guarantee Agency with respect
to Guaranteed Student Loans.

     "ELIGIBLE LOAN" shall mean a Student Loan which (a) has been or will be
made to an Eligible Borrower; (b) is Insured or is Guaranteed by a Guarantee
Agency which then has a Guarantee Agreement with the Trustee; (c) unless it is
an Unsubsidized Stafford Loan, a PLUS Loan or an SLS Loan or a Consolidation
Loan, is an "eligible loan" under the Higher Education Act for purposes of
receiving Interest Benefit Payments; (d) bears interest at not less than the
maximum applicable rate of interest permitted by the Higher Education Act at the
time originated; (e) is not delinquent more than 180 days and has not been
tendered at any time to either the Secretary or any guarantee agency, including
without limitation, the Guarantee Agency, for payment unless the situation
giving rise to such tender has been cured; and (f) is eligible for Special
Allowance Payments as provided in Section 438 of the Act.

     "ESTIMATED AMOUNT" shall mean the amount which the Issuer estimates will be
required to pay Maintenance and Operating Expenses (including accrued but unpaid
Maintenance and Operating Expenses) for the period beginning on the
Date of Issuance of the Series 1996A Notes and ending on June 30, 1996, and
thereafter for the monthly period beginning on the first Business Day of each
month, commencing July 1, 1996.  The Estimated Amount shall be paid pursuant to
the Indenture; provided, however, such Estimated Amount shall not exceed (i) the
amount shown therefor in the Closing Cash Flow Projection, (ii) 0.12% annualized
on the Outstanding Financial Eligible Loans or (iii) the amount shown in the
most recent subsequent Cash Flow Certificate.



                                     14

<PAGE>

     "EVENT OF BANKRUPTCY" shall mean (a) the Issuer shall have commenced a
voluntary case or other proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any bankruptcy, insolvency, or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of it or any
substantial part of its property, or shall have made a general assignment for
the benefit of creditors, or shall have declared a moratorium with respect to
its debts or shall have failed generally to pay its debts as they become due, or
shall have taken any action to authorize any of the foregoing; or (b) an
involuntary case or other proceeding shall have been commenced against the
Issuer seeking liquidation, reorganization, or other relief with respect to it
or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or any substantial part
of its property provided such action or proceeding is not dismissed within 60
days.

     "EVENT OF DEFAULT" shall have the meaning specified in the Indenture.

     "EXCHANGE DATE" shall mean the date that the Notes are exchanged for
Exchange Notes pursuant to the Indenture.

     "EXCHANGE NOTES" shall mean the Notes exchanged for the Series 1996A Notes
and the Series 1996B Notes pursuant to the Indenture.

     "FEDERAL REIMBURSEMENT CONTRACTS" shall mean the agreements between the
Guarantee Agency and the Secretary providing for the payment by the Secretary of
amounts authorized to be paid pursuant to the Act, including (but not
necessarily limited to) reimbursement of amounts paid or payable upon defaulted
Financed Eligible Loans and other Student Loans Guaranteed or Insured by the
Guarantee Agency and Interest Benefit Payments and Special Allowance Payments to
holders of qualifying Student Loans Guaranteed or Insured by the Guarantee
Agency.

     "FINANCED" or "FINANCING," when used with respect to Eligible Loans or
Student Loans, shall mean or refer to Eligible Loans or Student Loans, as the
case may be, (i) acquired by the Issuer with balances in the Student Loan Fund
and (ii) Eligible Loans substituted or exchanged for Financed Eligible Loans or
Financed Eligible Loans, but does not include Student Loans or Eligible Loans
released from the lien of the Indenture and sold or transferred, to the extent
permitted by the Indenture.

     "FISCAL YEAR" shall mean the fiscal year of the Issuer as established from
time to time.

     "FISL PROGRAM" shall mean the federal loan insurance program created under
the Act, whereby the Secretary directly insures the repayment of 100% of the
principal of and accrued interest on student loans under the Act.

     "FITCH" shall mean Fitch Investors Service, L.P., and its successors and
assigns, and, for the purposes of the Auction Procedures, if such corporation
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "Fitch" shall be deemed to relate to any other
nationally recognized securities rating agency designated by the Issuer by
notice to the Trustee, the Auction Agent and the Broker-Dealers; provided,
however, that such notice shall not be effective unless accompanied by a consent
of a majority of the Broker-Dealers.

     "FUNDS" shall mean the following funds created under Section 5.01 of the
Indenture and held by the Trustee: (a) the Student Loan Fund, including therein
the Series 1996 Loan Account, the Series 



                                     15

<PAGE>

1996 Note Account, the Series 1996 Recycling Account and any other Loan 
Account and Recycling Account designated with respect to a Series, (b) the 
Revenue Fund, (c) the Reserve Fund, (d) the Interest Fund, including therein 
the Senior Interest Account, the Subordinate Interest Account and the 
Junior-Subordinate Interest Account, if any, (e) the Note Redemption Fund, 
including therein the Senior Note Redemption Account, the Subordinate Note 
Redemption Account and the Junior-Subordinate Note Redemption Account, if 
any, (f) the Student Loan Holding Fund and (g) the Cost of Issuance Fund.

     "GENERAL FUND" shall mean the fund by that name described in the Indenture.

     "GUARANTEE" or "GUARANTEED" shall mean with respect to a Student Loan, the
insurance or guarantee by the Guarantee Agency pursuant to such Guarantee
Agency's Guarantee Agreement of not less than 98% of the principal of and
accrued interest on such Student Loan and the coverage of such Student Loan by
the Federal Reimbursement Contracts, providing, among other things, for
reimbursement to the Guarantee Agency for payments made by it on defaulted
Student Loans insured or guaranteed by the Guarantee Agency of at least the
minimum reimbursement allowed by the Federal Reinsurance Contracts and the
Higher Education Act with respect to a particular Student Loan.

     "GUARANTEE AGENCY" shall mean (a) United Student Aid Funds, Inc., (b) Iowa
College Student Aid Commission, (c) Oklahoma State Guaranty Agency, (d) Nebraska
Student Loan Program, Inc. (e) Kentucky Higher Education Assistance Authority,
(f) Colorado Student Loan Program, (g) Northstar Guarantee Inc. and (h) and any
other guarantee agency so long as the Issuer shall have received written
confirmation from each Rating Agency that the designation of such entity as a
"Guarantee Agency" hereunder will not, at the time of such designation,
adversely affect its Ratings then applicable to any of the Notes, and their
respective successors and assigns.

     "GUARANTEE AGREEMENTS" shall mean (a) the Guarantee Agreement, dated as of
March 7, 1996, between United Student Aid Funds, Inc. and Norwest Bank
Minnesota, National Association as trustee, (b) the Guarantee Agreement, dated
as of February 23, 1996, between Iowa College Student Aid Commission and Norwest
Bank Minnesota, National Association, as trustee, (c) the Guarantee Agreement,
dated as of March 7, 1996, between Oklahoma State Guaranty Agency and Norwest
Bank Minnesota, National Association, as trustee, (d) the Guarantee Agreement,
dated as of May 1, 1996, between Nebraska Student Loan Program, Inc. and Norwest
Bank Minnesota, National Association, as trustee, (e) the Guarantee Agreement,
dated as of June 12, 1996, between Kentucky Higher Education Assistance
Authority and Norwest Bank Minnesota, National Association, as trustee, (f) the
Lender Program Participation Agreement, dated as of September 24, 1996, between
Colorado Student Loan Program and Norwest Bank Minnesota, National Association,
as trustee, (g) the Lender Agreement dated as of September 26, 1996, between
Northstar Guarantee Inc. and Norwest Bank Minnesota, National Association, as
trustee (h) any similar guarantee or lender agreement with any other Guarantee
Agency, and (i) any amendments to the foregoing.

     "GUARANTEED STUDENT LOAN" shall mean a Student Loan which is Guaranteed or
Insured.

     "GUARANTEED STUDENT LOAN PROGRAM" shall mean the program known as the
Federal Family Education Loan Program which makes low interest loans under the
Higher Education Act available to pay the costs of a student attending
post-secondary schools, whether under the Guarantee Agency program or the FISL
Program.



                                     16

<PAGE>

     "HIGHER EDUCATION ACT" shall mean the Higher Education Act of 1965, as
amended or supplemented from time to time, or any successor federal act and all
regulations, directives, bulletins, and guidelines proposed or promulgated from
time to time thereunder.

     "HOLD ORDER" shall have the meaning set forth in the Indenture.

     "IMMEDIATE NOTICE" shall mean notice by telephone, telex or telecopier to
such address as the addressee shall have directed in writing, promptly followed
by written notice by first class mail, postage prepaid; provided, however, that
if any person required to give Immediate Notice shall not have been provided
with the necessary information as to the telephone, telex or telecopier number
of an addressee, Immediate Notice shall mean written notice by first class mail,
postage prepaid.

     "INDENTURE" shall mean the Second Amended and Restated Indenture of Trust
dated as of November 1, 1996, including all supplements and amendments thereto.

     "INSURANCE," "INSURED" or "INSURING" shall mean, with respect to a Student
Loan, insurance by the Secretary under the Higher Education Act (as evidenced by
a Contract of Insurance issued or entered into under the provisions of the Act)
of the maximum percentage of the principal of such Student Loan allowed by the
Act, and, during such time as such Student Loan is not entitled to Interest
Benefit Payments, the interest on such Student Loan.

     "INTEREST BENEFIT PAYMENT" shall mean an interest payment on Student Loans
received pursuant to the Interest Benefits Agreement.

     "INTEREST BENEFITS AGREEMENT" shall mean the agreement between the
Guarantee Agency and the Secretary whereby the Secretary agrees to pay to
holders of Student Loans Guaranteed by the Guarantee Agency the portion of the
interest charges on such loans which students are entitled to have paid on their
behalf pursuant to Sections 428(a)(1) and 428(a)(2) of the Act.

     "INTEREST FUND" shall mean the Fund by that name created in the Indenture
and further described in the Indenture, including the Senior Interest Account,
the Subordinate Interest Account and the Junior-Subordinate Interest Account, if
any, created therein.

     "INVESTMENT AGREEMENT" shall mean, collectively, the Investment Agreement
dated as of June 19, 1996 by and among the Trustee, the Issuer and Lehman
Brothers, Inc. and the Promissory Note dated as of June 19, 1996 between the
Issuer and Lehman Brothers Holdings Inc.

     "INVESTMENT SECURITIES" shall mean

          (a)  Direct obligations of (including obligations issued or held in
     book entry form on the books of) the Department of Treasury of the United
     States of America with remaining maturities not exceeding the first
     Business Day preceding the next Transfer Date.  If not rated by Standard &
     Poor's, the obligations must have a predetermined fixed dollar principal
     due at maturity that cannot vary or change.  If the obligation is rated, it
     should not have an "r" highlighter affixed to its rating;

          (b)  Obligations of any of the following federal agencies which
     obligations represent full faith and credit of the United States of America
     with remaining maturities not exceeding the first Business Day preceding
     the next Transfer Date, (i) Export - Import Bank; (ii) Farmers Home
     Administration; (iii) General Services Administration; (iv) Government



                                     17

<PAGE>

     National Mortgage Association (GNMA); (v) U.S. Department of Housing &
     Urban Development (PHA's); (vi) Federal Housing Administration.  If not
     rated by S&P, the obligations must have a predetermined fixed dollar
     principal due at maturity that cannot vary or change.  If the obligation is
     rated, it should not have an "r" highlighter affixed to its rating;

          (c)  Notes, bonds or other evidences of indebtedness rated "AAA" by
     Fitch and S&P issued by the Federal National Mortgage Association or the
     Federal Home Loan Mortgage Corporation with remaining maturities not
     exceeding the first Business Day preceding the next Transfer Date.  If not
     rated by S&P, the obligations must have a predetermined fixed dollar
     principal due at maturity that cannot vary or change.  If the obligation is
     rated, it should not have an "r" highlighter affixed to its rating;

          (d)  U.S. dollar denominated deposit accounts, federal funds and
     banker's acceptances with domestic commercial banks which have a rating on
     their short-term debt obligations of "A-1+" by S&P and "F-1+" by Fitch and
     maturities not exceeding the first Business Day preceding the next Transfer
     Date.  In addition, the instruments should not have an "r" highlighter
     affixed to the rating and its terms should have a predetermined amount of
     principal due at maturity that cannot vary or change (Ratings on holding
     companies are not considered as the rating of the bank);

          (e)  Commercial paper which is rated "F-1+" by Fitch and "A-1+" by S&P
     and maturities not exceeding the first Business Day preceding the next
     Transfer Date.  In addition, the instruments should not have an "r"
     highlighter affixed to the rating and its terms should have a predetermined
     amount of principal due at maturity that cannot vary or change;

          (f)  Investments in money market funds (i) rated within the two
     highest rating categories of Fitch and (ii) "AAAm" or "AAAm-G" by S&P;

          (g)  With the prior written consent of Fitch and S&P, repurchase
     agreements with respect to securities of the type described in (a), (b) or
     (c) above, with (i) a registered broker/dealer rated by Fitch and S&P or
     approved in writing by Fitch and S&P and subject to the Securities
     Investors' Protection Issuer Liquidation Act in the event of insolvency to
     the full extent of such repurchase agreement, (ii) a primary dealer rated
     by Fitch and S&P reporting to and trading with the Federal Reserve Bank of
     New York, or (iii) any commercial bank, and in the case of clauses (i),
     (ii) and (iii), (x) whose unsecured long-term indebtedness is rated by
     Fitch and S&P and whose long-term or short-term indebtedness is rated
     "F-1+" or "AAA" by Fitch and "A-1+" or "AAA" by S&P (dependent upon whether
     the repurchase agreement is long-term or short-term, respectively) or
     better by Fitch, or (y) which in the case of clause (iii) is the lead bank
     of a parent bank holding company whose unsecured long-term indebtedness is
     rated "AAA" or better by Fitch and S&P, and in the case of either (x) or
     (y), having a combined capital, surplus and undivided profits of not less
     than $100 million and which repurchase agreement shall provide that:

               (A)  the repurchase obligation is collateralized by the
          securities themselves which shall be held by the Trustee (unless the
          Trustee is the purchaser under the repurchase agreement) or a third
          party which is a Federal Reserve Bank or a commercial bank with
          capital, surplus and undivided profits of not less than $50 million,
          and the Trustee shall have received written confirmation from such
          third party that it holds such securities;



                                     18

<PAGE>

               (B)  a perfected security interest in favor of the Trustee in the
          securities has been created under the Uniform Commercial Code or
          pursuant to the book entry procedures described in 31 C.F.R. 306.1 et
          seq. or 31 C.F.R. 350.0 et seq., as amended, and any successor
          regulations thereto; and

               (C)  the securities on the date of execution of the repurchase
          agreement and upon weekly evaluation by the Trustee thereafter have a
          fair market value of at least 102% of the amount of the repurchase
          obligation, including both principal and interest;

          (h)  With the prior written consent of Fitch and S&P, any investment
     agreement that has as a counterparty, an institution rated "F-1+" or "AAA"
     by Fitch and "A-1+" or "AAA" by S&P; and

          (i)  The Investment Agreement and any other investment approved in
     advance in writing by each Rating Agency.

     "ISSUER" shall mean Union Financial Services-1, Inc., a corporation
organized and existing under the corporation laws of the State, and any
successor to its functions.

     "ISSUER ORDER" shall mean a written order signed in the name of the Issuer
by an Authorized Officer.

     "JUNIOR-SUBORDINATE INTEREST ACCOUNT" shall mean the Account by that name
created within the Interest Fund by Section 5.01 of the Indenture and further
described in the Indenture.

     "JUNIOR-SUBORDINATE NOTE REDEMPTION ACCOUNT" shall mean the Account by that
name created within the Note Redemption Fund by the Indenture and further
described in the Indenture.

     "JUNIOR-SUBORDINATE NOTES" shall mean Offered Notes or Additional Notes, if
any, subordinate to the Subordinate Notes, the principal of and interest on
which is paid from the Junior-Subordinate Redemption Account of the Note
Redemption Fund and the Junior-Subordinate Interest Account of the Interest
Fund, respectively; provided, however, that any series of the Junior-Subordinate
Notes need not necessarily be payable on a parity with all other series of the
Junior-Subordinate Notes.  Any Junior-Subordinate Notes shall be designated by
Class "C," "D," "E" or lower alphabetic designation, the higher alphabetic
designation ("C" being higher than "D") indicating the more senior series of the
Junior-Subordinate Notes.

     "LETTER OF REPRESENTATIONS" means the Letters of Representations among the
Securities Depository, the Issuer and the Trustee.

     "LOAN ACCOUNT" shall mean the Account by that name created within the
Student Loan Fund by the Indenture designated with respect to each Series and
further described in the Indenture.

     "MAINTENANCE AND OPERATING EXPENSES" shall mean the expenses of the Issuer
incurred in direct connection with the Program under the Indenture, including
attorneys' fees, auditing fees, marketing fees, travel expenses of directors and
officers, insurance, taxes, and such other reasonable and necessary expenses
which may be incurred directly or indirectly in connection with the operation of
the Program under the Indenture and in an annual amount not to exceed the
estimated Maintenance and Operating Expenses described in Exhibit E-2 to the
Indenture until January 1, 1999, unless 



                                     19

<PAGE>

otherwise approved by each Rating Agency, and on and after January 1, 1999, 
an annual amount not to exceed the estimated Maintenance and Operating 
Expenses described in a Cash Flow Certificate to be approved by each Rating 
Agency for a specified period approved by each Rating Agency, but such term 
shall not include servicing fees and expenses incurred under the Servicing 
Agreement or the Subservicing Agreement, as the case may be, the Trustee fees 
and expenses and the Calculation Agent fees and expenses incurred under the 
Indenture or the Custodian Agreement, the Auction Agent's fees and expenses 
incurred under the Auction Agent Agreement, any Broker-Dealer Fees and 
expenses incurred under a Broker-Dealer Agreement or the Rating Agency Fees 
and expenses incurred under the Indenture.

     "MATURITY" shall mean, when used with respect to any Note, the date on
which the principal thereof becomes due and payable as provided herein in the
Indenture, whether at its Stated Maturity, by earlier redemption, by declaration
of acceleration, or otherwise.

     "NET LOSSES" shall mean the aggregate principal amount of all Financed
Eligible Loans which are over 540 days delinquent, less any recoveries of
principal received with respect to such Financed Eligible Loans.  

     "NOTE COUNSEL" shall mean Kutak Rock, or any other counsel of nationally
recognized standing in the field of law relating to notes, selected by the
Issuer and reasonably acceptable to the Trustee.

     "NOTE REDEMPTION FUND" shall mean the Fund by that name created in the
Indenture and further described in the Indenture, including the Senior Note
Redemption Account, the Subordinate Note Redemption Account and the Junior-
Subordinate Note Redemption Account created therein.

     "NOTES" shall mean the Private Notes, the Offered Notes and any other
Additional Notes.

     "NOTICE OF MANDATORY EXCHANGE" shall mean the notice regarding the exchange
of the Notes to be delivered by the Trustee pursuant to the Indenture.

     "NOTIFICATION OF LOAN APPROVAL" shall mean the written notification by the
Guarantee Agency with respect to an Eligible Loan evidencing the Guarantee
thereof by the Guarantee Agency.

     "OFFERED NOTES" shall mean, with respect to any Series, the Taxable Student
Loan Asset-Backed Notes being offered with respect thereto as specified in the
related Prospectus Supplement.  

     "OPERATING FUND" shall mean the fund by that name continued by and
described in the Indenture and under "Security and Sources of Payment for the
Notes."

     "OUTSTANDING" shall mean, when used in connection with any Note, a Note
which has been executed and delivered pursuant to the Indenture which at such
time remains unpaid as to principal or interest, unless provision has been made
for such payment pursuant to the Indenture, excluding Notes which have been
replaced pursuant to the Indenture.

     "OWNERSHIP INTEREST" means, with respect to any Note, any ownership
interest in such Note, including any interest in such Note as the Registered
Owner thereof and any other interest therein, whether direct or indirect, legal
or beneficial.



                                     20

<PAGE>

     "PARTICIPANT" means a member of, or participant in, the Depository.

     "PERSON" shall mean an individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, or
government or agency or political subdivision thereof.

     "PLUS LOAN" or "FEDERAL PLUS LOAN" shall mean a Student Loan authorized
under Section 428B of the Act.

     "PRESIDENT" shall mean the President of the Issuer.

     "PRINCIPAL OFFICE" shall mean the principal corporate trust office of the
Trustee.

     "PRIOR CLASS A NOTES" shall mean (i) the Issuer's Taxable Student Loan
Asset-Backed Notes, Series 1996A Senior Auction Rate issued pursuant to the
Indenture in the aggregate principal amount of $96,600,000 and consisting of
$48,300,000 of Class 1996 A-1 Notes (Auction Rate Securities-SM- (ARS-SM-)) and
$48,300,000 of Class 1996 A-2 Notes (Auction Rate Securities-SM- (ARS-SM-)) and
(ii) the Issuer's Taxable Student Loan Asset-Backed Notes, Series 1996B,
Class 1996B Senior Auction Rate issued pursuant to the Indenture in the
aggregate principal amount of $128,000,000 and consisting of $73,700,000 of
Class A-3 Notes (Auction Rate Securities-SM- (ARS-SM-)) and $54,300,000 of
Class A-4 Notes (Auction Rate Securities-SM- (ARS-SM-)).

     "PRIOR CLASS B NOTES" shall mean (i) the Issuer's Taxable Student Loan
Asset-Backed Notes, Series 1996A, Class B Subordinate LIBOR Rate, issued
pursuant to the Indenture in the aggregate principal amount of $11,100,000 and
(ii) the Issuer's Taxable Student Loan Asset-Backed Notes, Series 1996B,
Class B-2 Subordinate LIBOR Rate, issued pursuant to the Indenture in the
aggregate principal amount of $14,200,000.

     "PRIVATE NOTES" shall mean the Series 1996A Notes and the Series 1996B
Notes.

     "PROGRAM" or "PURCHASE PROGRAM" shall mean the Issuer's Program for the
purchase of Eligible Loans from Eligible Lenders in order to increase the supply
of money available for new Student Loans, thereby assisting students in
obtaining an education at an Eligible Institution.

     "PURCHASE PRICE" shall mean the purchase price for the Financed Eligible
Loans described in the respective Student Loan Purchase Agreement.

     "RATING" shall mean one of the rating categories of Fitch, S&P or any other
Rating Agency, provided Fitch, S&P or any other Rating Agency, as the case may
be, is currently rating the Notes.

     "RATING AGENCY" shall mean, collectively, (a) Fitch and its successors and
assigns, (b) S&P and its successors and assigns or (c) or any other Rating
Agency requested by the Issuer to maintain a Rating on any of the Notes, but
only to the extent such entity is at the time maintaining a Rating on the Notes.

     "RECYCLING ACCOUNT" shall mean the Account by that name created within the
Student Loan Fund by the Indenture designated with respect to each Series and
further described in the Indenture.



                                     21

<PAGE>

     "REGISTERED OWNER" shall mean the Person in whose name a Note is registered
on the Note registration books maintained by the Trustee or, if a Note is
registered in the name of a Securities Depository, any other Person with an
Ownership Interest.

     "REGULATIONS" shall mean the Regulations promulgated from time to time by
the Secretary or the Guarantee Agency.

     "RESERVE FUND" shall mean the Fund by that name created in the Indenture
and further described in the Indenture and under "Security and Sources of
Payment for the Notes."

     "RESERVE FUND REQUIREMENT" shall mean at any time (a) the greater of an
amount equal to 2% of the aggregate principal amount of the Notes then
Outstanding or $750,000 plus (b) an amount, if any, required to be on deposit in
the Reserve Fund with respect to any Additional Notes pursuant to the
Supplemental Indenture authorizing the issuance of such Additional Notes.

     "RESOLUTION" shall mean a resolution duly adopted by the Board.

     "REVENUE" shall mean all principal and interest payments, proceeds, charges
and other income received by the Trustee or the Issuer from or on account of any
Financed Eligible Loan (including, but not limited to, scheduled, delinquent and
advance payments of and any insurance proceeds with respect to, interest,
including Interest Benefit Payments, on Financed Eligible Loans and any Special
Allowance Payments received by the Issuer or the Trustee with respect to any
Financed Eligible Loan) and investment income from all Funds and Accounts, and
any proceeds from the sale or other disposition of such Financed Eligible Loans.

     "REVENUE FUND" shall mean the Fund by that name created in the Indenture
and further described in the Indenture and under "Security and Sources of
Payment for the Notes."

     "S&P" shall mean Standard & Poor's Ratings Services, a Division of The
McGraw-Hill Companies, Inc., its successors and assigns, and, for the purposes
of the Auction Procedures, if such corporation shall be dissolved or liquidated
or shall no longer perform the functions of a securities rating agency, "S&P"
shall be deemed to relate to any other nationally recognized securities rating
agency designated by the Issuer by notice to the Trustee, the Auction Agent and
the Broker-Dealers; provided, however, that such notice shall not be effective
unless accompanied by a consent of a majority of the Broker-Dealers.

     "SECRETARY" shall mean the Secretary of the United States Department of
Education or any successor to the pertinent functions thereof, under the Higher
Education Act or when the context so requires, the former Commissioner of
Education of the United States Department of Health, Education and Welfare.

     "SECURITIES ACT" means the Securities Act of 1933, as amended.

     "SECURITIES DEPOSITORY" shall mean The Depository Trust Company and its
successors and assigns or if, (i) the then Securities Depository resigns from
its functions as depository of the Notes or (ii) the Issuer discontinues use of
the Securities Depository pursuant to Section 2.01(d) of the Indenture, any
other securities depository which agrees to follow the procedures required to be
followed by a securities depository in connection with the Notes and which is
selected by the Issuer with the consent of the Trustee.



                                     22

<PAGE>

     "SECURITIES EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.

     "SELLER" shall mean an Eligible Lender from which the Issuer is purchasing
or has purchased or agreed to purchase Eligible Loans pursuant to a Student Loan
Purchase Agreement between the Issuer and such Eligible Lender; provided,
however, that any Seller, other than Union Bank and Trust Company, shall be
approved in writing by each Rating Agency.

     "SENIOR NOTE REDEMPTION ACCOUNT" shall mean the Account by that name
created within the Note Redemption Fund by Section 5.01 of the Indenture and
further described in the Indenture.

     "SENIOR NOTES" shall mean the Prior Class A Notes and any Offered Notes or
Additional Notes secured on a parity with the Prior Class A Notes, the principal
of and interest on which is paid from the Senior Note Redemption Account of the
Note Redemption Fund and the Senior Interest Account of the Interest Fund,
respectively.

     "SENIOR INTEREST ACCOUNT" shall mean the Account by that name created
within the Interest Fund by the Indenture and further described in the Indenture
and under "Security and Sources of Payment for the Notes."

     "SERIES 1996 NOTE ACCOUNT" shall mean the Account by that name created
within the Student Loan Fund by the Indenture and further described in the
Indenture and under "Security and Sources of Payment for the Notes."

     "SERIES 1996A NOTES" shall mean the Union Financial Services-1, Inc.,
Taxable Student Loan Asset-Backed Notes, Series 1996A issued pursuant to the
Indenture in the aggregate principal amount of $107,700,000, consisting of the
Class A-1 Notes, the Class A-2 Notes and the Class B Notes.

     "SERIES 1996B NOTES" shall mean the Union Financial Services-1, Inc.,
Taxable Student Loan Asset-Backed Notes, Series 1996B issued pursuant to the
Indenture in the aggregate principal amount of $142,200,000, consisting of the
Class A Notes and the Class B-2 Notes with respect thereto.

     "SERVICER" shall mean Union Bank and Trust Company, and any other servicer
so long as the Issuer shall have received written confirmation from each Rating
Agency that the designation of such entity as a "Servicer" under the Indenture
will not, at the time of such designation, cause such Rating Agency to reduce or
withdraw its Ratings then applicable to any of the Notes, and their respective
successors and assigns.

     "SERVICING AGREEMENT" shall mean the Amended and Restated Servicing
Agreement, dated as of June 19, 1996, as amended, between the Issuer and Union
Bank and Trust Company and any other servicing agreement with any other Servicer
relating to Financed Eligible Loans.

     "SLS LOAN" or "FEDERAL SLS LOAN" shall mean a Student Loan authorized under
Section 428A of the Act.

     "SPECIAL ALLOWANCE PAYMENTS" shall mean the special allowance payments
authorized to be made by the Secretary by Section 438 of the Act, or similar
allowances authorized from time to time by federal law or regulation.

     "SPECIAL RECORD DATE" shall mean the date set forth in the Indenture on
which any defaulted interest shall be paid to Noteholders.



                                     23

<PAGE>

     "STATE" shall mean the State of Nevada.  

     "STATED MATURITY" shall mean the date specified in the Notes as the fixed
date on which principal of such Notes is due and payable.

     "STUDENT LOAN" shall mean a loan under the Higher Education Act to an
Eligible Borrower for education at an Eligible Institution (or a loan to
consolidate the same) authorized to be made or acquired by the Issuer pursuant
to its articles of incorporation and the Loan Purchase Regulations and described
in Section 144(b)(1)(A) of the Code.

     "STUDENT LOAN FUND" shall mean the Fund by that name created in the
Indenture and further described in the Indenture, including the Series 1996 Loan
Account, the Series 1996 Note Account and the Series 1996 Recycling Account
created therein and each Loan Account and Recycling Account designated with
respect to Additional Notes.

     "STUDENT LOAN HOLDING FUND" shall mean the Fund by that name created in the
Indenture and further described in the Indenture and under "Security and Sources
of Payment for the Notes."

     "STUDENT LOAN PURCHASE AGREEMENT" shall mean, collectively, (a) that
certain Loan Sale and Commitment Agreement dated as of March 1, 1996 between the
Issuer and Union Bank and Trust Company, (b) that certain Loan Sale and
Commitment Agreement dated as of June 19, 1996, between the Issuer and Union
Bank and Trust Company and (c) any other loan purchase agreement, entered into
between the Issuer and any Eligible Lender for the purchase of Eligible Loans in
substantially the same form as said Loan Sale and Commitment Agreement, as
determined by the Issuer and with an opinion of Note Counsel.

     "SUBORDINATE INTEREST ACCOUNT" shall mean the Account by that name created
within the Interest Fund by the Indenture and further described in the Indenture
and under "Security and Sources of Payment for the Notes."

     "SUBORDINATE NOTE REDEMPTION ACCOUNT" shall mean the Account by that name
created within the Note Redemption Fund by the Indenture and further described
in the Indenture and under "Security and Sources of Payment for the Notes."

     "SUBORDINATE NOTES" shall mean the Prior Class B Notes and any Offered
Notes or Additional Notes secured on a parity with the Prior Class B Notes, the
principal of and interest on which is paid from the Subordinate Note Redemption
Account of the Note Redemption Fund and the Subordinate Interest Account of the
Interest Fund, respectively.

     "SUBSERVICER" shall mean UNIPAC Service Corporation, a Nebraska
corporation, and any other subservicer so long as the Issuer shall have received
written confirmation from each Rating Agency that the designation of such entity
as a "Subservicer" hereunder will not, at the time of such designation, cause
such Rating Agency to reduce or withdraw its Ratings then applicable to any of
the Notes, and their respective successors and assigns.

     "SUBSERVICING AGREEMENT" shall mean the Servicing Agreement, dated as of
January 1, 1995, as amended by the First Amendment to Servicing Agreement dated
as of March 1, 1996 and the Second Amendment to Servicing Agreement dated as of
June 19, 1996, each between the Servicer and the Subservicer and any other
subservicing agreement with any other Subservicer relating to Financed Eligible
Loans.



                                     24

<PAGE>

     "SUPPLEMENTAL INDENTURE" shall mean an agreement supplemental to the
Indenture executed pursuant to the Indenture.

     "TRANSFER DATE" shall mean each January 1 and July 1, commencing July 1,
1996.

     "TRUSTEE" shall mean Norwest Bank Minnesota, National Association, acting
in its capacity as Trustee under the Indenture, or any successor trustee
designated pursuant to the Indenture.

     "UNSUBSIDIZED LOAN" or "UNSUBSIDIZED STAFFORD LOAN" shall mean a Student
Loan authorized under Section 428H of the Act.

     "VALUE" on any calculation date when required under the Indenture shall
mean the value of the Trust Estate calculated by the Trustee as follows:

          (a)  with respect to any Eligible Loan, the unpaid principal amount
     thereof plus any unamortized premiums, any accrued but unpaid interest,
     Interest Benefit Payments and Special Allowance Payments as set forth on
     the most recent Servicer's report or from the Issuer;

          (b)  with respect to any funds on deposit in any commercial bank or as
     to any banker's acceptance or repurchase agreement or investment contract,
     the amount thereof plus accrued but unpaid interest;

          (c)  with respect to any Investment Securities of an investment
     company, the net asset value price of the shares as reported by the
     investment company;

          (d)  as to investments the bid and asked prices of which are published
     on a regular basis in THE WALL STREET JOURNAL (or, if not there, then in
     THE NEW YORK TIMES): (i) the average of the bid and asked prices for such
     investments so published on or most recently prior to such time of
     determination, but not in excess of the par amount of such investment plus
     accrued interest thereon or (ii) the bid price published by a nationally
     recognized pricing service; and

          (e)  as to investments the bid and asked prices of which are not
     published on a regular basis in THE WALL STREET JOURNAL or THE NEW YORK
     TIMES: (i) the lower of the bid prices at such time of determination for
     such investments by any two nationally recognized government securities
     dealers (selected by the Issuer in its absolute discretion) at the time
     making a market in such investments or (ii) the bid price published by a
     nationally recognized pricing service.



                                     25