Document:

Separation and Release Agreement, dated as of May 28, 1999,
                       by and between
  Peter J. O'Gorman  and  The Great Atlantic & Pacific Tea
                        Company, Inc.

      This  will confirm our understandings with respect  to
the termination of your employment with The Great Atlantic &
Pacific Tea Company, Inc., which is effective May 28,  1999,
whereupon  all  rights, privileges and  entitlements  as  an
active employee will cease, except only to the extent herein
provided.   Your resignation as a corporate officer  of  the
Company  effective May 28, 1999 is an integral part of  this
Agreement.

      In  return for your general release which is set forth
below, the Company will pay you at your current salary  rate
through  May  31,  2000  ("the  severance  period").   These
payments  include  any  and  all otherwise  applicable  paid
leave,  including but expressly not limited to your vacation
entitlement.  Upon your attainment of age sixty-two you will
be  eligible  for  your pension under the special  executive
retirement  plan  (SERP) with 20 years' service  credit  and
without any early retirement reduction for retiring prior to
age  65.   Your  life insurance coverage and your  Executive
Medical  health  benefits including your  prescription  drug
coverage  under the Company plan will be continued  for  you
and  your  covered dependents until you attain age  65;  any
COBRA  entitlements  will follow.   Your  unexercised  Stock
Options  and Stock Appreciation Rights ("SAR's")  which  are
vested  currently  or  after vesting  during  the  severance
period  will be exercisable through the date that  is  three
months  after the end of the severance period, unless sooner
expired. These provisions exceed anything to which  you  are
otherwise entitled by reason of your having been employed by
or separated from the Company prior to the execution of this
Release Agreement.

     The  foregoing  voluntary  consideration  is  given  in
return  for  your  discharge  and  release  of  all  claims,
obligations, and demands which you have, ever had, or in the
future  may  have against The Great Atlantic &  Pacific  Tea
Company, Inc., each and any parent, subsidiary or affiliated
entity   and  any  of  its  or  their  officers,  directors,
employees,   agents,   predecessors   or   successors   (the
"Company") arising out of or related to your employment with
and  separation from the Company, including, but not limited
to,  any and all claims under Title VII of the Civil  Rights
Act  of  1964,  the  Civil  Rights  Act  of  1991,  the  Age
Discrimination in Employment Act ("ADEA"), the Older Workers
Benefit Protection Act, the Americans with Disabilities Act,
the  Employment Retirement Income Security Act of 1974,  the
Family  and Medical Leave Act, the Equal Pay Act, the Worker
Adjustment and Retraining Notification Act, each  and  every
state  or  local  variation of these federal laws  including
without    limitation   the   New   Jersey    Law    Against
Discrimination,   the  New  Jersey  Conscientious   Employee
Protection Act, and the New Jersey Family Leave Act, and any
and  all  other  applicable federal, state, and  local  fair
employment   practices,   individual   rights,    wage    or
discrimination laws, and any and all claims  for  breach  of
contract  or  implied  contract,  constructive  or  wrongful
discharge,  or  for negligence, retaliation and  all  torts.
This  release  shall not affect any subsequent  acts  giving
rise to claims.

     This Separation and Release Agreement does contain  and
constitute the full and complete understanding and agreement
between  you  and  the Company ("Agreement").   You  further
understand  and  agree that by entering into this  Agreement
the Company is not admitting violating any legal right, duty
or  entitlement  and  further that you  will  keep  strictly
confidential the terms and conditions of this Separation and
Release Agreement.

      The  Company advises you to consult with  an  attorney
prior  to  executing  this  Agreement.   By  executing  this
Agreement you acknowledge that (a) you have been provided an
opportunity to consult with an attorney or other advisor  of
your  choice regarding the terms of this Agreement, (b) this
is  a  final  offer and you have been given twenty-one  (21)
days  in  which to consider whether you wish to  enter  into
this Agreement, (c) you have elected to enter this Agreement
knowingly and voluntarily and (d) if you do so within  fewer
than  21  days from receipt of the final document  you  have
knowingly  and voluntarily waived the remaining  time.   The
Company  reserves the right reasonably to change  or  revoke
this Agreement prior to your execution hereof.

     This  Separation and Release Agreement shall  be  fully
effective  and  binding upon all parties hereto  immediately
upon  execution  by you and the Company; provided,  however,
you  have  seven (7) days following your execution  of  this
Agreement to change your mind.  You may revoke the Agreement
during those seven days by mailing or delivering a letter of
revocation  to  the Legal Department, attention  Mary  Ellen
Offer, Esq., The Great Atlantic & Pacific Tea Company, Inc.,
2  Paragon Drive, Montvale, New Jersey 07645.  Such a letter
must  be  signed and received, or postmarked, no later  than
the  seventh  day  after the date on which  you  signed  the
Separation and Release Agreement.

      You  further covenant not to contest the  validity  of
this  release after the expiration of the revocation period.
Therefore,  you agree that if you nonetheless should  pursue
litigation against the Company involving any matter  covered
and/or  released  hereby,  you first  will  restore  to  the
Company  the  full  value  of  all  consideration  you  have
received  and  waive  any to which you  are  still  entitled
hereunder  and  you shall be liable for the Company's  costs
and attorney fees incidental to defending such legal action.
Finally should any provision of this Agreement be found by a
court of competent jurisdiction to be unenforceable in whole
or  in  part, the remainder of this Agreement shall  not  be
affected thereby and shall remain in full force and effect.

      To evidence our understanding and agreement, duplicate
originals will be executed and notarized and each party will
retain an original.

THE COMPANY                             Agreed and accepted:

By:                                 ________________________
______________________        CHRISTIAN HAUB
     PETER J. O'GORMAN             President &
                                   Chief Executive Officer
                                   THE GREAT ATLANTIC &
                                   PACIFIC TEA COMPANY, INC.

Dated:___________________          Dated:__________________
                                        Sworn to before me
                                        this ______ day
                                        of _________, 1999.

                                        ___________________
                                        Notary Public

     Employment  and Separation Agreement  and  Release
     dated as of February 2, 2000 by and between George
     Graham  and  The  Great  Atlantic  &  Pacific  Tea
     Company, Inc.

     This   will  confirm  our  mutual  understandings   and
agreement  concerning  your continued  employment  with  and
anticipated separation from The Great Atlantic & Pacific Tea
Company,  Inc.  You agree to remain employed  and  actively
engaged  in providing the services needed to effectuate  the
transition  in  merchandising for the Company.   You  commit
that you will do so for at least the first six (6) months of
fiscal  2000 and thereafter at the Company's request through
March  3,  2001, whereafter your employment will  terminate.
Until  your  termination date in accord herewith  ("Eligible
Termination")  your  employment  status  otherwise   remains
unchanged.  Upon  termination  all  rights,  privileges  and
entitlements  as an active employee cease, subject  only  to
the provisions hereinafter set forth.

      Provided  you  continue  to work  as  agreed  to  your
Eligible  Termination, the Company  will  pay  you  at  your
current  salary rate for two (2) calendar years  after  said
termination  date, which includes payment for any  otherwise
applicable paid leave time, notably including vacation  time
(the   "Severance  Period").   Your  Company  provided  life
insurance  and executive medical coverage will be  continued
during the Severance Period.  Any COBRA entitlement, if any,
will  follow  thereafter.  Your pension  under  the  special
executive retirement plan (SERP) will be calculated with  20
years' service credit and full retirement benefit at age  59
instead  of  age  65.  In the event your spouse  Mary  Ellen
survives you, she will receive 40% of your SERP benefit  for
the  remainder of her life.  Your unexercised Stock  Options
and Stock Appreciation Rights ("SAR's") which are vested  as
of your Eligible Termination and not previously exercised or
expired will be exercisable at any time until the date three
months   after  the  end  of  the  Severance  Period.   Your
participation in the Company's management incentive  program
ceases  as  of your termination date; provided,  you  remain
entitled on a pro rata basis to any bonus earned, accrued or
payable in respect to the fiscal year in which your Eligible
Termination  occurs.  These provisions  exceed  anything  to
which  you  are otherwise entitled by reason of your  having
been employed by or separated from the Company.

     The  foregoing  voluntary consideration is  conditioned
upon  and  given  in  return for your competent  and  honest
employment  until  your  Eligible  Termination  date,   your
agreement to provide information, advice and cooperation  on
matters  having  their origin prior to separation  from  the
Company,  and  your  discharge and release  of  all  claims,
obligations, and demands which you have, ever had, or in the
future  may  have against The Great Atlantic &  Pacific  Tea
Company,  Inc.,  any  parents,  subsidiaries  or  affiliated
entities  and  any  of  its  or their  officers,  directors,
employees,   agents,   predecessors   or   successors   (the
"Company") arising out of or related to your employment with
and  separation from the Company, including, but not limited
to,  any and all claims under Title VII of the Civil  Rights
Act  of  1964,  the  Civil  Rights  Act  of  1991,  the  Age
Discrimination in Employment Act ("ADEA"), the Older Workers
Benefit Protection Act, the Americans with Disabilities Act,
the  Employment Retirement Income Security Act of 1974,  the
Family  and Medical Leave Act, the Equal Pay Act, the Worker
Adjustment  and  Retraining Notification Act,  the  National
Labor Relations Act, each and every state or local variation
of  these federal laws including without limitation the  New
Jersey  Law  Against Discrimination, the New  Jersey  Family
Leave Act, as amended, the New Jersey Conscientious Employee
Protection Act, any and all other applicable federal, state,
and   local   fair  employment  practices,   individual   or
constitutional rights, wage or discrimination laws  and  any
and  all  claims for breach of contract or implied contract,
constructive  or  wrongful  discharge,  or  for  negligence,
retaliation  and  all  torts, and any  and  all  claims  for
attorney fees.

     This  release shall not affect any acts giving rise  to
claims  subsequent  to  your  employment  termination  date.
Excluded  from  this  release are any claims  which  by  law
cannot be waived; provided, however, while you cannot  waive
your  right  to  file  a charge with or  participate  in  an
investigation conducted by certain government agencies,  you
are  waiving  and  releasing your  claim  or  right  to  any
monetary  recovery  should any agency  (such  as  the  Equal
Employment  Opportunity Commission) pursue any  claims  that
would otherwise financially benefit you.

     This  Employment  and Separation and Release  Agreement
does   contain   and  constitute  the  full   and   complete
understanding  and  agreement between you  and  the  Company
("Agreement").   You further understand and  agree  that  by
entering  into  this Agreement the Company is not  admitting
violating  any legal right, duty or entitlement and  further
that  you  will  keep strictly confidential  the  terms  and
conditions of this Agreement.

      The  Company advises you to consult with  an  attorney
prior  to  executing  this  Agreement.   By  executing  this
Agreement you acknowledge that (a) you have been provided an
opportunity to consult with an attorney or other advisor  of
your  choice regarding the terms of this Agreement, (b) this
is  a  final  offer and you have been given twenty-one  (21)
days  in  which to consider whether you wish to  enter  into
this Agreement, (c) you have elected to enter this Agreement
knowingly and voluntarily and (d) if you do so within  fewer
than  21  days from receipt of the final document  you  have
knowingly  and  voluntarily waived the remaining  time.  The
Company  reserves the right reasonably to change  or  revoke
this Agreement prior to your execution hereof.

     This  Agreement  shall be fully effective  and  binding
upon  all parties hereto immediately upon execution  by  you
and  the Company; provided, however, you have seven (7) days
following  your execution of this Agreement to  change  your
mind.  You may revoke the Agreement during those seven  days
by mailing or delivering a letter of revocation to the Legal
Department,  attention  Mary Ellen Offer,  Esq.,  The  Great
Atlantic  &  Pacific  Tea Company, Inc.,  2  Paragon  Drive,
Montvale,  New Jersey 07645.  Such a letter must  be  signed
and  received, or postmarked, no later than the seventh  day
after the date on which you signed the Agreement.

      You  further covenant not to contest the  validity  of
this  release after the expiration of the revocation period.
Therefore,  you agree that if you nonetheless should  pursue
litigation against the Company involving any matter  covered
and/or  released  hereby,  you first  will  restore  to  the
Company  the  full  value  of  all  consideration  you  have
received  and  waive  any to which you  are  still  entitled
hereunder  and  you shall be liable for the Company's  costs
and attorney fees incidental to defending such legal action.
Finally should any provision of this Agreement be found by a
court of competent jurisdiction to be unenforceable in whole
or  in  part, the remainder of this Agreement shall  not  be
affected thereby and shall remain in full force and effect.

      If  this  is in accordance with our understanding  and
agreement,  please  sign  and return  to  my  attention  the
enclosed copy, which shall evidence our binding agreement.

                                   Agreed and Accepted:

By: _____________________          ___________________
  LAURANE MAGLIARI                 GEORGE GRAHAM
  Sr. Vice President,
  People Resources & Services
  THE GREAT ATLANTIC & PACIFIC
  TEA COMPANY, INC.

Dated: ___________________    Dated:_____________________

Personal & Confidential

To:       Brian Pall
From:     Laurane S. Magliari
Date:     May 3, 2000
Subject:  Promotion to Chief Development Officer
           - Total Compensation

This memo will detail the terms of your promotion to Chief
Development Officer effective May 1, 2000.  In your new
capacity, you will report directly to Christian Haub and
participate as a member of the Management Executive
Committee (MEC).

Annual Base Salary:           $300,000

Grade Level:                  F    (Minimum $214.0,
                              Mid-Point $305.0,
                              Maximum $397.0)

Annual Incentive Target:      40% ($122.0) of
                              grade mid-point

Long Term Incentive Target:   25,000 stock options.   Stock
                              option grant for 1999
                              performance is 26,500 options.

Severance Agreement:     Should the Company terminate your
                         employment for reason other than
                         cause, you will be entitled to an
                         amount equal to 18 months of
                         continued total compensation
                         inclusive of benefits, (i.e. health
                         insurance, bonus entitlement, etc.,
                         not just base salary).

As we discussed, you will be considered for participation in
SERP once the Plan has been revised and approved by the
Retirement Committee.  Additionally, should the results of
the Total Compensation Study indicate your new position
warrants a salary grade level higher than "F", an adjustment
will be made at that time.

Brian, on behalf of the MEC, we our very excited about your
joining the team and look forward to your contributions to
our Company's success.

cc:  Christian Haub

                              November 19, 1999

Via Fed Ex
Mr. William Costantini
64 Bouton Road
South Salem, NY  10590

Dear Bill:

The  management  team at The Great Atlantic  &  Pacific  Tea
Company joins me in offering you the position of Senior Vice
President, General Counsel beginning March 1, 2000, based in
our  Montvale  office and reporting to  Fred  Corrado,  Vice
Chairman - CFO.  This offer is conditioned on a satisfactory
reference check and substance abuse testing.  Below are  the
details:

    Your base salary will be $335,000 per annum, payable
    in  four-week increments (13 times per  year)  at  a
    rate  of  $25,769.23.  You will  be  granted  25,000
    Stock   Options  upon  your  employment  with   A&P.
    Subsequent awards under the Company's program are at
    the  decision  of  the Board of Directors  based  on
    individual  and  Company performance.   Your  target
    award is 25,000 options.

    As  Senior Vice President, General Counsel, you will
    participate in the Fiscal Year 2000 Management Bonus
    Plan  at  a  target bonus rate of $122,000  (40%  of
    grade mid-point; 1999 mid-point is $305,000).

    You  will  be  eligible to participate  in  the  A&P
    Retirement and Savings Plan upon completion  of  one
    year  of  employment.  In addition,  you  have  been
    designated  to  participate in the Senior  Executive
    Medical   Reimbursement  Plan  for  claims  incurred
    subsequent  to  your  start date.   In  short,  this
    enhanced  benefit covers 100% of all  medical  costs
    including  dental and vision, with the exception  of
    prescriptions, which are covered under the  standard
    plan.   A  copy of our standard benefits package  is
    enclosed for your review.  Also enclosed is  a  copy
    of  A&P's Relocation Benefits Program, for which you
    will also be eligible.

Bill,  we are delighted with your decision to join A&P.   We
believe  your  association  with our  organization  will  be
extremely beneficial to both of us.

                              Sincerely,

Enclosed  is a duplicate copy of this letter which  I  would
appreciate  your signing and returning indicating  agreement
with the above.

___________________________   _____________________________
(Name)                                  Date

January 20, 2000

Robert Ulrich, Esq.
500 Weymouth Drive
Wyckoff, NJ  07481

Dear Bob,

      As we have discussed, you have agreed to announce your
retirement from the Company effective May 18, 2000, i.e., on
your 25th anniversary date.

      This confirms the Agreement between the Company and
you terminating your active employment effective upon your
retirement from the Company on May 18, 2000, on which date
you will have attained age 65.

The Company has agreed to pay you at your current salary
rate from May 18, 2000 through May 17, 2001 ("severance
period").  These payments include any and all otherwise
applicable paid leave, including but expressly not limited
to vacation entitlement.

      Your Company paid life insurance coverage will be
continued through May 31, 2001.

      Executive Medical Health benefits and prescription
drug coverage under the Company plan will be continued for
you until May 31, 2001, and for your wife until she attains
age 65, i.e., until May 11, 2004.

      You will be entitled to any bonus that would otherwise
be payable to you in respect to fiscal year 2000, whether
"earned" or "discretionary."

      Any unexercised Stock Appreciation Rights ("SAR's")
and Stock Options, whether ISO's or Nonqualified Options,
which are vested as of May 18, 2000, will remain exercisable
through August 17, 2001, namely the conclusion of the third
month after the severance period.

      You will be eligible to receive a pension under the
Supplemental Executive Retirement Plan ("SERP") in
accordance with the terms of the Plan.
Robert Ulrich, Esq.
January 20, 2000
Page 2

      The Company will reimburse you for your Ridgewood
Country Club dues of $2,200 for the year 2000.

      If this is agreeable to you, please sign in the place
indicated below.

                              Very truly yours,

                              Laurane S. Magliari

Agreed:

Robert G. Ulrich

June 15, 1999

Mr. Nicholas Ioli, Jr.
253 North Poverty Road
Southbury, CT  06488

Dear Nick:

We are pleased to confirm to your our offer of employment.
The details are as follows:

     You will be employed by The Great Atlantic & Pacific
     Tea Company, Inc. on an agreed upon date, as Sr. Vice
     President -Chief Information Officer reporting to Fred
     Corrado, Vice Chairman, which is conditioned on
     satisfactory substance abuse testing.

     Your base salary will be $225,000 per annum, payable in
     four weekly increments (13 times per year) at rate of
     $17,307.69.  Checks are issued on Thursday of the last
     week of each fiscal period.

     As Sr. Vice President-Chief Information Officer, you
     will participate in the Fiscal Year 1999 Management
     Bonus Plan at a target bonus rate of 40% of grade mid-
     point (1999 mid-point is $305,000).  Bonus payment for
     FY 1999 will be prorated coincident with your start
     date.

     Additionally, you will be granted an issuance of 15,000
     Stock Options under the A&P Stock Option Plan at the
     price in effect on the date you begin employment with
     A&P.

     In the event of involuntary termination by the company
     (except in the case of termination for cause), you will
     be entitled to twelve (12) months' salary as severance
     pay.

     You are also eligible for full relocation benefits
     should your relocation occur during your first twelve
     months of employment.

     Vacation entitlement will be four (4) weeks each
     calendar year.  You will participate in the Company's
     Executive Medical Program immediately upon commencement
     of employment.  You will be eligible to participate in
     the A&P Retirement and Savings Plan upon completion of
     one year of employment.

Nick, we are delighted with your decision to join A&P.  We
believe your association with our organization will be
extremely beneficial to both of us.

                              Sincerely,

                              Laurane Magliari

Enclosed is a duplicate copy of this letter which I would
appreciate your signing and returning indicating agreement
with the above.

NICHOLAS L. IOLI, JR.         DATEExhibit 4.1
================================================================================

                               SERVICING AGREEMENT

                                      among

                          SMS STUDENT LOAN TRUST 2000-B
                                   as Issuer,

                          USA GROUP LOAN SERVICES, INC.
                                  as Servicer,

                    USA GROUP SECONDARY MARKET SERVICES, INC.
                                   as Seller,

                                       and

                         BANK ONE, NATIONAL ASSOCIATION,
                    not in its individual capacity but solely
                           as Eligible Lender Trustee

                            Dated as of April 1, 2000

================================================================================
<PAGE>

            SERVICING AGREEMENT dated as of April 1, 2000, among SMS STUDENT
LOAN TRUST 2000-B, a Delaware trust (the "Issuer"), USA GROUP LOAN SERVICES,
INC., as servicer (the "Servicer"), USA GROUP SECONDARY MARKET SERVICES, INC.,
as Seller (the "Seller"), and BANK ONE, NATIONAL ASSOCIATION, a national banking
association, solely as eligible lender trustee and not in its individual
capacity (the "Eligible Lender Trustee").

            WHEREAS the Issuer desires to purchase from the Seller (and, with
respect to legal title to the student loans, Bank One, National Association
("Bank One") as trustee on behalf of the Seller) a portfolio of federally
reinsured student loans purchased in the ordinary course of business by the
Seller; and

            WHEREAS the Eligible Lender Trustee is willing to hold legal title
to, and serve as eligible lender trustee with respect to, such student loans on
behalf of the Issuer; and

            WHEREAS the Servicer is willing to service such student loans and
undertake certain administrative functions with respect thereto.

            NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                              Definitions and Usage

            Capitalized terms used but not defined herein are defined in
Appendix A to the Administration Agreement, dated as of April 1, 2000, among the
Issuer, the Seller, as Administrator, and Bankers Trust Company, as Indenture
Trustee, which also contains rules as to usage and construction that shall be
applicable herein.

                                   ARTICLE II

                        Custody of Financed Student Loans

            SECTION 2.01. Custody of Student Loan Files. To assure uniform
quality in servicing the Financed Student Loans and to reduce administrative
costs, the Issuer hereby revocably appoints the Servicer, and the Servicer
hereby accepts such appointment, to act for the benefit of the Issuer and the
Indenture Trustee as Custodian of the following documents or instruments which
are hereby constructively delivered to the Indenture Trustee, as pledgee of the
Issuer (or will be constructively delivered to the Indenture Trustee, as pledgee
of the Issuer, in the case of Prefunded Loans, New Loans and Serial Loans, as of
the applicable Transfer Date, in the case of Qualified Substitute Student Loans,
as of the date of the relevant Assignment to the Issuer, in the case of
Consolidation Loans originated during the Revolving Period by the Eligible
Lender Trustee on behalf of the Issuer, as of the applicable date of origination
or in the case of Consolidation Loans the principal balances of which are
increased by the principal balances of
<PAGE>

any related Add-on Consolidation Loans, as of the applicable Add-on
Consolidation Loan Funding Date) with respect to each Financed Student Loan:

            (a) the original fully executed copy of the note evidencing the
      Financed Student Loan (including the original loan application fully
      executed by the Borrower); and

            (b) any and all other documents and computerized records that the
      Servicer shall keep on file, in accordance with its customary procedures,
      relating to such Financed Student Loan or any Obligor with respect
      thereto.

            SECTION 2.02. Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer shall maintain custody of the Student Loan Files for the benefit of the
Issuer and the Indenture Trustee on behalf of the Noteholders and any Swap
Counterparties and maintain such accurate and complete accounts, records and
computer systems pertaining to each Student Loan File as shall enable the Issuer
to comply with the Basic Documents. In performing its duties as custodian, the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the student loan files
relating to all comparable Student Loans that the Servicer services and shall
ensure that it complies with all applicable federal and state laws, including
the Higher Education Act, with respect thereto. The Servicer shall conduct, or
cause to be conducted, periodic audits of the Student Loan Files held by it
under this Agreement and of the related accounts, records and computer systems,
in such a manner as shall enable the Issuer, the Indenture Trustee or any Swap
Counterparties to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the Issuer, the Indenture Trustee and any Swap
Counterparties any failure on its part to hold the Student Loan Files and
maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer, the Eligible Lender Trustee or the Indenture Trustee of the Student Loan
Files.

            (b) Maintenance of Records. The Servicer shall maintain each Student
Loan File at one of the locations specified in Schedule A to this Agreement or
at such other office as shall be specified by written notice to the Issuer, the
Indenture Trustee and any Swap Counterparties not later than 90 days after any
change in location. Upon reasonable prior notice of not less than three Business
Days, the Servicer shall make available to the Issuer, the Indenture Trustee and
any Swap Counterparties or their respective duly authorized representatives,
attorneys or auditors a list of locations of the Student Loan Files and the
related accounts, records and computer systems maintained by the Servicer.

            (c) Release of Documents. Upon instruction from the Indenture
Trustee, the Servicer shall, as soon as practicable, release any Student Loan
File to the Indenture Trustee, the Indenture Trustee's agent, or the Indenture
Trustee's designee, as the case may be, at such place or places as the Indenture
Trustee may designate.

                                      -2-
<PAGE>

            SECTION 2.03. Instructions; Authority To Act. The Servicer shall be
deemed to have received proper instructions with respect to the Student Loan
Files upon its receipt of written instructions signed by a Responsible Officer
of the Indenture Trustee.

            SECTION 2.04. Custodian's Indemnification. The Servicer as Custodian
shall pay for any actual loss, liability or expense, including reasonable
attorneys' fees, that may be imposed on, incurred by or asserted against the
Issuer, the Eligible Lender Trustee or the Indenture Trustee or any of their
officers, directors, employees and agents as a result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer as
Custodian of the Student Loan Files as required by this Agreement where the
final determination that any such improper act or omission by the Servicer
resulted in such loss, liability or expense is established by a court of law, by
an arbitrator, or by way of settlement agreed to by the Servicer; provided,
however, that the amount of any liability with respect to any Financed Student
Loan shall not exceed the amount that would have been paid if such Student Loan
had been accepted and paid by the related Guarantor as a claim, and provided,
further, that the Servicer shall not be liable to the Eligible Lender Trustee
for any portion of any such amount resulting from the willful misfeasance, bad
faith or negligence of the Eligible Lender Trustee and the Servicer shall not be
liable to the Indenture Trustee for any portion of any such amount resulting
from the willful misfeasance, bad faith or negligence of the Indenture Trustee.
This provision shall not be construed to limit the Servicer's or any other
party's rights, obligations, liabilities, claims or defenses which arise as a
matter of law or pursuant to any other provision of this Agreement.

            SECTION 2.05. Effective Period and Termination. The appointment of
Loan Services as Custodian shall become effective as of the Closing Date and
shall continue in full force and effect for so long as Loan Services shall
remain the Servicer hereunder. If all the rights and obligations of Loan
Services shall have been terminated under Section 6.01, the appointment of Loan
Services as Custodian shall be terminated simultaneously with the effectiveness
of such termination. As soon as practicable on or after any termination of such
appointment and in any event within ninety (90) days, Loan Services shall
deliver possession of the Student Loan Files to the Indenture Trustee or the
Indenture Trustee's agent at such place or places as the Indenture Trustee may
reasonably designate. Loan Services will continue to hold the Student Loan Files
as agent of the Indenture Trustee until the Student Loan Files are transferred.

                                   ARTICLE III

                  Administration and Servicing of Student Loans

            SECTION 3.01. Duties of Servicer. The Servicer, for the benefit of
the Issuer (to the extent provided herein), the Noteholders and any Swap
Counterparties, shall manage, service, administer and make collections on the
Financed Student Loans with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable Student
Loans that it services. Without limiting the generality of the foregoing or of
any other provision set forth in this Agreement and notwithstanding any other
provision to the contrary set forth

                                      -3-
<PAGE>

herein, the Servicer shall manage, service, administer and make collections with
respect to the Financed Student Loans (other than collection of any Interest
Subsidy Payments and Special Allowance Payments, which the Eligible Lender
Trustee will perform on behalf of the Trust) in accordance with, and otherwise
comply with, all applicable federal and state laws, including any applicable
standards, guidelines and requirements of the Higher Education Act and the
applicable Guarantee Agreement, the failure to comply with which would adversely
affect the eligibility of one or more of the Financed Student Loans for federal
reinsurance or Interest Subsidy Payments, Special Allowance Payments or
Guarantee Payments or would have an adverse effect on the Noteholders, any Swap
Counterparties or the Company. The Servicer also hereby acknowledges that its
obligation to service the Financed Student Loans includes all Consolidation
Loans originated by the Issuer during the Revolving Period, any Consolidation
Loan supplemented from time to time during and after the Revolving Period by the
addition of the principal balance of any related Add-on Consolidation Loan, any
Qualified Substitute Student Loans conveyed to the Issuer pursuant to Section
3.02 of the Loan Sale Agreement and those Prefunded Loans, New Loans and Serial
Loans conveyed to the Eligible Lender Trustee on behalf of the Trust pursuant to
Section 2.02 of the Loan Sale Agreement and the related Transfer Agreement, a
copy of which shall be delivered to the Servicer by the Seller promptly upon
execution thereof; provided, however, that any failure by the Seller to so
deliver a Transfer Agreement shall not affect the Servicer's obligations
hereunder to service all the Financed Student Loans.

            The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of borrowers on such Financed Student Loans,
monitoring borrowers' status, making required disclosures to borrowers,
investigating delinquencies, sending payment coupons to borrowers and otherwise
establishing repayment terms, reporting tax information to borrowers, if
applicable, accounting for collections and furnishing monthly and annual
statements with respect thereto to the Administrator. Subject to the provisions
of Section 3.02, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the generality
of the foregoing, the Servicer is authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Company and the Noteholders or any of them, instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such Financed Student Loans;
provided, however, that the Servicer agrees that it will not (a) permit any
rescission or cancellation of a Financed Student Loan except as ordered by a
court of competent jurisdiction or governmental authority or as otherwise
consented to in writing by the Eligible Lender Trustee and the Indenture Trustee
or (b) reschedule, revise, defer or otherwise compromise with respect to
payments due on any Financed Student Loan except pursuant to any applicable
Deferral or Forbearance periods or otherwise in accordance with all applicable
standards, guidelines and requirements with respect to the servicing of the
Financed Student Loans; and provided, further, that the Servicer shall not agree
to any decrease of the interest rate on, or the principal amount payable with
respect to, any Financed Student Loan.

            The Servicer, for the benefit of the Issuer (to the extent provided
herein) and the Indenture Trustee on behalf of the Noteholders, shall promptly
and routinely furnish the Eligible Lender Trustee and the Indenture Trustee with
copies of all material reports, records, and other

                                      -4-
<PAGE>

documents and data as required by this Agreement or as may otherwise be required
by the Higher Education Act. All material correspondence received by the
Servicer relating to individual Student Loans shall be maintained in microcopy
form or in summary form in an automated history file established by the
Servicer. The Servicer shall furnish in good condition all forms and supplies as
specified in this Agreement and any Schedules hereto. The Eligible Lender
Trustee and the Indenture Trustee may transmit Financed Student Loan account
data to the Servicer on these forms or by any other mutually acceptable means.
In performing its duties hereunder, the Servicer will be guided by and comply
with the Higher Education Act and applicable requirements of the related
Guarantor. The Servicer agrees to produce a clear and precise audit trail for
each Financed Student Loan and to comply with such other reporting, servicing,
and operating standards as are contained in this Agreement.

            The Eligible Lender Trustee on behalf of the Issuer hereby grants a
power of attorney and all necessary authorization to the Servicer to maintain
any and all collection procedures with respect to the Financed Student Loans,
including filing, pursuing and recovering claims against the Guarantors for
Guarantee Payments and taking any steps to enforce such Financed Student Loans
such as commencing a legal proceeding to enforce a Financed Student Loan in the
name of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Company or the Noteholders. The Eligible Lender Trustee or the Indenture Trustee
shall upon the written request of the Servicer or the Administrator furnish the
Servicer or the Administrator with any other powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer or the
Administrator to carry out their servicing and administrative duties hereunder.

            SECTION 3.02. Collection of Student Loan Payments. (a) The Servicer
shall make reasonable efforts (including all efforts that may be specified under
the Higher Education Act or any Guarantee Agreement) to collect all payments
called for under the terms and provisions of the Financed Student Loans as and
when the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable Student Loans that it services. The
Servicer shall allocate collections with respect to the Financed Student Loans
between principal and interest in accordance with the terms of each such loan.
The Servicer may in its discretion waive any late payment charge or any other
fees that may be collected in the ordinary course of servicing a Financed
Student Loan.

            (b) The Servicer shall make reasonable efforts to claim, pursue and
collect all Guarantee Payments from the Guarantors pursuant to the Guarantee
Agreements with respect to any of the Financed Student Loans as and when the
same shall become due and payable, shall comply with the Higher Education Act
and all other applicable laws and agreements with respect to claiming, pursuing
and collecting such payments and shall follow such practices and procedures as
it follows with respect to all comparable guarantee agreements and student loans
that it services. In connection therewith, the Servicer is hereby authorized and
empowered to convey to the related Guarantor the note and the related Student
Loan File representing any Financed Student Loan in connection with submitting a
claim to the applicable Guarantor for a Guarantee Payment in accordance with the
terms of the applicable Guarantee Agreement.

                                      -5-
<PAGE>

            (c) The Eligible Lender Trustee shall, with the assistance of the
Servicer as set forth below and on behalf of the Issuer, make reasonable efforts
to claim, pursue and collect all Interest Subsidy Payments and Special Allowance
Payments from the Department with respect to any of the Financed Student Loans
as and when the same shall become due and payable, shall comply with all
applicable laws and agreements with respect to claiming, pursuing and collecting
such payments and shall follow such practices and procedures as the Servicer
follows with respect to Student Loans serviced by it. All amounts so collected
by the Eligible Lender Trustee with respect to Financed Student Loans (net, for
the first Collection Period, of interest accrued prior to the Cutoff Date that
is not to be capitalized) shall constitute Monthly Available Funds for the
applicable Monthly Collection Period and Available Funds for the applicable
Collection Period, and shall be deposited into the Collection Account in
accordance with Section 4.01. In connection therewith, the Servicer shall
prepare and file with the Department on a timely basis all claims forms and
other documents and filings necessary or appropriate in connection with the
claiming of Interest Subsidy Payments and Special Allowance Payments on behalf
of the Eligible Lender Trustee and shall otherwise assist the Eligible Lender
Trustee in pursuing and collecting such Interest Subsidy Payments and Special
Allowance Payments from the Department. The Eligible Lender Trustee shall upon
the written request of the Servicer furnish the Servicer with any power of
attorney and other documents reasonably necessary or appropriate to enable the
Servicer to prepare and file such claims forms and other documents and filings.

      The Eligible Lender Trustee may permit trusts, other than the Trust,
established by the Seller to securitize student loans to use the Department
lender identification number applicable to the Trust. In such event, the
Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including, but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department to any such other trust using such common lender identification
number as a result of amounts (including, but not limited to, Consolidation
Fees) owing to the Department from the Trust will be deemed for all purposes
hereof and of the Basic Documents (including for purposes of determining amounts
paid by the Department with respect to the student loans in the Trust and such
other trust) to have been assessed against the Trust and shall be deducted by
the Eligible Lender Trustee or the Servicer and paid to such other trust from
any collections made by them which would otherwise have been payable to the
Collection Account for the Trust. If so specified in the servicing agreement
applicable to any such other trust, any amounts assessed against payments due
from the Department to the Trust as a result of amounts owing to the Department
from such other trust using such common lender identification number will be
deemed to have been assessed against such other trust and will be deducted by
the Eligible Lender Trustee or the Servicer from any collections made by them
which would otherwise be payable to the collection account for such other trust
and paid to the Trust.

            SECTION 3.03. Realization upon Student Loans. For the benefit of the
Issuer, the Servicer shall use reasonable efforts consistent with its customary
servicing practices and

                                      -6-
<PAGE>

procedures and including all efforts that may be specified under the Higher
Education Act or the applicable Guarantee Agreement in its servicing of any
delinquent Financed Student Loans.

            SECTION 3.04. No Impairment. The Servicer shall not impair the
rights of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Company, the Noteholders or any Swap Counterparties in the Financed Student
Loans.

            SECTION 3.05. Purchase of Student Loans; Reimbursement. (a) Upon the
discovery by the Servicer, the Eligible Lender Trustee, the Indenture Trustee or
the Seller of any breach pursuant to Sections 3.01, 3.02, 3.03 or 3.04 hereof,
the party discovering the breach shall give prompt written notice to the others.
If the breach is not cured within sixty (60) days after the Servicer becomes
aware or receives written notice (whichever is earlier) of such breach, the
Servicer shall purchase or arrange for the purchase of any Student Loan in which
the interests of the Noteholders, the Issuer, the Indenture Trustee, the
Eligible Lender Trustee or any Swap Counterparties are materially and adversely
affected by such breach as of the first day succeeding the end of such 60-day
period that is the last day of a Monthly Collection Period (it being understood
that any such breach that does not affect the related Guarantor's obligation to
guarantee payment of such Student Loan will not be considered to have a material
adverse effect for this purpose and it being further understood that any dispute
as to whether such Guarantor's obligation has been so affected so as to create
such a material adverse effect, shall be resolved, for so long as the Notes are
Outstanding, by the Indenture Trustee, whose determination shall be dispositive,
and after the Notes are no longer Outstanding, by the Eligible Lender Trustee,
whose determination shall then be dispositive); provided, however, that during
each 12-month period following the Cutoff Date or an anniversary of the Cutoff
Date (each, a "Servicer Liability Period"), the Servicer will be obligated to
purchase Student Loans only to the extent its total liability incurred during
the then current Servicer Liability Period for such purchases and any other
liabilities under this Agreement exceeds an amount (the "Servicer Liability
Limit") equal to 0.15% of the principal balances of the Financed Student Loans
outstanding as of the Cutoff Date or, after the first anniversary of the Cutoff
Date, as of the preceding July 31.

            (b) In consideration of the purchase of any such Student Loan
pursuant to this Section 3.05, the Servicer shall remit, in the manner specified
in Section 4.01, the Purchase Amount and the Issuer shall execute such
assignments and other documents reasonably requested by the Servicer in order to
effect the transfer of such Student Loan to the Servicer or its designee;
provided, however, that the Servicer's total liability for losses for rejected
claims by the Guarantors for any Financed Student Loan based on any breach
pursuant to Sections 3.01, 3.02, 3.03 or 3.04 hereof will not exceed that amount
which the related Guarantor would have been obligated to pay with respect to
such loan had its obligation to guarantee payment thereof not been affected by
the Servicer's breach. Subject to Section 5.02, the exclusive remedy of the
Noteholders, the Issuer, the Indenture Trustee, and the Eligible Lender Trustee
and the entire liability of Servicer for such a breach shall be limited to
requiring the Servicer to purchase Financed Student Loans pursuant to this
Section 3.05.

                                      -7-
<PAGE>

            SECTION 3.06. Servicing Fee. The Servicing Fee for each calendar
month (the "Servicing Fee") shall be equal to the lesser of (a) one-twelfth of
0.60% or such larger percentage approved by the Rating Agencies, not to exceed
1.00% (or of 0.50% with respect to any calendar month beginning with January
2010) of the aggregate principal balances of the Financed Student Loans
outstanding as of the last day of the preceding calendar month and (b) the sum
of (i) one-twelfth of the In-School Percentage of the principal balance of each
Billing Account relating to a Financed Student Loan as of the last day of the
preceding calendar month which was an In-School Loan on such date or, if the
average principal balance of Billing Accounts relating to In-School Loans as of
such date was $2,500 or less, $1.50 per Billing Account, (ii) one-twelfth of the
GRDF Percentage of the principal balance as of the last day of the preceding
calendar month of each Billing Account relating to a Financed Student Loan which
was a Grace, Repayment, Deferral or Forbearance Student Loan as of such date or,
if the average principal balance of such Billing Accounts as of such date was
$3,000 or less, $3.00 per Billing Account, (iii) a fee of $1.00 for each
notification sent by the Servicer during the preceding calendar month on behalf
of the Trust to a borrower providing information to such borrower with respect
to Federal Consolidation Loan programs, (iv) a one-time fee of $75.00 for each
Federal Consolidation Loan originated by the Eligible Lender Trustee on behalf
of the Trust during the preceding calendar month, (v) a fee of $25.00 for each
Financed Student Loan for which, during the preceding calendar month, claim
documentation was completed and provided to the Guarantor or for which the
Servicer performed bankruptcy or ineligible Billing Account processing (that, in
the case of ineligible Billing Account processing, resulted in a demand letter
being sent to the borrower), in each case as required by the claims processing
requirements of the Guarantor, (vi) a fee of $.05 per Financed Student Loan for
storing and warehousing the applicable loan documentation for each such loan
during the preceding calendar month, (vii) a one-time fee of $0.40 for each
Billing Account transferred by the Seller to the Trust during the preceding
calendar month, (viii) a fee equal to one-twelfth of the product of (A) the
aggregate outstanding principal balance of the Financed Student Loans as of the
last day of the preceding calendar month and (B) .05%, which fee will be payable
so long as 34 C.F.R. ss. 682.413 or any successor section remains in effect and
(ix) a fee of $70.00 per hour for system development requests made by the
Eligible Lender Trustee on behalf of the Trust and provided by the Servicer
during the preceding calendar month. For purposes of making the determinations
set forth in clauses (i) and (ii) of the preceding sentence, the "In-School
Percentage" and "GRDF Percentage" shall each be determined based on the average
principal balance of the Billing Accounts relating to the In-School Loans and
the Billing Accounts relating to the Grace, Repayment, Deferral and Forbearance
Loans, respectively, as of the last day of the preceding calendar month, as
follows:

 Average Principal      In-School       Average Principal            GRDF
      Balance          Percentage            Balance              Percentage
--------------------   ------------     -------------------    ----------------

$2,501 - $3,000             0.625%       $3,001 - $3,400                1.100%
$3,001 - $3,500             0.525%       $3,401 - $3,900                0.950%
$3,501 - $4,000             0.450%       $3,901 - $4,400                0.830%
$4,001 - $4,750             0.375%       $4,401 - $4,800                0.740%

                                      -8-
<PAGE>

$4,751 - $5,500             0.310%       $4,801 - $5,400                0.650%
$5,501 - $6,250             0.260%       $5,401 - $6,000                0.575%
$6,251 and above            0.230%       $6,001 - $6,600                0.510%
                                         $6,601 - $7,200                0.475%
                                         $7,201 - $10,000               0.450%
                                        $10,001 - $13,000               0.350%
                                        $13,001 and above               0.300%

      The Servicing Fee (together with any portion of the Servicing Fee that
remains unpaid from prior Monthly Payment Dates) will be payable on each Monthly
Payment Date and will be paid solely out of Monthly Available Funds in the case
of each Monthly Payment Date that is not a Quarterly Payment Date (and out of
Available Funds in the case of each Quarterly Payment Date) and amounts on
deposit in the Reserve Account on such Monthly Payment Date (including each
Quarterly Payment Date) as provided in Sections 2(d)(iv)(A), 2(d)(v)(A) and
2(e)(iv)(A) of the Administration Agreement. To the extent that, for any Monthly
Payment Date, the Servicing Fee is the amount calculated as described in clause
(a) of the first sentence of the preceding paragraph, then an amount (the
"Servicing Fee Shortfall") equal to the excess of the amount described in clause
(b) of such sentence over the amount described in clause (a) of such sentence
shall be payable on the next succeeding Quarterly Payment Date (or if such
Monthly Payment Date is also a Quarterly Payment Date, on such Quarterly Payment
Date) from any remaining Reserve Account Excess as provided in Section 2(e)(ii)
of the Administration Agreement. To the extent such remaining Available Funds
are insufficient to pay the Servicing Fee Shortfall on any Distribution Date,
the Seller shall be required to pay any unpaid Servicing Fee Shortfall directly
to the Servicer out of its own funds. The Servicer will be obligated to perform
its servicing obligations whether or not it receives any amounts in respect of
Servicing Fee Shortfalls.

            SECTION 3.07. Servicer's Report. On or before the fifteenth day of
each month (or, if any such day is not a Business Day, on the next succeeding
Business Day), the Servicer shall deliver to the Administrator a servicer's
report with respect to the preceding calendar month containing all information
necessary for the Administrator to prepare the Administrator's Certificate,
referred to in Section 2(b)(ii) of the Administration Agreement, covering such
preceding calendar month.

            SECTION 3.08. Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Eligible Lender Trustee, the Indenture
Trustee and any Swap Counterparties (with a copy to the Seller), on or before
April 30 of each year beginning April 30, 2001, an Officers' Certificate of the
Servicer, dated as of December 31 of the preceding year, stating that (i) a
review of the activities of the Servicer during the preceding 12-month period
(or, in the case of the first such certificate, during the period from the
Closing Date to December 31, 2000 or, as specified below, to September 30, 2000)
and of its performance has been made under such officers' supervision and (ii)
to the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement in all material respects
throughout such year (or in the case of the first such Officers' Certificate,
such shorter period) or, if there has been a default in the fulfillment of any
such obligation, specifying each such default

                                      -9-
<PAGE>

known to such officers and the nature and status thereof; provided, however,
that, at the option of the Servicer, the Servicer may date the initial such
Officers' Certificate as of September 30, 2000, and, in such case, shall deliver
such Officer's Certificate on or before December 31, 2000 and thereafter shall
deliver such Officer's Certificate, dated as of September 30 of each succeeding
year, on or before December 31 of such year. The Indenture Trustee shall send a
copy of each such Officers' Certificate and each report referred to in this
Section 3.08 to the Rating Agencies. A copy of each such Officers' Certificate
and each report referred to in this Section 3.08 may be obtained by any
Noteholder or Note Owner by a request in writing to the Eligible Lender Trustee
addressed to its Corporate Trust Office, together with evidence satisfactory to
the Eligible Lender Trustee that such Person is one of the foregoing parties.
Upon the telephone request of the Eligible Lender Trustee, the Indenture Trustee
will promptly furnish the Eligible Lender Trustee a list of Noteholders as of
the date specified by the Eligible Lender Trustee.

            (b) The Servicer shall deliver to the Eligible Lender Trustee, the
Indenture Trustee, the Seller, any Swap Counterparties and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an Officers' Certificate of the
Servicer of any event which with the giving of notice or lapse of time, or both,
would become a Servicer Default under Section 6.01 or would cause the Servicer
to fail to meet any Rating Agency Condition.

            SECTION 3.09. Annual Independent Certified Public Accountants'
Report. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer, the Seller or
their Affiliates, to deliver to the Eligible Lender Trustee, the Indenture
Trustee and any Swap Counterparties (with a copy to the Seller) within 180 days
of the end of the Servicer's regular fiscal-year ended September 30 or
calendar-year audit period, an audit report that encompasses the Servicer's
portion of the annual Lender Audit (as defined in the Higher Education Act), or
any successor thereto, as required of a lender under the Higher Education Act,
for the preceding year (or, in the case of the first such report, during the
period from the Closing Date to December 31, 2000 or, as the case may be, to
September 30, 2000). The Indenture Trustee shall send a copy of each such report
to the Rating Agencies.

            Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.

            SECTION 3.10. Access to Certain Documentation and Information
Regarding Financed Student Loans. Upon at least three Business Days' prior
notice, the Servicer shall provide the Noteholders access to the Student Loan
Files in such cases where the Noteholders shall be required by applicable
statutes or regulations to review such documentation, as demonstrated by
evidence satisfactory to the Servicer in its reasonable judgment. Access shall
be afforded without charge, but only upon reasonable request and during the
normal business hours at the respective offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the

                                      -10-
<PAGE>

Obligors and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section.

            SECTION 3.11. Servicer Expenses. The Servicer shall be required to
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to the Administrator or the Noteholders, as the case may be.

            SECTION 3.12. Appointment of Subservicer. (a) The Servicer may at
any time appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder; provided, however, other than with respect to the
appointment of the Subservicer pursuant to clause (b) below, that the Rating
Agency Condition shall have been satisfied in connection therewith; and
provided, further, that the Servicer shall remain obligated and be liable to the
Issuer, the Eligible Lender Trustee, the Indenture Trustee and the Noteholders
for the servicing and administering of the Financed Student Loans in accordance
with the provisions hereof without diminution of such obligation and liability
by virtue of the appointment of such subservicer and to the same extent and
under the same terms and conditions as if the Servicer alone were servicing and
administering the Financed Student Loans. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its subservicer from
time to time and none of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee or the Noteholders shall have any responsibility therefor, and

            (b) On the Closing Date, the Servicer is appointing the Subservicer
to subservice certain Financed Student Loans pursuant to the Subservicing
Agreement. Neither the Servicer nor any successor Servicer may terminate the
Subservicer without cause pursuant to the Subservicing Agreement.

                                   ARTICLE IV

                      Deposits into the Collection Account

            SECTION 4.01. Deposits into the Collection Account. (a) The Servicer
shall deposit into the Collection Account (in the case of clauses (i) and (ii)
within two Business Days of receipt of freely available funds therefor):

            (i) all identifiable payments received by the Servicer by or on
      behalf of Obligors on the Financed Student Loans, including any Guarantee
      Payments with respect to the Financed Student Loans;

            (ii) all Liquidation Proceeds on the Financed Student Loans;

            (iii) with respect to Purchased Student Loans, the aggregate
      Purchase Amounts, when such amounts are due, as provided in Section 3.05
      hereof; and

                                      -11-
<PAGE>

            (iv) all other amounts required to be deposited into the Collection
      Account by the Servicer pursuant to the terms hereof.

            (v) The Eligible Lender Trustee shall deposit into the Collection
Account within two Business Days of the receipt thereof, the aggregate amount of
Interest Subsidy Payments and Special Allowance Payments received by it with
respect to the Financed Student Loans.

            (vi) The Seller shall deposit into the Collection Account, the
aggregate Purchase Amount with respect to Purchased Student Loans and all other
amounts to be paid by the Seller under Section 3.02 and 5.01 of the Loan Sale
Agreement when such amounts are due, as provided in Section 3.03 of the Loan
Sale Agreement.

            (vii) The Indenture Trustee, at the written direction of the
Administrator, shall withdraw from the Prefunding Account or the Collateral
Reinvestment Account, as applicable, and deposit into the Collection Account on
each Determination Date during the Revolving Period, an amount equal to the
Capitalized Interest Amount for the preceding Collection Period, as provided in
Section 2(f) and Section 2(k) of the Administration Agreement.

            (viii) The Indenture Trustee, at the written direction of the
Administrator, shall withdraw from the Prefunding Account or the Collateral
Reinvestment Account, as applicable, and deposit into the Collection Account on
any date during the Revolving Period specified by the Administrator, such
amounts as the Administrator may determine are needed to make required
distributions from Monthly Available Funds or Available Funds, as the case may
be, on Monthly Payment Dates.

                                    ARTICLE V

                                  The Servicer

            SECTION 5.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring (through the Eligible Lender Trustee) the Financed Student Loans and
appointing the Servicer as servicer hereunder. The representations speak as of
the execution and delivery of this Agreement and as of the Closing Date in the
case of the Initial Financed Student Loans, and will be deemed to speak as of
the applicable Transfer Date, in the case of Prefunded Loans, New Loans and
Serial Loans, as of the date of the relevant Assignment in the case of any
Qualified Substitute Student Loan, as of the date of origination in the case of
any Consolidation Loan added to the Trust during the Revolving Period and as of
the applicable Add-on Consolidation Loan Funding Date in the case of any
Consolidation Loan the principal balance of which has been increased by the
principal balance of a related Add-on Consolidation Loan, but shall survive the
sale, transfer and assignment of the Financed Student Loans to the Eligible
Lender Trustee on behalf of the Issuer

                                      -12-
<PAGE>

(and the origination of such Consolidation Loans) and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.

            (a) Organization and Good Standing. The Servicer is duly organized
      and validly existing as a corporation in good standing under the laws of
      the State of Delaware, with the power and authority to own its properties
      and to conduct its business as such properties are currently owned and
      such business is currently conducted, and has the legal right to service
      the Financed Student Loans.

            (b) Power and Authority of the Servicer. The Servicer has the
      corporate power and authority to execute and deliver this Agreement and to
      carry out its terms, and the execution, delivery and performance of this
      Agreement have been duly authorized by the Servicer by all necessary
      corporate action.

            (c) Binding Obligation. This Agreement constitutes a legal, valid
      and binding obligation of the Servicer, enforceable in accordance with its
      terms, subject to applicable bankruptcy, insolvency, reorganization and
      similar laws relating to creditors' rights generally and subject to
      general principles of equity.

            (d) No Violation. The consummation of the transactions contemplated
      by this Agreement and the fulfillment of the terms hereof or thereof do
      not conflict with, result in any breach of any of the terms and provisions
      of, or constitute (with or without notice or lapse of time or both) a
      default under, the certificate of incorporation or by-laws of the
      Servicer, or any indenture, agreement or other instrument to which the
      Servicer is a party or by which it shall be bound; or result in the
      creation or imposition of any Lien upon any of its properties pursuant to
      the terms of any such indenture, agreement or other instrument; or violate
      any law or, to the knowledge of the Servicer, any order, rule or
      regulation applicable to the Servicer of any court or of any federal or
      state regulatory body, administrative agency or other governmental
      instrumentality having jurisdiction over the Servicer or its properties.
      Performance by the Servicer of its servicing duties with respect to the
      Financed Student Loans, and compliance by the Servicer with the terms of
      this Agreement, will not result in the loss of any Guarantee Payments by
      the Trust or any reinsurance payments with respect to any Financed Student
      Loan by the applicable Guarantor.

            (e) No Proceedings. There are no proceedings or investigations
      pending against the Servicer or, to its best knowledge, threatened against
      the Servicer, before any court, regulatory body, administrative agency or
      other governmental instrumentality having jurisdiction over the Servicer
      or its properties: (i) asserting the invalidity of this Agreement or any
      of the other Basic Documents to which the Servicer is a party, (ii)
      seeking to prevent the issuance of the Notes or the consummation of any of
      the transactions contemplated by this Agreement, or any of the other Basic
      Documents, (iii) seeking any determination or ruling that could reasonably
      be expected to have a material and adverse effect on the performance by
      the Servicer of its obligations under, or the

                                      -13-
<PAGE>

      validity or enforceability of, this Agreement, any of the other Basic
      Documents or the Notes or (iv) seeking to affect adversely the federal or
      state income tax attributes of the Issuer or the Notes.

            (f) All Consents. All authorizations, consents, licenses, orders or
      approvals of or registrations or declarations with any court, regulatory
      body, administrative agency or other government instrumentality required
      to be obtained, effected or given by the Servicer in connection with the
      execution and delivery by the Servicer of this Agreement and the
      performance by the Servicer of its duties contemplated by this Agreement
      have in each case been duly obtained, effected or given and are in full
      force and effect.

            SECTION 5.02. Indemnities of Servicer. (a) The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.

            The Servicer shall pay for any loss, liability or expense, including
reasonable attorneys' fees, that may be imposed on, incurred by or asserted
against the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Seller, the Administrator or the Noteholders or any of the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Administrator or the Seller to the extent that such loss, liability
or expense arose out of, or was imposed upon any such Person through, the
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its obligations and duties under this Agreement or by reason of the reckless
disregard of its obligations and duties under this Agreement, where the final
determination that any such loss, liability or expense arose out of, or was
imposed upon any such Person through, any such negligence, willful misfeasance,
bad faith or recklessness on the part of the Servicer is established by a court
of law, by an arbitrator or by way of settlement agreed to by the Servicer;
provided, however, that the Servicer's obligation arising under this Section
5.02 shall apply only to the extent that the sum of such obligation and any
other liabilities of the Servicer under this Agreement exceeds the Servicer
Liability Limit for any Servicer Liability Period (as such terms are defined in
Section 3.05). Notwithstanding the foregoing, if the Servicer is rendered
unable, in whole or in part, by a force outside the control of the parties
hereto (including acts of God, acts of war, fires, earthquakes and other
disasters) to satisfy its obligations under this Agreement, the Servicer shall
not be deemed to have breached any such obligation upon delivery of written
notice of such event to the other parties hereto, for so long as the Servicer
remains unable to perform such obligation as a result of such event.

            For purposes of this Section, in the event of the termination of the
rights and obligations of Loan Services as Servicer pursuant to Section 6.01, or
a resignation by such Servicer pursuant to this Agreement, such Servicer shall
be deemed to be the Servicer pending appointment of a successor Servicer
pursuant to Section 6.02.

            Liability of the Servicer under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation.

                                      -14-
<PAGE>

If the Servicer shall have made any indemnity payments pursuant to this
Agreement and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall promptly
repay such amounts to the Servicer, without interest.

            (b) Except with respect to liabilities relating to rejected claims
by the Guarantors, the Seller agrees to indemnify and hold harmless the Servicer
from any liability incurred by the Servicer under subsection (a) above as a
result of the Servicer's ordinary negligence.

            SECTION 5.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. The Servicer hereby agrees that, upon (a) any merger
or consolidation of the Servicer into another Person, (b) any merger or
consolidation to which the Servicer shall be a party resulting in the creation
of another Person or (c) any Person succeeding to the properties and assets of
the Servicer substantially as a whole, the Servicer shall (i) cause such Person
(if other than the Servicer) to execute an agreement of assumption to perform
every obligation of the Servicer hereunder, (ii) deliver to the Eligible Lender
Trustee, the Indenture Trustee and any Swap Counterparties an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent provided for in this Agreement relating to
such transaction have been complied with, (iii) cause the Rating Agency
Condition to have been satisfied with respect to such transaction and (iv) cure
any existing Servicer Default or any continuing event which, after notice or
lapse of time or both, would become a Servicer Default. Upon compliance with the
foregoing requirements, such Person shall be the successor to the Servicer under
this Agreement without further act on the part of any of the parties to this
Agreement. Notwithstanding anything herein to the contrary, compliance with
clauses (i), (ii), (iii) and (iv) above shall be conditions to the consummation
of any of the transactions referred to in clause (a), (b) or (c) above.

            SECTION 5.04. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or agents of
the Servicer shall be under any liability to the Issuer or the Noteholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such Person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any person respecting any matters arising under this
Agreement.

            Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Student Loans in accordance
with this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and

                                      -15-
<PAGE>

the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the Noteholders
under the Indenture.

            SECTION 5.05. Loan Services Not to Resign as Servicer. Subject to
the provisions of Section 5.03, Loan Services shall not resign from the
obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of any
such determination permitting the resignation of Loan Services shall be
communicated to the Eligible Lender Trustee, the Indenture Trustee, the Rating
Agencies and any Swap Counterparties at the earliest practicable time (and, if
such communication is not in writing, shall be confirmed in writing at the
earliest practicable time) and any such determination shall be evidenced by an
Opinion of Counsel to such effect delivered to the Eligible Lender Trustee, the
Indenture Trustee and any Swap Counterparties concurrently with or promptly
after such notice. No such resignation shall become effective until the
Indenture Trustee or a Successor Servicer shall have assumed the
responsibilities and obligations of Loan Services in accordance with Section
6.02.

                                   ARTICLE VI

                                     Default

            SECTION 6.01. Servicer Default. If any one of the following events
(each, a "Servicer Default") shall occur and be continuing:

            (a) any failure by the Servicer to deliver to the Indenture Trustee
      for deposit in any of the Trust Accounts any payment required by the Basic
      Documents, which failure continues unremedied for three Business Days
      after written notice of such failure is received by the Servicer from the
      Eligible Lender Trustee, the Indenture Trustee or the Administrator or
      after discovery of such failure by an officer of the Servicer; or

            (b) any failure by the Servicer duly to observe or to perform in any
      material respect any other covenants or agreements of the Servicer set
      forth in this Agreement or any other Basic Document, which failure shall
      (i) materially and adversely affect the rights of Noteholders or any Swap
      Counterparties and (ii) continue unremedied for a period of thirty (30)
      days after the date of discovery of such failure by an officer of the
      Servicer or on which written notice of such failure, requiring the same to
      be remedied, shall have been given (A) to the Servicer, by the Indenture
      Trustee, the Eligible Lender Trustee or (B) to the Servicer, the Indenture
      Trustee, the Administrator and the Eligible Lender Trustee by Noteholders
      representing not less than 25% of the Outstanding Amount of the Notes; or

            (c) any limitation, suspension or termination by the Department of
      the Servicer's eligibility to service Student Loans which materially and
      adversely affects its ability to service the Financed Student Loans; or

                                      -16-
<PAGE>

            (d) an Insolvency Event occurs with respect to the Servicer;

then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Noteholders of Notes
evidencing not less than 75% of the Outstanding Amount of the Notes by notice
then given in writing to the Servicer (and to the Indenture Trustee and the
Eligible Lender Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 5.02) of
the Servicer under this Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Financed Student Loans or
otherwise, shall, without further action, pass to and be vested in the Indenture
Trustee or such successor Servicer as may be appointed under Section 6.02; and,
without limitation, the Indenture Trustee and the Eligible Lender Trustee are
hereby authorized and empowered to execute and deliver, for the benefit of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Financed Student Loans
and related documents, or otherwise. The predecessor Servicer shall cooperate
with the successor Servicer, the Indenture Trustee and the Eligible Lender
Trustee in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to a Financed Student Loan. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Student Loan Files to the successor Servicer and amending this Agreement and
any other Basic Documents to reflect such succession as Servicer pursuant to
this Section shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses. Upon receipt of notice of
the occurrence of a Servicer Default, the Eligible Lender Trustee shall give
notice thereof to the Rating Agencies.

            SECTION 6.02. Appointment of Successor. (a) Upon receipt by the
Servicer of notice of termination pursuant to Section 6.01, or the resignation
by the Servicer in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 120 days from the delivery to the Eligible Lender Trustee, and the
Indenture Trustee of written notice of such resignation (or written confirmation
of such notice) in accordance with the terms of this Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as Servicer as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the termination hereunder of the Servicer, the Issuer shall appoint
a successor Servicer acceptable to the Indenture Trustee, and the successor
Servicer shall accept its appointment by a written assumption in form acceptable
to the Indenture Trustee and the Administrator. In the event that a successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased to act as Servicer in accordance with this Section, the Indenture Trustee
without further action shall automatically be appointed the successor Servicer
and the Indenture Trustee shall be

                                      -17-
<PAGE>

entitled to the Servicing Fee. Notwithstanding the above, the Indenture Trustee
shall, if it shall be unwilling or legally unable so to act, appoint or petition
a court of competent jurisdiction to appoint, any established institution the
regular business of which shall include the servicing of student loans, as the
successor to the Servicer under this Agreement; provided, however, that such
right to appoint or to petition for the appointment of any such successor
Servicer shall in no event relieve the Indenture Trustee from any obligations
otherwise imposed on it under the Basic Documents until such successor has in
fact assumed such appointment.

            (b) Upon appointment, the successor Servicer (including the
Indenture Trustee acting as successor Servicer) shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities placed on the predecessor Servicer that
arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Servicer (which shall not exceed the Servicing Fee,
unless such compensation arrangements will not result in a downgrading of the
Class A-1 Notes, the Class A-2 Notes or the Subordinate Notes by any Rating
Agency) and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.

            (c) The Servicer may not resign unless it is prohibited from serving
as such by law as evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee and the Eligible Lender Trustee. Notwithstanding the
foregoing or anything to the contrary herein or in the other Basic Documents,
the Indenture Trustee, to the extent it is acting as successor Servicer pursuant
hereto, shall be entitled to resign to the extent a qualified successor Servicer
has been appointed and has assumed all the obligations of the Servicer in
accordance with the terms of this Agreement and the other Basic Documents.

            SECTION 6.03. Notification to Noteholders and the Company. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VI, the Indenture Trustee shall give prompt written notice thereof to
Noteholders, the Administrator, the Company, the Eligible Lender Trustee and the
Rating Agencies (which, in the case of any such appointment of a successor,
shall consist of prior written notice thereof to the Rating Agencies).

            SECTION 6.04. Waiver of Past Defaults. The Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes may,
on behalf of all Noteholders, waive in writing any default by the Servicer in
the performance of its obligations hereunder, and any consequences thereof,
except a default in making any required deposits to or payments from any of the
Trust Accounts (or giving instructions regarding the same) in accordance with
this Agreement to the extent provided in such waiver. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto.

                                      -18-
<PAGE>

                                   ARTICLE VII

                                  Miscellaneous

            SECTION 7.01. Amendment. This Agreement may be amended by the
Servicer and the Eligible Lender Trustee, with the prior written consent of the
Indenture Trustee, but without the consent of any of the Noteholders, to cure
any ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions in this Agreement or of modifying in any manner the rights
of the Noteholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Eligible Lender Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder.

            This Agreement may also be amended from time to time by the Servicer
and the Eligible Lender Trustee, with the prior written consent of the Indenture
Trustee, the Noteholders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and any Swap Counterparties, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments with respect to Financed Student Loans or distributions
that shall be required to be made for the benefit of the Noteholders or (b)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Noteholders of which are required to consent to any such amendment, without the
consent of all outstanding Noteholders; provided further, that the prior written
consent of any Swap Counterparties shall not be required if an Opinion of
Counsel is delivered to any Swap Counterparties stating that the proposed
amendment to this Agreement will not adversely affect in any material respect
the interests of the Noteholders or any Swap Counterparties.

            Promptly after the execution of any such amendment or consent (or,
in the case of the Rating Agencies, five Business Days prior thereto), the
Eligible Lender Trustee shall furnish written notification of the substance of
such amendment or consent to the Indenture Trustee and each of the Rating
Agencies.

            It shall not be necessary for the consent of Noteholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.

            Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee, the Indenture Trustee and any Swap Counterparties shall
be entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and the
Opinion of Counsel referred to in Section 6.02(f) of the Loan Sale Agreement.
The Eligible Lender Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Eligible Lender
Trustee's or the

                                      -19-
<PAGE>

Indenture Trustee's, as applicable, own rights, duties or immunities under this
Agreement or otherwise.

            SECTION 7.02. Protection of Interests in Trust. (a) The Servicer
shall not change its name, identity or corporate structure in any manner that
would, could or might make any financing statement or continuation statement
filed in accordance with Section 6.02(a) of the Loan Sale Agreement seriously
misleading within the meaning of ss. 9-402(7) of the UCC, unless it shall have
given the Eligible Lender Trustee, the Indenture Trustee, any Swap
Counterparties and the Rating Agencies at least five days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.

            (b) The Servicer shall have an obligation to give the Eligible
Lender Trustee, the Indenture Trustee and any Swap Counterparties at least sixty
(60) days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment. The Servicer shall at all times maintain each office from
which it shall service Financed Student Loans, and its principal executive
office, within the United States of America.

            (c) The Servicer shall maintain accounts and records of each Student
Loan accurately and in sufficient detail to permit (i) the reader thereof to
know at any time the status of such Financed Student Loan, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Financed Student Loan and the amounts from time to time deposited in the
Collection Account in respect of such Financed Student Loan.

            (d) The Servicer shall, by use of a distinct identification code,
maintain its computer systems so that, from and after the time of sale under
this Agreement of the Financed Student Loans, the Servicer's master computer
records (including any backup archives) that refer to a Student Loan shall
indicate clearly the interest of the Issuer, the Eligible Lender Trustee and the
Indenture Trustee in such Student Loan and that such Student Loan is owned by
the Eligible Lender Trustee on behalf of the Issuer and has been pledged to the
Indenture Trustee. Indication of the Issuer's, the Eligible Lender Trustee's and
the Indenture Trustee's interest in a Student Loan shall be deleted from or
modified on the Servicer's computer systems when, and only when, the related
Financed Student Loan shall have been paid in full or repurchased.

            (e) If at any time the Servicer shall propose to sell, grant a
security interest in, or otherwise transfer any interest in student loans to any
prospective purchaser, lender or other transferee, the Servicer shall give to
such prospective purchaser, lender or other transferee computer tapes, records
or printouts (including any restored from backup archives) that, if they shall
refer in any manner whatsoever to any Financed Student Loan, shall indicate
clearly that such Financed Student Loan has been sold and is owned by the
Eligible Lender Trustee on behalf of the Issuer and has been pledged to the
Indenture Trustee.

                                      -20-
<PAGE>

            (f) The Servicer shall permit the Indenture Trustee and any Swap
Counterparties and their respective agents at any time during normal business
hours to inspect, audit and make copies of and abstracts from the Servicer's
records regarding any Financed Student Loan; provided, however, that the
Servicer is given reasonable prior notice of at least three (3) Business Days.

            (g) Upon request, at any time the Eligible Lender Trustee or the
Indenture Trustee shall have reasonable grounds to believe that such request
would be necessary in connection with its performance of its duties under the
Basic Documents, the Servicer shall furnish to the Eligible Lender Trustee or
the Indenture Trustee (in each case, with a copy to the Administrator), within
five (5) Business Days, a list of all Financed Student Loans (by borrower social
security number, type of loan and date of issuance) then held as part of the
Trust, and shall cause the Administrator to furnish to the Eligible Lender
Trustee or to the Indenture Trustee, within 20 Business Days thereafter, a
comparison of such list to the list of Initial Financed Student Loans set forth
in Schedule A to the Loan Sale Agreement as of the Closing Date, and, for each
Financed Student Loan that has been added to or removed from the pool of loans
held by the Eligible Lender Trustee on behalf of the Issuer, information as to
the date as of which and circumstances under which each such Financed Student
Loan was so added or removed.

            SECTION 7.03. Notices. Unless otherwise agreed by the recipient, all
demands, notices and communications upon or to the Seller, Bank One, the
Servicer, the Eligible Lender Trustee, the Indenture Trustee, the Administrator,
the Rating Agencies or any Swap Counterparties under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested (or in the form of telex or facsimile notice, followed by written
notice delivered as aforesaid or postage prepaid, first class mail), and shall
be deemed to have been duly given upon receipt;

            (a)   in the case of the Seller, to
                  USA Group Secondary Market Services, Inc.
                  30 South Meridian Street
                  Indianapolis, Indiana  46204-3503
                  Attention: President and Chief Executive Officer
                  Telephone: (317) 951-5640
                  Telecopy: (317) 951-5764

                                      -21-
<PAGE>

                  with a copy to:

                  Office of the General Counsel
                  USA Group, Inc.
                  30 South Meridian Street
                  Indianapolis, Indiana  46204-3503
                  Attention: Peter M. Greco
                  Telephone: (317) 951-5526
                  Telecopy: (317) 951-5532;

            (b)   in the case of Bank One, to
                  Bank One, National Association, as trustee for USA Group
                    Secondary Market Services, Inc.
                  1 Bank One Plaza
                  Suite IL1-0126
                  Chicago, Illinois 60670-0126
                  Attention: Global Corporate Trust Services Division,
                    Steve Husbands
                  Telephone: (212) 373-1140
                  Telecopy: (212) 373-1383;

            (c)   in the case of the Servicer, to
                  USA Group Loan Services, Inc.
                  30 South Meridian Street
                  Indianapolis, Indiana  46204-3503
                  Attention: President
                  Telephone: (317) 849-6510
                  Telecopy: (317) 951-5297

                  with a copy to:

                  Office of the Deputy General Counsel
                  USA Group, Inc.
                  30 South Meridian Street
                  Indianapolis, Indiana  46204-3503
                  Telephone: (317) 951-5523
                  Telecopy: (317) 951-5532;

            (d)   in the case of the Issuer, to
                  Student Loan Trust 2000-B
                  c/o Bank One Delaware, Inc.
                  3 Christina Centre
                  201 North Walnut Street
                  Wilmington, Delaware 19801,

                                      -22-
<PAGE>

                  with a copy to the Eligible Lender Trustee
                  at the Corporate Trust Office of the
                  Eligible Lender Trustee;

                        (e) in the case of the Eligible Lender Trustee, at the
                  Corporate Trust Office of the Eligible Lender Trustee;

                        (f) in the case of the Indenture Trustee, at its
                  Corporate Trust Office;

            (g)   in the case of the Administrator, to
                  USA Group Secondary Market Services, Inc.
                  30 South Meridian Street
                  Indianapolis, Indiana  46204-3503
                  Attention: President and Chief Executive Officer
                  Telephone: (317) 951-5640
                  Telecopy: (317) 951-5764

                  with a copy to:

                  Office of the General Counsel
                  USA Group, Inc.
                  30 South Meridian Street
                  Indianapolis, Indiana  46204-3503
                  Attention: Peter M. Greco
                  Telephone: (317) 951-5526
                  Telecopy: (317) 951-5532;

            (h)   in the case of Moody's, to
                  Moody's Investors Service, Inc.
                  99 Church Street
                  New York, New York 10007
                  Attention: ABS Monitoring Department
                  Telephone: (212) 553-0573
                  Facsimile: (212) 553-4600;

            (i)   in the case of Fitch, to
                  Fitch IBCA, Inc.
                  One State Street Plaza
                  New York, New York 10004
                  Attention: Asset Backed Monitoring Unit
                  Telephone: (212) 908-0500
                  Facsimile: (212) 376-6889; and

                                      -23-
<PAGE>

            (j)   in the case of Standard & Poor's,
                  a division of The McGraw-Hill Companies, Inc., to
                  Standard & Poor's
                  55 Water Street
                  New York, NY 10041
                  Attention: Asset Backed Surveillance Department
                  Telephone: (212) 438-2000
                  Facsimile: (212) 438-2649

            (k)   in the case of any Swap Counterparties,
                  to the addresses set forth in any Swap Agreements

or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.

            SECTION 7.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in the succeeding sentence, as provided in
Section 5.03 and as provided in the provisions of this Agreement concerning the
resignation of the Servicer, this Agreement may not be assigned by the Servicer.
This Agreement may only be assigned by the Eligible Lender Trustee to its
permitted successor pursuant to the Trust Agreement.

            SECTION 7.05. Limitations on Rights of Others. The provisions of
this Agreement are solely for the benefit of the Servicer, the Issuer and the
Eligible Lender Trustee and for the benefit of the Administrator, the Indenture
Trustee and the Noteholders, as third party beneficiaries, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein. The Indenture Trustee and any Swap Counterparties are express
third-party beneficiaries and may enforce the provisions of this Agreement as if
they were parties hereto; provided, however, that in the case of any Swap
Counterparties, such right to enforcement and the right to provide consents or
waivers pursuant to the provisions hereof or to take other actions as provided
herein are conditioned upon its not being in default under any Swap Agreements.

            SECTION 7.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

            SECTION 7.07. Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.

                                      -24-
<PAGE>

            SECTION 7.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.

            SECTION 7.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Indiana, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.

            SECTION 7.10. Non-Petition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer shall not, prior to the date which
is one year and one day after the termination of this Agreement with respect to
the Issuer or the Company, acquiesce, petition or otherwise invoke or cause the
Issuer or the Company to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer or the
Company under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.

            SECTION 7.11. Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee. (a) Reserved.

            (b) Notwithstanding anything contained herein to the contrary (other
than pursuant to subsection (d)), this Agreement has been signed by Bank One,
National Association not in its individual capacity but solely in its capacity
as Eligible Lender Trustee of the Issuer and in no event shall Bank One,
National Association in its individual capacity or, except as expressly provided
in the Trust Agreement, as beneficial owner of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto as to all or which recourse shall be had solely to the
assets of the Issuer.

            (c) Notwithstanding anything contained herein to the contrary (other
than pursuant to subsection (d)), this Agreement has been accepted by Bankers
Trust Company not in its individual capacity but solely as Indenture Trustee and
in no event shall Bankers Trust Company have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.

            (d) Notwithstanding any other provision in this Agreement or the
other Basic Documents, nothing in this Agreement or the other Basic Documents
shall be construed to limit the legal responsibility of the Eligible Lender
Trustee or the Indenture Trustee, to the U.S. Secretary of Education or a
Guarantor for any violations of statutory or regulatory requirements that may
occur with respect to loans held by the Eligible Lender Trustee or the Indenture
Trustee

                                      -25-
<PAGE>

pursuant to, or to otherwise comply with their obligations under, the Higher
Education Act or implementing regulations.

                        [Signatures Follow on Next Page]

                                      -26-
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.

                                  SMS STUDENT LOAN TRUST 2000-B,

                                  By: BANK ONE, NATIONAL ASSOCIATION, not in its
                                      individual capacity but solely as Eligible
                                      Lender Trustee on behalf of the Trust

                                  By: /s/ Steve M. Husbands
                                      ----------------------------
                                      Name: Steve M. Husbands
                                      Title: Assistant Vice President

                                  USA GROUP LOAN SERVICES, INC.

                                  By: /s/ Jeffrey E. Good
                                      --------------------------
                                      Name: Jeffrey E. Good
                                      Title: Executive Vice President and
                                             Chief Financial Officer

                                  USA GROUP SECONDARY MARKET SERVICES, INC.

                                  By: /s/ Cheryl E. Watson
                                      ----------------------
                                      Name: Cheryl E. Watson
                                      Title: Senior Vice President and
                                             Chief Financial Officer

                                      -27-
<PAGE>

                                    BANK ONE, NATIONAL ASSOCIATION,
                                      not in its individual capacity but
                                      solely as Eligible Lender Trustee

                                    By: /s/ Steve M. Husbands
                                        ----------------------------
                                        Name: Steve M. Husbands
                                        Title: Assistant Vice President

Acknowledged and accepted as of the day and year first above written:

BANKERS TRUST COMPANY,
  not in its individual capacity but
  solely as Indenture Trustee

By: /s/ Jenna Kaufman
    -------------------------
    Name: Jenna Kaufman
    Title: Vice President

                                      -28-
<PAGE>

                                                                      SCHEDULE A

The Servicer shall maintain each Student Loan File at one of the locations
listed below:

      (a)   USA Group Loan Services, Inc.
            11100 USA Parkway
            Fishers, IN  46038

      (b)   USA Group Loan Services, Inc.
            Brambles DVS, Inc. d/b/a Indianapolis Vault Company
            5251 West 81st Street
            Indianapolis, IN  46268

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