Document:

<PAGE>

                                                                     EXHIBIT 4.3

                                ESCROW AGREEMENT

         THIS ESCROW AGREEMENT is made as of February 16, 2001, between Wells
Fargo Bank Iowa, National Association, with offices in Des Moines, Iowa (the
"Escrow Agent") and Badger State Ethanol, LLC, a Wisconsin limited liability
company (the "Company").

         WHEREAS, the Company is, or will be, conducting a public offering of
its Class A units (the "Units") and wishes to establish an escrow account to
hold the proceeds of subscriptions for the Units for a minimum of 10,000 Units
and a maximum of 20,000 Units, until written instructions from the Company have
been received;

         NOW, THEREFORE, in consideration of the premises and agreements set
forth herein, the parties hereto agree as follows:

         1. PROCEEDS TO BE PLACED IN ESCROW. All proceeds received by the
Company constituting subscriptions for the Units shall be promptly delivered to
the Escrow Agent and deposited by the Escrow Agent (the "Deposited Funds") in an
interest bearing account (the "Escrow Account"). During the term of this Escrow
Agreement, the Company shall cause all checks received by it or others with
respect to the offering to be made payable to "WELLS FARGO BANK IOWA AS ESCROW
AGENT FOR -BADGER STATE ETHANOL, LLC ESCROW."

         2. IDENTITY OF SUBSCRIBERS. The Company shall furnish to the Escrow
Agent with each deposit of funds in the Escrow Account a list of the persons who
have subscribed and submitted those funds, showing the name, address, date,
amount of subscription and money paid, and the social security number or
taxpayer identification number for each subscriber. All proceeds so deposited
shall remain the property of the subscriber and shall not be subject to any
liens or charges by the Escrow Agent or judgments or creditors' claims against
the Company unless and until released to the Company as hereinafter provided.

         3. DISBURSEMENT OF FUNDS. Upon receipt by the Escrow Agent of written
authorization from the Company that the Company has achieved Financial Closing
as defined in the Badger State Ethanol, LLC Amended and Restated Operating
Agreement dated effective as of January 31, 2001, the Escrow Agent shall pay
over to the Company all funds held in the Escrow Account. Any interest earned on
any Deposited Funds shall belong (and be paid) to the Company no more than
thirty (30) days after termination of the offering period or termination by the
Company of the Escrow Account per written direction from the Company. If a
minimum of $10,000,000 (representing subscriptions for 10,000 Units) (the
"Minimum") is not sold, the funds held in the Escrow Account shall be refunded
to the investors without interest within thirty (30) days after termination of
the offering period per written direction from the Company. All interest on the
funds held in the Escrow Account shall be for the account of Company and shall
be paid to the Company less any amount retained by the Escrow Agent to be
applied to the Escrow Agent's fees specified hereunder.

                                       1
<PAGE>

         4. INVESTMENT OF DEPOSITED FUNDS. During the term of this escrow and in
accordance with written instructions from time to time provided to Escrow Agent
by the Company, all Deposited Funds in the Escrow Account shall be, and Escrow
Agent is hereby authorized to, deposit, transfer, hold and invest said Deposited
Funds and all accrued interest and earnings thereon, in either short-term
certificates of deposit issued by a bank, short-term securities issued and
guaranteed by the United States Government, or money market funds including
without limitation the Wells Fargo Fund, a money market fund available through
the Escrow Agent; provided, that any such investments must accrue interest on a
daily basis and allow the immediate withdrawal of funds without premium or
penalty. Funds shall not be invested in corporate equity or debt securities,
repurchase agreements, bankers' acceptances, commercial papers, or municipal
securities.

         5. TERM OF ESCROW. The offering period for this escrow shall terminate
on June 1, 2001, unless the Company shall have received an extension of a
certain Development Agreement with the City of Monroe, Wisconsin, and in which
case, the offering period shall terminate on the earlier of the last date of the
extension granted by the City of Monroe or September 30, 2001. Upon termination
of the offering period, whether after extension or otherwise, the Escrow Agent
shall disburse the funds in the Escrow Account in the manner and upon the terms
directed in paragraph 3 hereof. The Company may, in its sole discretion, abandon
the sale of the Units at any time prior to the termination of the offering
period. Upon the receipt of written instructions from the Chief Executive
Officer of the Company that the offering is being abandoned, the Escrow Agent
shall refund the monies on deposit to the subscribers thereof as provided in
paragraph 3.

         6. DUTY AND LIABILITY OF THE ESCROW AGENT.

                  (a) The sole duty of the Escrow Agent, other than as herein
specified, shall be to receive the funds and hold them subject to release, as
provided in this Agreement. The Escrow Agent shall be under no duty to determine
whether the Company is complying with requirements of any offering document in
tendering to the Escrow Agent said proceeds of the sale of the Units. No implied
covenants or obligations shall be inferred from this Agreement against the
Escrow Agent, nor shall the Escrow Agent be bound by the provisions of any
agreement beyond the specific terms hereof.

                  (b) The Escrow Agent shall be entitled to rely upon any
certification, instruction, notice or other writing delivered to it in
compliance with the provisions of this Agreement without being required to
determine the authenticity or the correctness of any fact stated therein or the
propriety or validity thereof. The Escrow Agent may act in reliance upon any
instrument comporting with the provisions of this Agreement or signature
believed by it, without independent investigation, to be genuine and may assume
that any person purporting to give notice or advice or make any statement or
execute any document in connection with the provisions hereof has been duly
authorized to do so.

                                       2
<PAGE>
                  (c) Except as set forth in paragraph 1, the Escrow Agent does
not have any interest in the Deposited Funds, but is serving as escrow holder
only and has only possession thereof.

                  (d) The Escrow Agent shall be under no obligation to institute
or defend any action, suit or proceeding in connection with this Agreement.
However, the Escrow Agent may, in utilizing the Escrow Agent's reasonable
judgment and after written notice to, and at the expense of, the Company,
institute or defend such proceedings.

                  (e) The Escrow Agent may resign and be discharged from its
duties hereunder at any time by giving written notice of such resignation to the
Company specifying (i) a date (not less than thirty days after the giving of
such notice) when such resignation shall take effect; and (ii) any accrued
unpaid fees or expenses of Escrow Agent to the date of such resignation.
Promptly after such notice, a successor escrow agent shall be appointed by the
Company, such successor escrow agent to become Escrow Agent hereunder upon the
resignation date specified in such notice. The Escrow Agent shall continue to
serve until its successor accepts the escrow. Upon receipt of all fees and
expenses, Escrow Agent shall deliver all escrowed funds to such successor Escrow
Agent.

                  (f) The Company hereby agrees to indemnify, defend and hold
harmless the Escrow Agent from and against, any and all loss, liability, cost,
damage and expense, including, without limitation, reasonable counsel fees,
which the Escrow Agent may suffer or incur by reason of any action, claim or
proceeding brought against Escrow Agent arising out of or relating in any way to
this Agreement or any transaction to which this Agreement relates except to the
extent such action, claim or proceeding results from or is caused by the willful
misconduct or gross negligence of the Escrow Agent. The Escrow Agent may consult
counsel in respect of any question arising under this Agreement and the Escrow
Agent shall not be liable for any action taken or omitted in good faith upon
advice of such counsel.

         7. ESCROW AGENT'S FEE. The Escrow Agent shall be entitled to be paid
fees as indicated on Schedule A attached hereto as compensation for its services
hereunder (plus its customary charge with respect to the issuance of any
checks). The fee agreed upon for services rendered hereunder is intended as full
compensation for the Escrow Agent's services as contemplated by this Agreement;
provided, however, that in the event that the conditions of this Escrow
Agreement are not fulfilled, or the Escrow Agent renders any material service
not contemplated in this Agreement, or there is any assignment of interest in
the subject matter of this Escrow Agreement or any material modification hereof,
or if any material controversy arises hereunder, or the Escrow Agent is made a
party to or intervenes in any litigation pertaining to this Escrow Agreement, or
the subject matter hereof, the Escrow Agent shall be reasonably compensated for
such extraordinary services and reimbursed for all cost and expenses, including
reasonable attorneys' fees, occasioned by any delay, controversy, or litigation
except to the extent arising from or occasioned by Escrow Agent's negligence,
and the same may only be recoverable from the Company and not from the Deposited
Funds.

         8. BINDING AGREEMENT AND SUBSTITUTION OF ESCROW AGENT. The terms and
conditions of this Agreement shall be binding on the creditors or transferees,
or successors in interest, whether

                                       3
<PAGE>

by operation of law or otherwise, of the parties hereto. If, for any reason,
the Escrow Agent named herein should be unable or unwilling to continue as
such escrow agent, then the Company may substitute another escrow agent. Any
apportionment of the fees provided for in paragraph 7 will be subject to
agreement of the parties.

         9. RESIGNATION. Escrow Agent may resign upon 30 days advance written
notice to the parties hereto. If a successor Escrow Agent is not appointed
within the 30-day period following such notice, Escrow Agent may petition any
court of competent jurisdiction to name a successor Escrow Agent.

         10. GOVERNING LAW; JURISDICTION. This Agreement shall be construed,
performed, and enforced in accordance with, and governed by, the internal laws
of the State of Iowa, without giving effect to the principles of conflicts of
laws thereof. Each party hereby consents to the personal jurisdiction and venue
of any court in Iowa, including the United States District Court for the
District of Iowa located in Polk County, Iowa, as a proper forum.

         11. AMENDMENTS; WAIVERS. This Agreement may be amended or modified, and
any of the terms, covenants, representations, warranties, or conditions hereof
may be waived, only by a written instrument executed by the parties hereto, or
in the case of a waiver, by the party waiving compliance. Any waiver by any
party of any conditions, or of the breach of any provision, term, covenant,
representation, or warranty contained in this Agreement, in any one or more
instances, shall not be deemed to be nor construed as further or continuing
waiver of any such condition, or of the breach of any other provision, term,
covenant, representation, or warranty of this Agreement.

         12. NOTICES. All notices required or permitted to be given under this
Agreement must be in writing and shall be deemed to have been given (a) on the
date of service if served personally on the party to whom notice is to be given,
(b) on the day of transmission if sent by facsimile transmission to the
facsimile number given below, (c) on the day after delivery to Federal Express
or similar overnight courier or the Express Mail service maintained by the
United States Postal Service, or (d) on the fifth day after mailing, if mailed
to the party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed, return receipt requested, to
the party as follows:

         If to the Company:                 Badger State Ethanol, LLC
                                            P.O. Box 317
                                            Monroe, WI  53566
                                            Attn: Chairman and President
                                            Fax: 608-329-3866

         If to the Escrow Agent:            Wells Fargo Bank Iowa, N.A.
                                            Corporate Trust Services, N8200-034
                                            Attn: Leigh McVicker
                                            666 Walnut Street

                                       4
<PAGE>

                                            Des Moines, IA  50304-0837
                                            Fax: 515-245-8532

         13. ENTIRE AGREEMENT. This Agreement contains the entire understanding
among the parties hereto with respect to the escrow contemplated hereby and
supersedes and replaces all prior and contemporaneous agreements and
understandings, oral or written, with regard to such escrow.

         14. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which, when delivered, shall
constitute the same instrument.

              [The rest of this page is intentionally left blank.]

                                       5
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the date first above written.

BADGER STATE ETHANOL, LLC            WELLS FARGO BANK IOWA, NATIONAL ASSOCIATION
(the "Company)                       (the "Escrow Agent")

By     /s/ Gary L. Kramer            By  /s/ Roger Pyburn
   ----------------------------         -----------------------------------
   Its President                        Its  Senior Trust Officer
      -------------------------            -------------------------------

                                       6
<PAGE>

                                    EXHIBIT A

                        BADGER STATE ETHANOL, LLC ESCROW

                           WELLS FARGO BANK IOWA, N.A.
                         INVESTMENT MANAGEMENT AND TRUST

                                SCHEDULE OF FEES
                               FOR ESCROW SERVICES

<TABLE>
<S>                                                                                <C>
INITIAL: (A ONE-TIME CHARGE)

WELLS FARGO BANK IOWA, N.A. SERVICES                                               $500

ANNUAL ADMINISTRATION:
(TO BE BILLED ANNUALLY; ALL FEES COLLECTED PRIOR TO FINAL DISTRIBUTION)

WELLS FARGO BANK IOWA, N.A. SERVICES (and minimum)                                 $1,500

TRANSACTION  FEES:  (These  fees will  accrue in  addition  to the annual
administrative   charge.   Billed  semi-annually  in  arrears.  All  fees
shall be received prior to termination date.)

    Cash deposits or disbursements, asset movement,
    certifications, filings, and closing procedures:                               $25 each

    Purchase, sale, or maturity of securities and wire transfers (No fees will
    be incurred for investment in, or sale from a
    Wells Fargo sweep fund).                                                       $25 each

                   THIS SCHEDULE IS SUBJECT TO PERIODIC REVIEW
</TABLE>
                                       7SECOND SUPPLEMENTAL INDENTURE

                                     between

                             USA EDUCATION, INC.

                                       and

                            THE CHASE MANHATTAN BANK

                          Dated as of February 27, 2001

                                  $500,000,000

                      SENIOR NOTES DUE FEBRUARY 18, 2003

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

            SECOND SUPPLEMENTAL INDENTURE, dated as of February 27, 2001 (the
"Supplemental Indenture"), between USA Education, Inc., a Delaware corporation
(the "Company"), and The Chase Manhattan Bank, as trustee (the "Trustee") under
the Indenture, dated as of October 1, 2000 between the Company and the Trustee
(the "Base Indenture" and, together with this Supplemental Indenture, the
"Indenture").

            WHEREAS, the Company executed and delivered the Base Indenture to
the Trustee to provide for the future issuance of debentures, notes or other
evidences of indebtedness of the Company to be issued from time to time in one
or more series as might be determined by the Company under the Indenture, in an
unlimited aggregate principal amount which may be authenticated and delivered as
provided in the Base Indenture;

            WHEREAS, pursuant to the terms of the Base Indenture, the Company
desires to provide for the establishment of a series of senior unsecured and
unsubordinated notes to be known as its Senior Notes due February 18, 2003, the
form and substance of such Notes and the terms, provisions and conditions
thereof to be set forth as provided in the Base Indenture and this Supplemental
Indenture;

            WHEREAS, the Company has requested that the Trustee execute and
deliver this Supplemental Indenture; all requirements necessary to make this
Supplemental Indenture a valid instrument in accordance with its terms, and to
make the Notes, when executed by the Company and authenticated and delivered by
the Trustee, the valid obligations of the Company, have been performed; and the
execution and delivery of this Supplemental Indenture has been duly authorized
in all respects.

            NOW THEREFORE, in consideration for the purchase and acceptance of
the Notes by the Holders thereof, and for the purpose of setting forth, as
provided in the Base Indenture, the form and substance of the Notes and the
terms, provisions and conditions thereof, the Company covenants and agrees with
the Trustee as follows:

                                    ARTICLE 1

                                   DEFINITIONS

      1.1 Definition of Terms. Capitalized terms used and not otherwise defined
in this Supplemental Indenture (including the form of Global Note attached as
Exhibit A to this Supplemental Indenture, the terms of which are a part of this
Supplemental Indenture) have the meanings assigned to them below:

            "Base Indenture" is defined in the introductory paragraph.

            "Business Day" is defined in the Global Note.

            "Company" is defined in the introductory paragraph.

            "Company Order" is defined in the Base Indenture.

            "Depositary" is defined in the Base Indenture.

            "Eligible Instruments" is defined in the Base Indenture.

            "Global Note" is defined in Section 2.3.

            "Global Security" is defined in the Base Indenture.

            "Holder" is defined in the Base Indenture.

            "Indenture" is defined in the introductory paragraph.

            "Interest Accrual Period" is defined in the Global Note.

            "Interest Payment Date" is defined in the Global Note.

            "LIBOR Business Day" is defined in the Global Note.

            "LIBOR Determination Date" is defined in the Global Note.

            "Notes" is defined in Section 2.1.

            "Maturity Date" is defined in the Global Note.

            "Paying Agent" is defined in the Base Indenture.

            "Person" is defined in the Base Indenture.

            "Registered Security" is defined in the Base Indenture.

            "Registrar" is defined in the Base Indenture.

            "Regular Record Date" is defined in the Global Note.

            "Supplemental Indenture" is defined in the introductory paragraph.

            "Three-month LIBOR" is defined in the Global Note.

            "Trustee" is defined in the introductory paragraph.

            "Two-month LIBOR" is defined in the Global Note.

      1.2 Other Rules of Construction. For all purposes of this Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires:

            (a) capitalized terms used and not defined in this Supplemental
Indenture have the meanings assigned to them in the Base Indenture;

            (b) capitalized terms defined in the Global Note have the meanings
assigned to them in the Global Note;

            (c) all terms used in this Supplemental Indenture which are defined
in the Trust Indenture Act, whether directly or by reference therein, have the
meanings assigned to them in the Trust Indenture Act;

            (d) "or" is not exclusive;

            (e) words in the singular include the plural, and words in the
plural include the singular;

            (f) a reference to a Section or Article is to a Section or Article
of this Supplemental Indenture;

            (g) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Supplemental Indenture as a whole and not to any
particular Article, Section or other subdivision; and

            (h) headings are for convenience of reference only and do not affect
interpretation.

                                    ARTICLE 2

                        TERMS AND CONDITIONS OF THE NOTES

      2.1 Title of Securities. The title of the Securities is "Senior Notes due
February 18, 2003" (the "Notes").

      2.2 Aggregate Principal Amount of Notes. The aggregate principal amount of
Notes that may be authenticated and delivered is $500,000,000. The Company is
entitled under Section 2.02(b) of the Base Indenture to reopen the Series of
Notes by offering additional Securities of such Series. Upon receipt of a
Company Order for the authentication and delivery of the Notes and satisfaction
of the requirements of Section 2.03 of the Base Indenture, the Trustee shall
authenticate Notes for original issuance in an aggregate principal amount of
$500,000,000.

      2.3 Form of Notes. The Notes and the Trustee's Certificate of
Authentication to be endorsed on the Notes are to be substantially in the form
attached as Exhibit A to this Supplemental Indenture (the "Global Note").

      2.4 Maturity Date. The entire outstanding principal of the Notes shall be
payable on the Maturity Date set forth on the face of the Global Note to Holders
as of the Regular Record Date immediately preceding the Maturity Date.

      2.5 Interest. The rate of interest on the Notes for each Interest Accrual
Period after the first shall be Three-month LIBOR, plus the Spread set forth on
the face of the Global Note, except that the rate of interest on the Notes for
the final accrual period shall be Two-month LIBOR, plus the Spread set forth on
the face of the Global Note, in each case determined by the Trustee as set forth
in the Global Note. Interest shall accrue from the Original Issue Date set forth
on the face of the Global Note, and the interest rate for the first Interest
Accrual Period shall be as set forth in the Global Note. Interest is payable on
each Interest Payment Date to Holders as of each Regular Record Date, determined
as set forth in the Global Note. Interest shall be computed on the basis of a
360-day year and the actual number of days elapsed in the applicable Interest
Accrual Period. Upon each determination of Three-month LIBOR, the Trustee shall
forthwith notify the Company of such determination. The Trustee may appoint an
agent to determine Three-month LIBOR.

      2.6 Record Date. Payments of interest and principal shall be made to
Holders on each Regular Record Date, determined as set forth in the Global Note.

      2.7 Paying Agent. The Trustee shall be the Registrar and the Paying Agent
with respect to the Notes. Payments in respect of the Notes represented by
Global Securities (including principal and interest) shall be made in
immediately available funds as provided in the Global Note.

      2.8 Registered Securities. The Notes shall be issuable only as Registered
Securities (without coupons) and as permanent Global Securities. The Notes shall
not be issuable in definitive form (other than in the name of the Depositary's
nominee) except under the circumstances described in Section 2.15 of the Base
Indenture. The Trustee shall act as transfer agent for the Notes.

      2.9 Depositary. The Depositary for Notes in global form shall be The
Depository Trust Company. Beneficial interests in such Notes shall be held
through the Depositary.

      2.10 Denomination. The Notes shall be issued in denominations of $1,000
and any integral multiple thereof. The Notes may be transferred or exchanged
only in minimum denominations of $1,000 and integral multiples of $1,000 in
excess thereof; and any attempted transfer, sale or other disposition of Notes
in a denomination of less than $1,000 shall be deemed to be void and of no legal
effect whatsoever.

      2.11 Currency. Payments of the principal and interest on the Notes shall
be made in U.S. Dollars, and the Notes shall be denominated in U.S. Dollars.

      2.12 Redemption. The Company shall have no option to redeem the Notes
prior to their maturity, nor shall they be repayable before the Maturity Date at
the option of any Holder.

      2.13 Sinking Fund. The Notes shall not have the benefit of any sinking
fund.

      2.14 Conversion. The Notes shall not be convertible or exchangeable into
any other class or series of securities.

      2.15 Defeasance. The Company shall not be entitled to defease payments
under the Notes.

      2.16. Priority. The Notes are senior unsecured obligations of the Company
and rank equally in right of payment with any other senior unsecured and
unsubordinated indebtedness that the Company may issue from time to time. The
Notes will rank senior to any subordinated indebtedness that the Company may
issue from time to time.

                                    ARTICLE 3

                                TRUSTEE PAYMENTS

      3.1. Establishment of Account; Investments. The Company hereby directs and
authorizes the Trustee to establish and maintain a debt service account to be
entitled the "USA Education, Inc. 2001-A Debt Service Account." All or a portion
of amounts paid to the Trustee by the Company pursuant to Section 2.05 of the
Base Indenture shall be deposited in the USA Education, Inc. 2001-A Debt Service
Account established for such purpose and shall be invested and reinvested by the
Trustee pursuant to written directions from the Company, which direction may be
in the form of a standing direction. Such investments may be in one or more
Eligible Instruments or Eligible Investments (defined below). Notwithstanding
the foregoing, no investment of any such amount may mature later than the
business day preceding the applicable payment date (or, in the case of an
investment in an obligation of the Trustee, no later than the applicable payment
date) and no such investment shall be sold prior to its maturity date. On each
payment date the Trustee shall withdraw any net reinvestment income and return
such amount to the Company. The Trustee shall have no obligation to invest and
reinvest any cash held in the USA Education Inc. 2001-A Debt Service Account in
the absence of timely and specific written investment direction from the
Company. In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon. The Trustee shall have no
liability in respect of losses incurred as a result of the liquidation of any
investment prior to its stated maturity or the failure of the Company to provide
timely written investment direction.

      "Eligible Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form, with
respect to which the Trustee has taken delivery, which evidence: (a) direct
obligations of, and obligations fully guaranteed as to the full and timely
payment by, the United States of America; (b) demand deposits, time deposits or
certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any State thereof
and subject to supervision and examination by Federal or State banking or
depository institution authorities, provided that at the time of the investment
or contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the rating of
which is based on the credit of a Person other than such depository institution
or trust company) thereof shall be rated "A-1+" by Standard & Poor's Credit
Market Services ("S&P") and "P-1" by Moody's Investors Service, Inc.
("Moody's"); (c) commercial paper that, at the time of the investment or
contractual commitment to invest therein, is rated "A-1" by S&P and "P-1" by
Moody's; (d) bankers' acceptances issued by any depository institution or trust
company referred to in (b) above; (e) repurchase obligations with respect to any
security pursuant to a written agreement that is a direct obligation of, or
fully guaranteed as to the full and timely payment by, the United States of
America or any agency or instrumentality thereof, the obligations of which are
backed by the full faith and credit of the United States of America, in either
case entered into with (i) a depository institution or trust company the
deposits of which are insured by the Federal Deposit Insurance Corporation and
whose commercial paper or other short-term unsecured debt obligations are rated
"A-1+" by S&P and "Aaa" by Moody's; and (f) money market mutual funds registered
under the Investment Company Act having a rating, at the time of such investment
from each of S&P and Moody's in the highest investment category granted thereby.
Any Eligible Investments may be purchased by or through the Trustee or any of
its Affiliates and shall include such securities issued by the Trustee or its
Affiliates.

                                    ARTICLE 4

                                  MISCELLANEOUS

      4.1 Terms. The foregoing form and terms of the Notes have been established
in conformity with the provisions of the Base Indenture.

      4.2 Ratification of Base Indenture; Supplemental Indenture Controls. The
Base Indenture, as supplemented by this Supplemental Indenture, is in all
respects ratified and confirmed, and this Supplemental Indenture shall be deemed
part of the Base Indenture in the manner and to the extent herein and therein
provided. The provisions of this Supplemental Indenture (including the Global
Note) shall supersede the provisions of the Base Indenture to the extent the
Base Indenture is inconsistent herewith.

      4.3 Trustee Not Responsible for Recitals. The recitals in this
Supplemental Indenture are made by the Company and not by the Trustee, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee makes
no representation as to the validity or sufficiency of this Supplemental
Indenture.

      4.4 Governing Law. THIS SUPPLEMENTAL INDENTURE AND EACH NOTE SHALL BE
DEEMED TO BE A CONTRACT MADE UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK,
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF SAID STATE, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

      4.5 Separability. In case any one or more of the provisions contained in
this Supplemental Indenture or in the Notes shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provisions of this Supplemental
Indenture or of the Notes, but this Supplemental Indenture and the Notes shall
be construed as if such invalid or illegal or unenforceable provision had never
been contained herein or therein.

      4.6 Counterparts. This Supplemental Indenture may be executed in any
number of counterparts each of which shall be an original; but such counterparts
shall together constitute but one and the same instrument.

                 [remainder of page left blank intentionally]
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the day and year set forth above.

                                    USA EDUCATION, INC.

                                    By:   /s/  William M. E. Rachal
                                          -------------------------------------
                                          Name:   William M. E. Rachal
                                          Title:  authorized agent

                                    THE CHASE MANHATTAN BANK, not in its
                                    individual capacity, but solely as Trustee

                                    By:   /s/  Patricia M. F. Russo
                                          -------------------------------------
                                          Name:   Patricia M. F. Russo
                                          Title:  Vice President

<PAGE>

                                                                       EXHIBIT A

                            [FORM OF GLOBAL NOTE]

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