Document:

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                                                                   Exhibit 10.66

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                                GENERAL INDENTURE

                                     between

                                  CFLD-I, INC.

                                       and

                           ZIONS FIRST NATIONAL BANK,
                                   as Trustee

                                   Relating To

                         Student Loan Asset Backed Notes

                            Dated as of April 1, 2001

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                                TABLE OF CONTENTS

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                                   ARTICLE I

                          DEFINITIONS, INTERPRETATION

Section 1.01. Definitions.....................................................    5
Section 1.02. Interpretation..................................................   19

                                   ARTICLE II

                                 TERMS OF NOTES

Section 2.01. Authorization of Notes..........................................   21
Section 2.02. Issuance and Delivery of Notes..................................   21
Section 2.03. Conditions Precedent to Delivery of Notes.......................   21
Section 2.04. Limited Obligations of Corporation..............................   23

                                   ARTICLE III

                      GENERAL TERMS AND PROVISIONS OF NOTES

Section 3.01. Place, Medium of Payment Denomination, Maturities, Credit
              or Liquidity Facilities, Form and Date..........................   23
Section 3.02. Legends.........................................................   25
Section 3.03. Interchangeability of Notes.....................................   25
Section 3.04. Negotiability, Transfer and Registry............................   25
Section 3.05. Persons Treated as Registered Owners............................   25
Section 3.06. Regulations With Respect to Exchanges and Transfers.............   26
Section 3.07. Notes Mutilated, Destroyed, Stolen or Lost......................   26
Section 3.08. Cancellation of Notes...........................................   26
Section 3.09. Security Depository Procedures..................................   26
Section 3.10. Preparation of Definitive Notes; Temporary Notes................   26
Section 3.11. Execution and Authentication....................................   27

                                   ARTICLE IV

                 APPLICATION OF NOTE PROCEEDS AND OTHER AMOUNTS

Section 4.01. Application of Note Proceeds, Accrued Interest and Premium......   28
Section 4.02. Application of Proceeds of Refinancing..........................   28
Section 4.03. Application of Amounts Pledged as Security for Notes Defeased...   28
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                                    ARTICLE V

            PLEDGE OF INDENTURE; ESTABLISHMENT OF FUNDS AND ACCOUNTS

Section 5.01. Pledge Effected by Indenture; Priority..........................  29
Section 5.02. Creation of Funds...............................................  29
Section 5.03. Acquisition Fund................................................  30
Section 5.04. Revenue Fund....................................................  31
Section 5.05. Note Fund.......................................................  37
Section 5.06. Credit Proceeds Fund............................................  37
Section 5.07. Debt Service Reserve Fund.......................................  38
Section 5.08. Operating Fund..................................................  38
Section 5.09. Purchase Fund...................................................  39
Section 5.10. Investment of Funds.............................................  39
Section 5.11. Withdrawal of Excess Coverage...................................  40
Section 5.12. Order of Use of Amounts in Funds For Payment of Program
              Expenses, Maintenance and Operating Expenses, Notes and
              Reimbursement Obligations.......................................  41
Section 5.13. Investment Requirements.........................................  41

                                   ARTICLE VI

                               REDEMPTION OF NOTES

Section 6.01. Privilege of Redemption and Redemption Price....................  43
Section 6.02. Optional Redemption.............................................  43
Section 6.03. Mandatory Redemption............................................  44
Section 6.04. Selection of Notes to Be Redeemed...............................  44
Section 6.05. Notice of Redemption............................................  45
Section 6.06. Payment of Redeemed Notes.......................................  46

                                   ARTICLE VII

          REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

Section 7.01. Payment of Notes................................................  46
Section 7.02. Designation of Indenture Agents.................................  46
Section 7.03. Power to Issue Notes and Pledge Trust Estate....................  46
Section 7.04. Further Assurances..............................................  47
Section 7.05. Accounts and Reports............................................  47
Section 7.06. Student Loan Program............................................  47
Section 7.07. Servicing of Financed Student Loans.............................  49
Section 7.08. Issuance of Additional Notes....................................  49
Section 7.09. Compliance With Conditions Precedent............................  50
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Section 7.10.  General Compliance with Conditions in this Indenture and
               any Reimbursement Agreements...................................  50
Section 7.11.  Additional Covenants...........................................  50
Section 7.12.  Covenant Regarding Financed Student Loans......................  51
Section 7.13.  Continued Existence; Successor of Corporation..................  52
Section 7.14.  Servicer Computer Operations...................................  52
Section 7.15.  Representations; Negative Covenants............................  52
Section 7.16.  Corporation Covenants..........................................  55

                                  ARTICLE VIII

       SUPPLEMENTAL INDENTURES NOT REQUIRING CONSENT OF REGISTERED OWNERS

Section 8.01. Supplemental Indentures Not Requiring the Consent of
              Registered Owners...............................................  57
Section 8.02. General Provisions..............................................  59

                                   ARTICLE IX

         SUPPLEMENTAL INDENTURES REQUIRING CONSENT OF REGISTERED OWNERS

Section 9.01.  Mailing of Notice of Amendment.................................  59
Section 9.02.  Powers of Amendment............................................  60
Section 9.03.  Consent of Registered Owners...................................  61
Section 9.04.  Modifications by Unanimous Consent.............................  62
Section 9.05.  Exclusion of Notes.............................................  62
Section 9.06.  Notation on Notes..............................................  62

                                    ARTICLE X

                              DEFAULTS AND REMEDIES

Section 10.01. Events of Default..............................................  62
Section 10.02. Remedies.......................................................  64
Section 10.03. Priority of Payments After Default.............................  66
Section 10.04. Termination of Proceedings.....................................  70
Section 10.05. Registered Owners' Direction of Proceedings....................  70
Section 10.06. Limitation on Rights of Registered Owners......................  72
Section 10.07. Possession of Notes by Trustee Not Required....................  72
Section 10.08. Remedies Not Exclusive.........................................  72
Section 10.09. No Waiver of Default...........................................  73
Section 10.10. Notice of Event of Default; Acceleration.......................  73
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                                   ARTICLE XI

                         CONCERNING THE INDENTURE AGENTS

Section 11.01. Appointment and Acceptance of Duties of Trustee................  73
Section 11.02. Appointment and Acceptance of Duties of Paying Agents Note
               Registrar and Other Indenture Agents...........................  77
Section 11.03. Responsibility of Indenture Agents.............................  78
Section 11.04. Evidence on Which Indenture Agents May Act.....................  78
Section 11.05. Compensation and Indemnification...............................  79
Section 11.06. Permitted Acts and Functions...................................  79
Section 11.07. Trustee Covenants with Respect to Eligible Lender Status.......  79
Section 11.08. Trustee's Status as an Eligible Lender.........................  79
Section 11.09. Resignation of Trustee.........................................  80
Section 11.10. Removal of Trustee.............................................  80
Section 11.11. Appointment of Successor Trustee...............................  80
Section 11.12. Transfer of Rights and Properly to Successor Trustee...........  81
Section 11.13. Merger or Consolidation........................................  81
Section 11.14. Adoption of Authentication.....................................  82
Section 11.15. Resignation or Removal of the Tender Agent, Paying Agents,
               Registrar and Other Indenture Agents and Appointment of
               Successors.....................................................  82
Section 11.16. Evidence of Signatures of Registered Owners and
               Ownership of Notes.............................................  82
Section 11.17. Preservation and Inspection of Documents.......................  83
Section 11.18. Statement of Trustee of Funds and Accounts and Other Matters...  83

                                   ARTICLE XII

                                   TERMINATION

Section 12.01. Termination of the Trust.......................................  84
Section 12.02. Notice.........................................................  85

                                  ARTICLE XIII

                      DEFEASANCE; MISCELLANEOUS PROVISIONS

Section 13.01. Defeasance.....................................................  85
Section 13.02. Delegation of Duties by the Corporation........................  88
Section 13.03. Appointment of Agents, etc.....................................  88
Section 13.04. Notices........................................................  88
Section 13.05. Governing Law..................................................  89
Section 13.06. Notices to Rating Agencies.....................................  89
Section 13.07. Nonliability of Officers.......................................  89
Section 13.08. Parties Interested Herein......................................  89
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Section 13.09. Counterparts...................................................  89

EXHIBIT A STUDENT LOAN ACQUISITION CERTIFICATE
EXHIBIT B MASTER PROMISSORY NOTE PROVISIONS
EXHIBIT C FINANCED STUDENT LOAN REPORT
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                                GENERAL INDENTURE

      THIS GENERAL INDENTURE, dated as of April 1, 2001 (the "Indenture"), by
and between CFLD-I, INC., a corporation established under the laws of the State
of Delaware (the "Corporation"), and ZIONS FIRST NATIONAL BANK, a national
banking association authorized to accept trusts of the nature established herein
(herein called the "Trustee"):

                              W I T N E S S E T H:

      WHEREAS, The MEGA Life and Health Insurance Company, an Oklahoma
corporation ("MEGA"), and Mid-West National Life Insurance Company of Tennessee,
a Tennessee corporation ("Mid-West"), offer whole life insurance policies with
student loan benefits (the "Life Insurance Policies"); and

      WHEREAS, pursuant to the College First Alternative Loan Program (the
"Student Loan Program"), a policyholder under a Life Insurance Policy may obtain
a loan (a "College First Student Loan") to fund the policyholder's children's
educational expenses at an educational institution approved under the Student
Loan Program; and

      WHEREAS, the College First Student Loans are presently originated by
Richland State Bank, a South Dakota banking institution ("Richland"), pursuant
to the terms and provision of a Loan Underwriting and Processing Agreement,
dated as of June 12, 2000 (the "Loan Underwriting Agreement"), among Richland,
MEGA and Mid-West; and

      WHEREAS, UICI Funding Corp. 2, a Delaware corporation ("UICI Funding"),
has agreed to purchase all of the College First Student Loans originated by
Richland pursuant to the terms and provisions of a Loan Origination and Purchase
Agreement, dated as of June 12, 2000 (the "Loan Origination and Purchase
Agreement"), between Richland and UICI Funding; and

      WHEREAS, the Corporation and UICI Funding have entered into a Student Loan
Purchase Agreement, dated April 27, 2001 (the "College First Student Loan
Purchase Agreement"), permitting the Corporation to purchase certain College
First Student Loans owned by UICI Funding; and

      WHEREAS, MEGA, Mid-West, UICI Funding and the Corporation are wholly-owned
subsidiaries of UICI, a Delaware corporation ("UICI"); and

      WHEREAS, certain College First Student Loans are secured, in part, by an
allocable portion of the cash surrender value of the policyholder's Life
Insurance Policy related to such College First Student Loan (the "Cash Surrender
Value"); and

      WHEREAS, a College First Student Loan made to a policyholder who receives
a credit score higher than a certain predetermined level is eligible to be
insured by The Education Resources Institute, Inc., a private non-profit
corporation organized under Chapter 180 of the Massachusetts General Laws
("TERI"), pursuant to the terms and provisions of the Amended and Restated
Guaranty Agreement, dated as of December 31, 1999, between UICI and TERI, or a
Guaranty Agreement, dated as of April 1, 2001, between the Corporation and TERI

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(collectively, the "TERI Guaranty Agreement"), or by United Student Aid Funds,
Inc. ("USA Funds"), a Delaware corporation, pursuant to the terms and provisions
of an Amended and Restated Guarantee Agreement, dated as of January 1, 1996 (the
"USA Funds Guarantee Agreement"), among UICI, the Corporation and USA Funds; and

      WHEREAS, the Corporation, in the future may desire to purchase other
student loans permitted to be acquired pursuant to this Indenture, including
student loans made pursuant to the Federal Family Education Loan Program (the
"FFELP Loans") under the Higher Education Act of 1965, as amended (the "Higher
Education Act"); and

      WHEREAS, pursuant to the Corporation's Articles of Incorporation and this
Indenture, the Corporation is authorized to issue its debt obligations (the
"Notes") to obtain funds to purchase College First Student Loans, FFELP Loans
and other student loans permitted to be acquired pursuant to this Indenture
(collectively, the "Student Loans"); and

      WHEREAS, any series of the Notes (a "Series") may be secured by a form of
credit enhancement purchased by the Corporation, including, without limitation,
a letter of credit, bond insurance, a surety bond or a standby bond purchase
agreement (each a "Credit Facility") delivered by the provider of such Credit
Facility (the "Credit Facility Provider"); and

      WHEREAS, MBIA Insurance Corporation, a New York stock insurance
corporation, as a Credit Facility Provider, will initially provide each Credit
Facility for the Series 2001 Notes; and

      WHEREAS, any Series of the Notes may bear interest at fixed rates (the
"Fixed Rate Notes") or at adjustable rates (the "Adjustable Rate Notes"), and
any Series of Adjustable Rate Notes may be entitled to the benefit of a
liquidity facility purchased by the Corporation (each a "Liquidity Facility")
designed to provide for the payment of the purchase price (the "Purchase Price")
of such Adjustable Rate Notes upon a tender thereof pursuant to this Indenture;
and

      WHEREAS, the repayment to a Credit Facility Provider or the provider of a
Liquidity Facility (each a "Liquidity Facility Provider") may be secured by a
reimbursement agreement (each a "Reimbursement Agreement") between the
Corporation and the corresponding Credit Facility Provider or the corresponding
Liquidity Facility Provider; and

      WHEREAS, the Corporation may, with the written approval of each Credit
Facility Provider, if any, enter into contracts providing for an interest rate
cap, floor, swap or other similar instrument (each an "Interest Rate Exchange
Agreement") corresponding to one or more Series of the Notes pursuant to the
terms and provisions of this Indenture; and

      WHEREAS, the Corporation may purchase a letter of credit, surety bond,
insurance policy, agreement guaranteeing payment or other undertaking by a
financial institution to ensure that cash in an amount required to meet the Debt
Service Reserve Requirement (as such term is hereinafter defined) is available
to the Trustee (a "Debt Service Reserve Policy") from the provider of such Debt
Service Reserve Policy (the "Surety Provider"); and

      WHEREAS, the Notes issued hereunder may be issued as (i) senior
obligations (the "Senior Notes"), which are the highest priority Notes permitted
to be issued by this Indenture, (ii) as subordinate obligations (the
"Subordinate Notes"), the repayment of which is subordinated

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to the repayment of the Senior Notes, any Interest Rate Exchange Agreements
(other than any payment due upon termination of the Interest Rate Exchange
Agreement) which are secured on a parity with Senior Notes, any Reimbursement
Agreements which are secured on a parity with Senior Notes and any Debt Service
Reserve Policies, or (iii) as junior-subordinate obligations (the
"Junior-Subordinate Notes"), the repayment of which is subordinated to each of
the Senior Notes, the Subordinate Notes, any Interest Rate Exchange Agreements
(other than any payment due upon termination of the Interest Rate Exchange
Agreement) which are secured on a parity with Senior Notes or Subordinate Notes,
any Reimbursement Agreements which are secured on a parity with Senior Notes or
Subordinate Notes and any Debt Service Reserve Policy; and

      WHEREAS, the Notes and, except as otherwise may be provided therein, the
payment obligations under all Reimbursement Agreements, all Interest Rate
Exchange Agreements and all Debt Service Reserve Policies, are secured as
hereinafter provided, but solely by the pledge of the Trust Estate described
herein; provided that (i) the rights of the registered owners (the "Registered
Owners") of the Senior Notes, any Credit Facility Provider and any Liquidity
Facility Providers for Senior Notes, the providers of Interest Rate Exchange
Agreements (other than any payment due upon termination of the Interest Rate
Exchange Agreement) secured on a parity with Senior Notes and any Surety
Provider to such security shall be superior to the rights of the Registered
Owners of Subordinate Notes, the Registered Owners of the Junior-Subordinate
Notes, any Credit Facility Provider and any Liquidity Facility Providers for
Subordinate Notes or Junior-Subordinate Notes and providers of Interest Rate
Exchange Agreements secured on a parity with Subordinate Notes or the
Junior-Subordinate Notes and (ii) the rights of Registered Owners of the
Subordinate Notes, any Credit Facility Provider and any Liquidity Facility
Providers for Subordinate Notes and providers of Interest Rate Exchange
Agreements (other than any payment due upon termination of the Interest Rate
Exchange Agreement) secured on a parity with Subordinate Notes to such security
shall, to the extent provided herein, be superior to the rights of the
Registered Owners of Junior-Subordinate Notes, any Credit Facility Provider and
any Liquidity Facility Providers for Junior-Subordinate Notes and providers of
Interest Rate Exchange Agreements secured on a parity with Junior-Subordinate
Notes; and

      WHEREAS, upon execution and delivery of a Supplemental Indenture with
respect to a Series of Notes, all acts, proceedings and things necessary and
required by law to make said Notes, when executed by the Corporation and
authenticated by the Trustee, the valid and binding legal obligations of the
Corporation and to constitute and make this Indenture a valid and effective
Indenture, have been done, taken and performed and the issuance, execution and
delivery of said Notes and the execution, acknowledgment and delivery of this
Indenture have in all respects been duly authorized by the Corporation.

      NOW, THEREFORE, THIS INDENTURE WITNESSETH THAT:

      In consideration of the premises and of the mutual covenants herein
contained, and of the purchase and acceptance of the Notes by the Registered
Owners thereof, and for other valuable consideration, the receipt whereof is
hereby acknowledged, and for the purpose of fixing and declaring the terms and
conditions upon which the Notes are to be and may be issued, authenticated and
delivered, secured and accepted by all persons who shall from time to time be or
become the Registered Owners thereof, and in order to secure as hereinafter
provided, (a) the

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payment of the principal or Redemption Price (as such term is hereinafter
defined) of, and the interest and any Carry-over Amounts (as such term is
hereinafter defined) (and accrued interest thereon) on, the Notes at any time
issued and Outstanding (as such term is hereinafter defined) under this
Indenture according to their tenor and effect; (b) the performance and
observance of all of the covenants and conditions in the Notes and contained in
this Indenture; and (c) the payment of all amounts owing under any Reimbursement
Agreement, any Interest Rate Exchange Agreement, or to any Credit Facility
Provider, any Surety Provider or any Liquidity Facility Provider, the
Corporation has executed and delivered this Indenture and does hereby bargain,
assign, pledge and grant a security interest, subject to use and applications in
accordance with the provisions hereof, in the following (constituting the "Trust
Estate") to the Trustee:

                                GRANTING CLAUSES

                                    CLAUSE I

      All Financed Student Loans (as such term is hereinafter defined),
including any evidence of indebtedness, including agreements and notes made by
Financed Student Loan borrowers and cosigners and any and all other contracts,
instruments and documents executed and delivered by the Financed Student Loan
borrowers, cosigners or any other party evidencing, relating to, arising out of
or in any way connected with such Financed Student Loans, including the right to
receive the allocable portion of the Cash Surrender Value and death benefits of
any Life Insurance Policy related to such Financed Student Loan, and any
insurance or guarantees related to such Financed Student Loans, and extensions
or renewals thereof;

                                    CLAUSE II

      All proceeds of the Notes, all Revenues and Recoveries of Principal (as
each such term is hereinafter defined) and all other amounts deposited in the
Funds and Accounts (as such term is hereinafter defined) until their use or
release from the Funds and Accounts. Such Note proceeds, Revenues, Recoveries of
Principal and other deposits may take the form of moneys, securities, accounts,
chattel paper, instruments, and general intangibles;

                                   CLAUSE III

      The rights of the Corporation in and to all Servicing Agreements, all
Student Loan Purchase Agreements and all Guarantee Agreements (as each such term
is hereinafter defined) as the same relate to the Financed Student Loans; and

                                    CLAUSE IV

      Any and all other real or personal property of every name and nature, from
time to time hereafter by delivery or by writing of any kind conveyed,
mortgaged, pledged, assigned or transferred as and for additional security
hereunder by the Corporation or by anyone on its behalf or with its written
consent to the Trustee, which is hereby authorized to receive any and all such
property at any and all times and to hold and apply the same subject to the
terms hereof.

      TO HAVE AND TO HOLD the same unto the Trustee and its successor or
successors and its or their assigns forever, in trust, nevertheless, for the
following beneficiaries, as their

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interests may appear: Registered Owners of the Notes, any Credit Facility
Provider, any Surety Provider, any Liquidity Facility Provider, and any
counterparty to an Interest Rate Exchange Agreement.

      IN TRUST NEVERTHELESS, UPON CONDITION that, if the Corporation shall well
and truly pay, or cause to be paid, the principal of (and premium, if any) and
interest on the Notes according to the true intent and meaning thereof, or there
shall be deposited with the Trustee such amounts in such form in order that none
of the Notes shall remain Outstanding as herein deemed and provided, and shall
pay or cause to be paid all amounts due hereby and all amounts owed to any
Indenture Agent (as such term is hereinafter defined), any Credit Facility
Provider, any Liquidity Facility Provider and any Surety Provider in accordance
with the terms and provisions hereof, of any Reimbursement Agreement and of any
agreement related to the issuance of a Debt Service Reserve Policy, then upon
the full and final payment of all such sums and amounts or upon deposit of the
same, this Indenture and the rights, titles, liens, security interests, and
assignments herein granted shall cease, determine, and be void and this
Indenture shall be released by the Trustee in due form at the expense of the
Corporation, except only as herein provided; otherwise this Indenture to be and
remain in full force and effect.

      AND IT IS HEREBY COVENANTED AND DECLARED that the Trust Estate is to be
held and applied by the Trustee, subject to the further covenants, conditions,
and trust hereinafter set forth, and the Corporation does hereby covenant and
agree to and with the Trustee, as follows.

                                   ARTICLE I

                           DEFINITIONS, INTERPRETATION

      Section 1.01. Definitions. In this Indenture, the following words and
terms shall, unless the context otherwise requires, have the following meanings:

      "Account" means any of the accounts created and established within any
Fund pursuant to this Indenture.

      "Accountant" means Ernst & Young LLP and any other independent certified
public accountant as may be selected by the Corporation and approved in writing
by each Credit Facility Provider, if any.

      "Acquisition Fund" means the Fund by that name created in Section 5.02
hereof and further described in Section 5.03 hereof.

      "Adjustable Rate Notes" means those Notes whose terms provide for the
adjustment, by auction, by reference to an index or otherwise, of the interest
rate to be borne by such Notes periodically prior to their stated maturity and
may, under the terms of a Supplemental Indenture, provide for mandatory tender
or tender optionally upon demand of the Registered Owner thereof.

      "Affiliate" means a Person which is directly or indirectly controlled by
the Corporation or by any other Affiliate and any Person which directly or
indirectly controls the Corporation or which directly or indirectly controls any
other Affiliate; provided, however, that the term

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"Affiliate" shall not include the Corporation. For purposes of this definition,
control means the power to direct the management and policies of a Person
through the ownership of not less than a majority of its voting securities or
the right to designate or elect not less than a majority of the members of its
board of directors or other governing board or body by contract or otherwise.

      "Auction Agent" means any Person designated as such pursuant to a
Supplemental Indenture with the written approval of each Credit Facility
Provider, if any.

      "Authenticating Agent" means the Trustee or any other Indenture Agent as
may be authorized pursuant to a Supplemental Indenture to perform the acts
required of such agent in conformance with the provisions of this Indenture and
such Supplemental Indenture.

      "Authorized Representative" means the President, any Vice President or any
other person designated by the President or any Vice President to act as the
authorized representative of the Corporation hereunder.

      "Beneficial Owner" means, when a Series of Notes are in the Book-Entry
Form, any person who acquires a beneficial ownership interest in a Note of that
Series held by the Securities Depository.

      "Book-Entry Form" means a form or system under which (a) the beneficial
right to principal and interest may be transferred only through a book entry,
(b) physical securities in registered form are issued only to a Securities
Depository or its nominee as registered owner, with the securities "immobilized"
to the custody of the Securities Depository or its nominee, and (c) the book
entry is the record that identifies the owners of beneficial interests in that
principal and interest.

      "Broker-Dealer" means any Person designated as such pursuant to a
Supplemental Indenture with the written approval of each Credit Facility
Provider, if any.

      "Business Day" means any day other than a Saturday, Sunday, legal holiday
or any other day on which banking institutions in the City of New York, New
York, or the city in which the principal corporate trust office of the Trustee
is located, are generally authorized or obligated by law or executive order to
close or are closed or rendered inoperable due to natural disaster, or on which
the New York Stock Exchange or on which the office designated for presentation
by each Credit Facility Provider or by each Liquidity Facility Provider then
providing a Liquidity Facility for any of the Notes is closed. The term
"Business Day" shall also not include any date specified as not being a Business
Day in any Supplemental Indenture.

      "Capital Appreciation Notes" means those Notes which, by their terms, do
not bear interest, but accrete interest upon the capital portion thereof until
stated maturity or earlier redemption.

      "Capitalized Interest Account" means the account by that name that may be
created in the Note Fund pursuant to Section 5.02 hereof and further described
in Section 5.05 hereof.

      "Capitalized Expense Account" means the account by that name that may be
created in the Revenue Fund pursuant to Section 5.02 hereof and further
described in Section 5.04 hereof.

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      "Carry-over Amount" means, if and to the extent specifically provided for
as such in a Supplemental Indenture with respect to a Series of Adjustable Rate
Notes, the amount, if any, by which (a) the interest payable on such Series with
respect to a given interest period is exceeded by (b) the interest that
otherwise would have been payable with respect to such interest period but for a
stated limitation on the interest rate for such interest period. To the extent
required by a Supplemental Indenture providing for any Carry-over Amount,
interest will accrue on such Carry-over Amount until paid or extinguished. Any
reference to "principal" or "interest" in this Indenture, any Reimbursement
Agreement and in the related Notes shall not include (unless expressly provided
otherwise), within the meanings of such words, any Carry-over Amount or any
interest accrued on any Carry-over Amount.

      "Cash Flow Statement" means a Corporation Certificate attaching a cash
flow projection approved in writing by each Credit Facility Provider, if any:

            (a) setting forth, for the then current and each future Fiscal Year
      during which Notes will be Outstanding, and taking into account (x) any
      Notes expected to be issued or converted or redeemed or purchased for
      cancellation in each such Fiscal Year upon or in connection with the
      filing of such Corporation Certificate, (y) the interest rate, purchase
      price, discount or premiums, Interest Subsidy Payments, Special Allowance
      Payments and other terms of any Student Loans expected to be purchased or
      sold upon or in connection with the filing of such Corporation
      Certificate, and (z) the application, withdrawal or transfer of any moneys
      expected to be applied, withdrawn or transferred upon or in connection
      with the filing of such Corporation Certificate:

                  (i) the amount of Revenues expected to be received in each
            such Fiscal Year together with the balances in the Funds and
            Accounts available to make Debt Service Payments and to pay Program
            Expenses and Maintenance and Operating Expenses; and

                  (ii) the aggregate Debt Service for each such Fiscal Year on
            all Notes reasonably expected to be Outstanding, together with the
            Program Expenses and Maintenance and Operating Expenses reasonably
            estimated for each Fiscal Year; and

            (b) showing that in each Fiscal Year the aggregate of the amounts
      set forth in clause (a)(i) of this definition exceeds the aggregate of the
      amounts set forth in clause (a)(ii) of this definition.

      "Cash Surrender Value" means the cash surrender value of a Life Insurance
Policy (calculated pursuant to the terms thereof and excluding any annuity
accumulations) corresponding to a Financed Student Loan.

      "Certificate" means (a) a signed document either attesting to or
acknowledging the circumstances, representations or other matters stated therein
or in attachments thereto or setting forth matters to be determined pursuant to
this Indenture and any applicable Reimbursement Agreement, or (b) the report of
an Accountant or Authorized Representative as to audits or other

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procedures called for by this Indenture and any applicable Reimbursement
Agreement, as the case may be.

      "Code" means the Internal Revenue Code of 1986, as amended, and the
regulations, rulings and court decisions promulgated thereunder and pertaining
thereto.

      "College First Student Loan" means a student loan made by MEGA or Mid-West
pursuant to the Student Loan Program.

      "College First Student Loan Purchase Agreement" means the Student Loan
Purchase Agreement, dated April 27, 2001, between the Corporation and UICI
Funding and relating to College First Student Loans, as amended and supplemented
pursuant to the terms thereof.

      "Corporation" means CFLD-I, Inc., a Delaware corporation, or any Person
which shall hereafter succeed to the powers, duties and functions thereof.

      "Corporation Order" means a written order of the Corporation executed by
an Authorized Representative, requiring action on the part of any Indenture
Agent, and certifying such action is in accordance with this Indenture and any
applicable Reimbursement Agreement.

      "Costs of Issuance" means all items of expense, directly or indirectly
payable or reimbursable by or to the Corporation and related to the
authorization, sale and issuance of Notes, including, but not limited to,
printing costs, costs of preparation and reproduction of documents, filing and
recording fees, any initial Credit Facility premiums, fees and expenses of any
Credit Facility Provider and its counsel, fees and expenses of any Liquidity
Facility Provider and its counsel, any initial Debt Service Reserve Policy
premiums, fees and expenses of any Surety Provider and its counsel, underwriting
or placement agent fees, fees of an initial purchaser, initial fees and charges
of any Indenture Agent, legal fees, including note counsel fees and expenses and
underwriter's, placement agent's or initial purchaser's counsel fees and charges
(if charged to the Corporation), fees and disbursements of consultants and
professionals, Corporation staff travel and expenses related to an issue of
Notes, cost of credit ratings, fees and charges for preparation, execution,
transportation and safekeeping of Notes and any other cost, charge or fee in
connection with the original issuance of Notes.

      "Credit Confirmation" means a letter from each Credit Facility Provider,
if any, confirming that the action proposed by the Corporation is approved by
such Credit Facility Provider.

      "Credit Facility" means any form of credit enhancement purchased by the
Corporation for a Series of Notes, including, without limitation, a letter of
credit, bond insurance, a surety bond or a standby bond purchase agreement,
which shall be identified in the Supplemental Indenture for such Series, and may
include as part of the same facility, a liquidity component which, if issued
separately, would constitute a Liquidity Facility.

      "Credit Facility Provider" means (i) MBIA Insurance Corporation, a New
York stock insurance corporation, and any successor thereto and (ii) any other
Person approved in writing by MBIA Insurance Corporation (so long as MBIA
Insurance Corporation provides a Credit Facility securing any of the Notes)
which issues a Credit Facility for a Series of Notes; provided,

                                       8
<PAGE>

however, that whenever this Indenture shall require the consent, approval or
direction of a Credit Facility Provider, such provision shall mean solely the
consent, approval or direction of MBIA Insurance Corporation, unless MBIA
Insurance Corporation shall no longer provide a Credit Facility securing any
Series of the Notes.

      "Credit Proceeds Fund" means the Fund by that name created by Section 5.02
hereof and further described in Section 5.06 hereof.

      "Debt Service" means, with respect to any particular Fiscal Year and any
particular Series of Notes, an amount equal to the sum of (a) all interest
payable on such Notes during such Fiscal Year, plus (b) any Principal
Installments of such Notes during such Fiscal Year, plus (c) any additional
applicable premium payable on such Notes during such Fiscal Year, but shall not
include the Purchase Price of Notes or any Carry-over Amounts or interest
thereon.

      "Debt Service Reserve Fund" means the Fund by that name created by Section
5.02 hereof and further described in Section 5.07 hereof.

      "Debt Service Reserve Policy" means a letter of credit, surety bond,
insurance policy, agreement guaranteeing payment or other undertaking by a
financial institution to ensure that cash in an amount required to meet the Debt
Service Reserve Requirement is available to the Trustee.

      "Debt Service Reserve Requirement" means, as of any date of calculation,
the greater of (i) an amount equal to the aggregate of the amounts specified in
each and every Supplemental Indenture authorizing the issuance of a Series of
Notes as the amount required to be deposited in the Debt Service Reserve Fund
with respect to such Series of Notes and approved in writing by each Credit
Facility Provider, if any, and (ii) $500,000.

      "Default Claim" means a default claim filed by the Servicer with a
Guarantee Agency under the Servicing Agreement.

      "Defaulted Student Loan" means, as of any date of determination either (a)
a FFELP Loan that has been delinquent for 270 days or more, or (b) a Private
Loan for which any installment of principal or interest was not paid when due
(as determined under the related Student Loan documents without regard to any
waiver or forbearance granted by the Corporation or the Servicer) and has
remained unpaid for a period of at least 150 days.

      "Dissolution" means, with respect to Article XII hereof and the
Corporation, the occurrence of any of the events which would cause a dissolution
of a limited partnership organized under the laws of the State of Delaware, the
sole general partner of which is the Corporation.

      "Eligible Funds" means (a) proceeds of the Notes and the proceeds from the
investment thereof; (b) moneys with respect to which the Trustee receives a
written opinion of nationally recognized counsel experienced in bankruptcy
matters to the effect that payment of such moneys to the Registered Owners of
the Notes would not constitute a voidable preference under Section 544 or 547 of
the Bankruptcy Code and would not be recoverable under Section 550 of

                                       9
<PAGE>

the Bankruptcy Code in the event the Corporation or an Affiliate was to become a
debtor under the Bankruptcy Code; or (c) moneys derived from a Credit Facility
or Liquidity Facility.

      "Eligible Lender" means any "eligible lender" as defined in the Higher
Education Act which has received an eligible lender designation from the
Secretary with respect to FFELP Loans made under the Higher Education Act.

      "Event of Default" means any of the events specified in Section 10.01
hereof.

      "Excess Coverage" means, as of any date of calculation, the amount by
which the sum of the value of (a) the Financed Student Loans (valued at par plus
accrued and capitalized interest, including Special Allowance Payments and
Interest Subsidy Payments) credited to the Acquisition Fund, other than
Defaulted Student Loans which are not Guaranteed or Insured, and (b) all cash
and Investment Securities held in the Funds and Accounts (valued as set forth
herein or in a Supplemental Indenture, plus accrued interest, but excluding
amounts irrevocably set aside to pay particular Notes pursuant to Section 13.01
hereof) shall exceed 102.5% (or such lesser percentage with a Credit
Confirmation (or, for Notes not subject to a Credit Facility, a Rating
Confirmation)) of the sum of the principal and accrued interest on all
Outstanding Senior Notes as evidenced in a Certificate of an Authorized
Representative to the Trustee, upon which the Trustee may conclusively rely.

      "FFELP Loan" means a loan which (a) is made to an eligible borrower in
compliance with the requirements of the Higher Education Act, (b) is guaranteed
by a Guarantee Agency or Insured by the Secretary, (c) bears interest at not
less than the maximum applicable rate of interest permitted by the Higher
Education Act at the time originated, or a lesser rate of interest shown in a
Cash Flow Statement with the written approval of each Credit Facility Provider,
if any, and (d) is eligible for Special Allowance Payments.

      "Financed Student Loan" means any Student Loan that has been (a)
purchased, refinanced or originated with moneys in the Acquisition Fund and
credited to the Acquisition Fund, (b) received in exchange for other Financed
Student Loans upon the sale thereof or substitution therefor in accordance with
Section 7.06(e) hereof or the provisions of a Supplemental Indenture and
credited to the Acquisition Fund, or (c) otherwise credited to any Fund or
Account as part of the Trust Estate, but does not include Student Loans released
from the lien of this Indenture and sold or exchanged, as permitted in this
Indenture, to any purchaser, including the Corporation.

      "Fiscal Year" means a 12-month period commencing on the first day of
January of any year, or such other 12-month period adopted by the Corporation as
its fiscal year for accounting purposes.

      "Fixed Rate Notes" means those Notes which, by their terms, bear interest
at a specified rate or rates until their stated maturity, payable (except with
respect to Capital Appreciation Notes) periodically so long as such Notes are
Outstanding, all as may be particularly set forth in a Supplemental Indenture.

                                       10
<PAGE>

      "Fund" means any of the Funds created and established, or further
authorized, pursuant to Section 5.02 hereof, including the Funds and Accounts
and the Credit Proceeds Fund, but excluding the Purchase Fund and the Operating
Fund.

      "Funds and Accounts" means the Acquisition Fund, the Revenue Fund, the
Note Fund and the Debt Service Reserve Fund, and any Accounts contained therein,
created pursuant to Section 5.02 hereof.

      "Governmental Obligations" means direct obligations of the United States
and other obligations, the principal and interest of which are guaranteed by the
United States as to full and timely payment.

      "Guarantee" means with respect to a Student Loan, the insurance or
guarantee of a Guarantee Agency pursuant to such Guarantee Agency's Guarantee
Agreement.

      "Guarantee Agency" means The Education Resources Institute, Inc., United
Student Aid Funds, Inc. and any other entity approved in writing by each Credit
Facility Provider, if any, which has entered into an agreement with the
Corporation, or with the Trustee on the Corporation's behalf, which guarantees
student loans under the Student Loan Program, the Higher Education Act or other
Federal law and, with respect to FFELP Loans, has entered into an agreement with
the Secretary for reinsurance of its guarantees of student loans.

      "Guarantee Agreement" means the TERI Guaranty Agreement, the USA Funds
Guarantee Agreement and any other guaranty, insurance or lender agreement
between the Corporation, or the Trustee on the Corporation's behalf, and any
other Guarantee Agency approved in writing by each Credit Facility Provider, if
any.

      "Higher Education Act" means the Higher Education Act of 1965, as amended,
or any successor federal act, and the regulations promulgated thereunder.

      "Indenture" means, collectively, this General Indenture and any
Supplemental Indentures and any amendments thereto made in accordance with their
respective terms.

      "Indenture Agent" means the Trustee, the Registrar, the Authenticating
Agent, any Paying Agent and any Tender Agent, in each case approved in writing
by each Credit Facility Provider, if any, and any such additional agent as may
be authorized pursuant to a Supplemental Indenture and approved in writing by
each Credit Facility Provider, if any, or any or all of them as may be
appropriate.

      "Insured" means, with respect to a FFELP Loan, the insuring by the
Secretary (as evidenced by a certificate of insurance or other document or
certification issued under the provisions of the Higher Education Act) of the
maximum allowable percentage of the principal of and accrued interest on such
FFELP Loan.

      "Interest Account" means each account by that name created in the Note
Fund with respect to the Senior Notes, the Subordinate Notes and the
Junior-Subordinate Notes pursuant to Section 5.02 hereof and further described
in Section 5.05 hereof.

                                       11
<PAGE>

      "Interest Payment Date" means any date or dates upon which interest on the
Notes is due and payable in accordance with their terms.

      "Interest Rate Exchange Agreement" means a contract providing for an
interest rate cap, floor, swap or other similar instrument entered into pursuant
to Section 7.08 hereof and approved in writing by each Credit Facility Provider,
if any.

      "Interest Subsidy Payments" means, with respect to FFELP Loans, interest
subsidy benefits payable by the Secretary under the Higher Education Act, or
similar payments authorized from time to time by federal law.

      "Investment Securities" shall have the meaning, for any Series of Notes,
given to that term in any Supplemental Indenture.

      "Issue Date" means the date a Series of Notes is delivered to the initial
purchasers in exchange for the purchase price of such Series of Notes.

      "Junior-Subordinate Notes" means the Notes of the Corporation designated
as "Junior-Subordinate Notes" pursuant to a Supplemental Indenture authorizing
the issuance of such Junior-Subordinate Notes, the repayment of principal of and
interest on which are subordinated to the repayment of principal of and interest
on the Senior Notes and the Subordinate Notes and payments required to be made
pursuant to any Interest Rate Exchange Agreements, payments required to be made
pursuant to any Reimbursement Agreements secured on a parity with the Senior
Notes or the Subordinate Notes and payments required to be made pursuant to any
Debt Service Reserve Policy.

      "Life Insurance Policy" means a whole life insurance policy issued by MEGA
or by Mid-West which contains a student loan benefit.

      "Liquidity Facility" means any facility designed to provide for the
payment of the Purchase Price of any Adjustable Rate Notes upon tender thereof.

      "Liquidity Facility Provider" means the issuer of a Liquidity Facility.

      "Loan Origination and Purchase Agreement" means the Loan Origination and
Purchase Agreement, dated as of June 12, 2000, between Richland and UICI
Funding, as amended and supplemented pursuant to the terms thereof.

      "Loan Underwriting Agreement" means the Loan Underwriting and Processing
Agreement, dated as of June 12, 2000, among Richland, MEGA and Mid-West, as
amended and supplemented pursuant to the terms thereof.

      "MEGA" means The MEGA Life and Health Insurance Company, an Oklahoma
corporation, and any successor thereto.

      "Maintenance and Operating Expenses" means the expenses of the Corporation
incurred in connection the operation of the Student Loan Program and its
acquisition of Student Loans under this Indenture, including consultant's fees,
attorneys' fees, auditing fees, marketing fees,

                                       12
<PAGE>

travel expenses of directors and officers, insurance and such other reasonable
and necessary expenses which may be incurred directly or indirectly in
connection with the operation of the Student Loan Program and its acquisition of
Student Loans under this Indenture, but such term shall not include letter of
credit or other credit enhancement or liquidity fees, Note placement fees,
servicing fees and expenses incurred under the Servicing Agreement, Indenture
Agent fees and expenses incurred under this Indenture, any Auction Agent fees
and expenses incurred under an auction agreement, any Broker-Dealer fees and
expenses incurred under a broker-dealer agreement, or any Remarketing Agent fees
and expenses under a remarketing agreement.

      "Mid-West" means the Mid-West National Life Insurance Company of
Tennessee, a Tennessee corporation, and any successor thereto.

      "Monthly Calculation Date" means the twenty-fifth day of each calendar
month, or in the event such twenty-fifth day is not a Business Day, the next
succeeding Business Day.

      "Note" means one of the notes, bonds or other debt securities
authenticated and delivered pursuant to this Indenture, including any additional
or refinancing Notes issued pursuant to Article II hereof.

      "Note Fund" means the Fund by that name created by Section 5.02 hereof,
including one or more Capitalized Interest Accounts and a Senior Principal
Account, a Subordinate Principal Account, a Junior-Subordinate Principal
Account, a Senior Interest Account, a Subordinate Interest Account and a
Junior-Subordinate Interest Account established therein, and further described
in Section 5.05 hereof.

      "Note Payment Date" means the date or dates specified in any Supplemental
Indenture for payment of principal of or interest on the Notes.

      "Operating Fund" means the Fund by that name created by Section 5.02
hereof and further described in Section 5.08 hereof.

      "Opinion of Counsel" means a written opinion of an attorney at law or firm
of attorneys selected by the Person obliged to deliver an opinion on the subject
in question, reasonably acceptable to the Person who is to receive the same
hereunder, duly admitted to the practice of law before the highest court of any
state of the United States of America or the District of Columbia.

      "Outstanding" when used with reference to the Notes, means, as of any
date, all Notes, including any Notes held in custody for the benefit of any
Credit Facility Provider, theretofore or thereupon being authenticated and
delivered under this Indenture except:

            (a) any Note canceled by the Trustee or delivered to the Trustee for
      cancellation at or prior to such date;

            (b) on or after any purchase date for Notes subject to tender
      pursuant to the provisions of any Supplemental Indenture, all Notes or
      portions thereof (excluding any Notes held in custody for the benefit of
      any Credit Facility Provider) which are tendered

                                       13
<PAGE>

      or deemed to have been tendered for purchase, provided that moneys
      sufficient for such purchase are on deposit with the Trustee or the Tender
      Agent;

            (c) any Note in lieu of or in substitution for which other Notes
      shall have been authenticated and delivered pursuant to Sections 3.07,
      6.06 or 9.06 hereof; and

            (d) any Note paid or deemed to have been paid as provided in Section
      13.01(b) hereof.

      "Paying Agent" means the Trustee or any other commercial bank or trust
company designated as paying agent for the Notes, and its successor or
successors hereafter appointed in the manner herein provided and approved in
writing by each Credit Facility Provider, if any.

      "Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof.

      "Principal Account" means each account by that name created in the Note
Fund with respect to the Senior Notes, the Subordinate Notes and the
Junior-Subordinate Notes pursuant to Section 5.02 hereof and further described
in Section 5.05 hereof.

      "Principal Installment" means, as of any date of calculation, (a) the
aggregate principal amount of Outstanding Notes due on a certain future date,
reduced by the aggregate principal amount of such Notes which would have been
retired by such future date by reason of the payment when due and application in
accordance with this Indenture of Sinking Fund Payments payable before such
certain future date, plus (b) any Sinking Fund Payments due on such certain
future date, plus (c) the principal component of the Redemption Price of the
Notes then having been called for redemption on such certain future date.

      "Principal Payment Date" means, with reference to any Series or portion of
a Series of Notes, the date upon which a Principal Installment on such Notes
becomes payable.

      "Private Loan" means (a) a loan made to a borrower which (i) has been
originated in material compliance with the Program Manual and (ii) is made to a
borrower to pay the costs of attendance at a school approved for the Student
Loan Program or (b) any other loan approved in writing by each Credit Facility
Provider (or, for Notes not subject to a Credit Facility, a Rating
Confirmation).

      "Program Expenses" means (a) the fees and expenses of each Indenture
Agent, (b) fees and expenses of the Auction Agent and Broker-Dealer, (c) the
fees and expenses of any Remarketing Agent then acting under a Supplemental
Indenture with respect to Adjustable Rate Notes, (d) the fees and expenses of a
Credit Facility Provider or a Liquidity Facility Provider following the issuance
of any Series of Notes for which a Credit Facility or Liquidity Facility is in
place, (e) the fees of the Servicer under any Servicing Agreement, (f) the fees
and expenses of the Corporation incurred in connection with the preparation of
Opinions of Counsel and other authorized reports or statements attributable to
the Notes and the Financed Student Loans acquired hereunder, (g) fees and
expenses associated with the delivery of a substitute Credit Facility or
Liquidity Facility under a Supplemental Indenture, (h) fees and expenses
associated

                                       14
<PAGE>

with (but not payments under) an Interest Rate Exchange Agreement, (i) the fees
and expenses associated with the purchase of any Debt Service Reserve Policy,
(j) the costs of remarketing any of the Adjustable Rate Notes, which costs shall
be limited to (i) fees and expenses of the financial advisers, underwriters,
placement agents and/or initial purchasers to the Corporation in connection with
a remarketing, (ii) the fees and expenses of attorneys representing the parties
in connection with a remarketing (excluding the attorneys for any Credit
Facility Provider), (iii) the cost of printing in connection with a remarketing,
(iv) the fees and expenses of Accountants in connection with a remarketing, (v)
the fees of any Rating Agency then rating the Notes, and (vi) miscellaneous
reasonable and customary expenses, in each case, as such costs were incurred and
(k) fees or other amounts the Corporation is required to pay to the Secretary in
connection with any FFELP Loan.

      "Program Manual" means the College First Alternative Loan Program Manual
which describes the College First Alternative Loan Program for the origination,
acquisition, financing and servicing of Private Loans, as the same may be
amended, revised or supplemented from time to time with respect to the Private
Loans with the written approval of each Credit Facility Provider, if any, or if
there is no Credit Facility Provider, a Rating Confirmation.

      "Purchase Date" means any date established for the mandatory or optional
tender of Adjustable Rate Notes, established in accordance with the terms of the
applicable Supplemental Indenture.

      "Purchase Fund" means the Fund by that name created by Section 5.02 hereof
and further described in Section 5.09 hereof.

      "Purchase Price" means the price due to a tendering Registered Owner of
any Adjustable Rate Note issued hereunder, being the principal amount thereof,
plus interest accrued at the applicable rate or rates to the Purchase Date.

      "Rating Agency" means any nationally recognized securities rating agency
to the extent such agency has issued and continues to maintain a rating on a
Series of Notes at the time in question, at the request of the Corporation.

      "Rating Confirmation" means a letter from each Rating Agency then
providing a rating for a particular Series of Notes, confirming that the action
proposed to be taken by the Corporation will not, in and of itself, have the
effect of reducing or withdrawing the rating then applicable to that Series of
Notes.

      "Rating Notification" means written notice required to be given hereunder
or under any Supplemental Indenture of any action or proposed action provided by
the Corporation to each Rating Agency then providing a rating for a particular
Series of Notes.

      "Recoveries of Principal" means all amounts received by the Trustee from
or on account of any Financed Student Loan as a recovery of the principal amount
thereof, including scheduled, delinquent and advance payments, payouts or
prepayments, payments representing the allocable portion of the Cash Surrender
Value of a Life Insurance Policy corresponding to a Financed Student Loan (other
than amounts use to pay interest on the corresponding Financed Student Loan),
proceeds from insurance or from the sale, assignment, transfer, reallocation or

                                       15
<PAGE>

other disposition of a Financed Student Loan and any payments representing such
principal from the guarantee or insuring of any Financed Student Loan.

      "Redemption Date" means the date upon which Notes are to be called for
redemption pursuant to this Indenture.

      "Redemption Price" means, with respect to any Note, the principal amount
thereof, plus the applicable premium, if any, and interest accrued or accreted
to the Redemption Date established for such Note.

      "Registered Owner" means any person who shall be the registered owner of
any Outstanding Note as set forth on the registration books maintained by the
Registrar.

      "Registrar" means the Trustee, the Authenticating Agent or any other agent
of the Corporation at the office of which Notes may be presented for
registration, transfer or exchange as provided in Section 3.04 hereof.

      "Regulations" means the regulations adopted from time to time either by
the Secretary pursuant to the Higher Education Act or by any Guarantee Agency.

      "Reimbursement Agreement" means any Credit Facility agreement or Liquidity
Facility agreement by and between the Corporation and any Credit Facility
Provider or any Liquidity Facility Provider.

      "Remarketing Agent" means any Person designated as such pursuant to a
Supplemental Indenture.

      "Revenue Fund" means the Fund by that name created by Section 5.02 hereof
and further described in Section 5.04 hereof.

      "Revenues" means all payments, proceeds, charges and other income, other
than Recoveries of Principal, received by or on behalf of the Corporation from
or on account of any Financed Student Loan (including scheduled, delinquent and
advance payments of and any Default Claim proceeds with respect to, interest due
to or received by or on behalf of, the Corporation with respect to any Financed
Student Loan, including any Cash Surrender Value of a Life Insurance Policy to
be used to pay interest on the corresponding Financed Student Loan) and all
interest earned or gain realized from the investment of amounts in the Funds and
Accounts, and all payments received by or on behalf of the Corporation pursuant
to an Interest Rate Exchange Agreement, but excluding any amounts retained by
the Servicer or Subservicer as fees or expenses in connection with the servicing
of such Financed Student Loan pursuant to the terms and provisions of the
related Servicing Agreement.

      "Richland" means Richland State Bank, a South Dakota banking institution,
and any successor thereto.

      "Secretary" means the Secretary of the United States Department of
Education.

                                       16
<PAGE>

      "Securities Depository" means The Depository Trust Company, a New York
corporation, its successors and assigns, or any other security depository
appointed by the Corporation with the written approval of each Credit Facility
Provider, if any.

      "Seller" means UICI Funding or any other lender from which the Corporation
purchases Student Loans; provided, however, that any Seller from which the
Corporation purchases FFELP Loans must be an Eligible Lender.

      "Senior Notes" means the Notes of the Corporation designated as "Senior
Notes" pursuant to a Supplemental Indenture authorizing the issuance of such
Senior Notes, the repayment of principal of and interest on which are senior to
the repayment of principal of and interest on the Subordinate Notes and the
Junior-Subordinate Notes and payments required to be made pursuant to any
Interest Rate Exchange Agreements and Reimbursement Agreements secured on a
parity with the Subordinate Notes or the Junior-Subordinate Notes.

      "Series" means all of the Notes designated as a Series in a Supplemental
Indenture, and any Notes thereafter authenticated and delivered in lieu of or in
substitution for (but not to refinance) such Series of Notes as herein provided.

      "Servicer" means, collectively, Sallie Mae Servicing L.P., EFG
Technologies, Inc., The MEGA Life and Health Insurance Company, UICI Funding, or
any other loan servicer approved in writing by each Credit Facility Provider, if
any, and if no Credit Facility Provider is in place, with a Rating Notification.

      "Servicing Agreement" means, collectively, (i) the Master Servicing
Agreement, dated as of April 1, 2001, between the Corporation and UICI Funding
and (ii) any other servicing agreement between the Corporation and a Servicer
under which such Servicer agrees to service Financed Student Loans included in
the Trust Estate, which servicing agreement shall be approved in writing by each
Credit Facility Provider, if any.

      "Sinking Fund Payment" means, as of any particular date of calculation,
the amount required to be paid by the Corporation on a certain future date for
the retirement of Outstanding Notes which mature after said future date, but
does not include any amount payable by the Corporation by reason of the maturity
of a Note or by call for redemption at the election of the Corporation.

      "Special Allowance Payments" means, with respect to FFELP Loans, certain
incentive payments received by the Corporation pursuant to the Higher Education
Act.

      "State" means the State of Delaware.

      "Student Loan" means any loan made to finance post-secondary education
that is (a) a FFELP Loan, (b) a Private Loan or (c) otherwise permitted to be
acquired by the Corporation pursuant to this Indenture (provided a Credit
Confirmation (or, for Notes not subject to a Credit Facility, a Rating
Confirmation) is received with respect thereto).

                                       17
<PAGE>

      "Student Loan Acquisition Certificate" means the Student Loan Acquisition
Certificate in substantially the form attached as Exhibit A hereto, as such
Exhibit A may be amended or supplemented from time to time.

      "Student Loan Files" means

            (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.

      "Student Loan Program" means the College First Alternative Loan Program
for the origination, acquisition, holding, servicing and financing of College
First Student Loans, which program is governed by the Program Manual, as may be
amended or supplemented from time to time.

      "Student Loan Purchase Agreement" means, collectively, the College First
Student Loan Purchase Agreement and any other agreement approved in writing by
each Credit Facility Provider, if any (or, if there is no Credit Facility
Provider, with a Rating Confirmation), providing for the sale of Student Loans
to the Corporation, or the Trustee on behalf of the Corporation, for deposit
into the Trust Estate.

      "Subordinate Notes" means the Notes of the Corporation designated as
"Subordinate Notes" pursuant to a Supplemental Indenture authorizing the
issuance of such Subordinate Notes, the repayment of principal of and interest
on which is subordinated to the repayment of principal of and interest on the
Senior Notes and payments required to be made pursuant to any Interest Rate
Exchange Agreements, payments required to be made pursuant to any Reimbursement
Agreements secured on a parity with the Senior Notes and payments required to be
made pursuant to any Debt Service Reserve Policy, but is senior to the repayment
of principal of and interest on the Junior-Subordinate Notes and payments
required to be made pursuant to any Interest Rate Exchange Agreements and
payments required to be made pursuant to any Reimbursement Agreements secured on
a parity with the Junior-Subordinate Notes.

      "Subservicer" means , collectively, Sallie Mae Servicing L.P., EFG
Technologies, Inc., The MEGA Life and Health Insurance Company and any other
subservicer of Financed Student Loans approved in writing by each Credit
Facility Provider, if any, and if no Credit Facility Provider is in place,
appointed by the Servicer with a Rating Notification.

      "Supplemental Indenture" means any Indenture supplemental to or amendatory
of this Indenture, executed by the Corporation and the Trustee and effective in
accordance with Article VIII hereof.

      "Surety Provider" means the provider of a Debt Service Reserve Policy.

                                       18
<PAGE>

      "Tender Agent" means any commercial bank or trust company appointed by the
Corporation in accordance with Section 11.02 hereof to serve as the agent for
tender of Adjustable Rate Notes issued hereunder.

      "Trust Estate" means the assets described as such in the granting clauses
of this Indenture.

      "TERI" means The Education Resources Institute, Inc., a private non-profit
corporation organized under Chapter 180 of the Massachusetts General Laws, and
any successor thereto.

      "TERI Guaranty Agreement" means collectively, the Amended and Restated
Guaranty Agreement, dated as of December 31, 1999, between UICI and TERI, as
amended and supplemented pursuant to the terms thereof, and the Guaranty
Agreement, dated as of April 1, 2001, between the Corporation and TERI, as
amended and supplemented pursuant to the terms thereof.

      "UCC" means the Uniform Commercial Code of the State of Delaware.

      "UICI" means UICI, a Delaware corporation, and any successor thereto.

      "UICI Funding" means UICI Funding Corp. 2, a Delaware corporation, and any
successor thereto.

      "Undelivered Notes" means any Adjustable Rate Notes whose Registered Owner
has submitted a demand that such Notes be repurchased by the Corporation on a
designated Purchase Date or which are subject to mandatory tender for purchase
in accordance with the terms of a Supplemental Indenture, and which are not, in
fact, delivered for repurchase on the specified Purchase Date by the Registered
Owners thereof, but as to which the Purchase Price has been set aside in the
Purchase Fund.

      "USA Funds" means United Student Aid Funds, Inc., a Delaware corporation,
and any successor thereto.

      "USA Funds Guarantee Agreement" means the Amended and Restated Guarantee
Agreement, dated as of January 1, 1996, among the USA Funds, the Corporation and
UICI, as amended and supplemented pursuant to the terms thereof.

      Section 1.02. Interpretation.

            (a) In this Indenture, unless the context otherwise requires:

                  (i) the terms "hereby," "hereof," "herein," "hereunder" and
            similar terms, as used in this Indenture, refer to this Indenture,
            and the term "heretofore" means before, and the term "hereafter"
            means after, the date of this Indenture;

                  (ii) words of the masculine gender mean and include
            correlative words of the feminine and neuter genders and words
            importing the singular number mean and include the plural number and
            vice versa;

                                       19
<PAGE>

                  (iii) words importing persons shall include firms,
            associations, partnerships (including limited partnerships), trusts,
            corporations and other legal entities, including public bodies, as
            well as natural persons;

                  (iv) any headings preceding the texts of the several Articles
            and Sections of this Indenture and any table of contents or marginal
            notes appended to copies hereof shall be solely for convenience of
            reference and shall not constitute a part of this Indenture, nor
            shall they affect its meaning, construction or effect;

                  (v) this Indenture shall be governed by and construed in
            accordance with the applicable laws of the State;

                  (vi) the verbs "finance," "purchase" and "acquire," when used
            with reference to a Financed Student Loan, shall be construed to
            include (A) the making or purchase of such Financed Student Loan or
            the obtaining of such Financed Student Loan by exchange or
            otherwise, or (B) the participation by the Corporation, either alone
            or with others, in the making or purchase thereof;

                  (vii) references to time shall mean the applicable local time
            in Denver, Colorado, unless otherwise specified in a Supplemental
            Indenture; and

                  (viii) references to Sections and Articles, unless otherwise
            indicated, refer to Sections and Articles in this Indenture.

            (b) Nothing in this Indenture, expressed or implied, is intended or
      shall be construed to confer upon, or to give to, any person, other than
      the Corporation, the Indenture Agents, any provider of an Interest Rate
      Exchange Agreement, any Credit Facility Provider, any Liquidity Facility
      Provider, any Surety Provider and the Registered Owners of the Notes, any
      right, remedy or claim under or by reason of this Indenture or any
      covenant, condition or stipulation thereof. All the covenants,
      stipulations, promises and agreements herein contained by and on behalf of
      the Corporation shall be for the sole and exclusive benefit of the
      Corporation, the Indenture Agents, any provider of an Interest Rate
      Exchange Agreement, any Credit Facility Provider, any Liquidity Facility
      Provider, any Surety Provider and the Registered Owners of the Notes.

            (c) If any one or more of the covenants or agreements provided
      herein on the part of the Corporation or any Indenture Agent to be
      performed should be contrary to law, then such covenant or covenants or
      agreement or agreements, shall be deemed separable from the remaining
      covenants and agreements hereof and shall in no way affect the validity of
      the other provisions of this Indenture or of the Notes.

            (d) In consideration of the purchase and acceptance of the Notes by
      those who shall hold the same from time to time, the provisions of this
      Indenture shall be a part of the contract of the Corporation with the
      Registered Owners of the Notes and shall be deemed to be and shall
      constitute a contract among the Corporation and the Registered Owners from
      time to time of the Notes.

                                       20
<PAGE>

                                   ARTICLE II

                                 TERMS OF NOTES

      Section 2.01. Authorization of Notes. In order to (a) obtain funds to
purchase or finance Student Loans; (b) refinance obligations of the Corporation;
and (c) in connection with the foregoing, to set aside the amount the
Corporation determines is necessary for capitalized interest and reserves and to
pay Costs of Issuance, obligations of the Corporation in the form of Notes are
hereby authorized to be issued from time to time hereunder in one or more Series
of Senior Notes, Subordinate Notes or Junior-Subordinate Notes without
limitation as to amount except as may be provided by law. No Notes shall be
issued under this Indenture unless they are part of an issue described in a
Supplemental Indenture and until the conditions contained in Section 2.03 hereof
are satisfied.

      Section 2.02. Issuance and Delivery of Notes. After their authorization by
the Corporation, Notes may be executed by or on behalf of the Corporation and
delivered to an Authenticating Agent for authentication and, upon compliance by
the Corporation with the requirements of Section 2.03 hereof, the Authenticating
Agent shall thereupon authenticate and deliver such Notes to or upon the order
of the Corporation.

      Section 2.03. Conditions Precedent to Delivery of Notes. The Notes of each
Series shall be authenticated and delivered upon Corporation Order, but only
upon the receipt by the Trustee of the following:

            (a) A copy of the Supplemental Indenture authorizing such Series,
      duly executed by the Corporation and the Trustee, which shall specify:

                  (i) the authorized principal amount and designation of such
            Notes;

                  (ii) the purposes for which such Notes are issued, which shall
            be one or more of the purposes set forth in Section 2.01 hereof;

                  (iii) the dated dates and maturity dates of such Series of
            Notes;

                  (iv) the interest rates or interest component (in the case of
            Capital Appreciation Notes) of and principal amounts payable upon
            such Notes (or the manner of determining such rates or amounts) and
            the Interest Payment Dates, if any, and Principal Payment Dates
            therefor;

                  (v) the denominations of, and the manner of dating, numbering
            and lettering such Notes;

                  (vi) the Paying Agents for and the places of payment of such
            Notes or the manner of appointing and designating the same;

                  (vii) the amounts required to be deposited in the Debt Service
            Reserve Fund pursuant to the Debt Service Reserve Requirement,
            including, if applicable, the deposit of a Debt Service Reserve
            Policy therein;

                                       21
<PAGE>

                  (viii) provisions concerning the forms of such Notes
            (including, without limitation, whether such Notes shall be
            delivered in book-entry-only form) and of the Authenticating Agent's
            certificate of authentication;

                  (ix) to what funds moneys are to be deposited;

                  (x) the Redemption Price, if any, of and, subject to the
            provisions of Article VI hereof, the redemption terms for such
            Notes;

                  (xi) the amounts and due dates of the Sinking Fund Payments,
            if any, for any of such Notes;

                  (xii) the nature and extent of any Credit Facility or
            Liquidity Facility for any or all of such Notes, together with the
            identity of the Credit Facility Provider or the Liquidity Facility
            Provider, if any;

                  (xiii) whether such Notes constitute Senior Notes, Subordinate
            Notes or Junior-Subordinate Notes; and

                  (xiv) any other provisions deemed advisable by the Corporation
            as shall not conflict with the provisions hereof.

            (b) In the event there are then other Notes Outstanding hereunder,
      the written consent of each Credit Facility Provider and the written
      consent of the Liquidity Facility Provider whose Liquidity Facility
      secures Notes of the same or lower priority as the Notes proposed to be
      issued if the corresponding Reimbursement Agreement requires such consent.

            (c) An Opinion of Counsel to the Corporation to the effect that: (i)
      this Indenture and such Supplemental Indenture have been duly authorized,
      executed and delivered by the Corporation and, assuming due authorization,
      execution and delivery by the other parties thereto, is valid and binding
      upon the Corporation (subject to the operation of bankruptcy, insolvency,
      preferential transfer, fraudulent transfer, fraudulent conveyance or other
      laws relating to or affecting creditors rights generally, now existing or
      hereafter enacted, and by the application of general principles of equity
      including those relating to equitable subordination and judicial
      discretion); (ii) pursuant to this Indenture the Corporation has assigned
      and pledged, and all necessary action on the part of the Corporation has
      been taken as required to assign and pledge under this Indenture, all of
      the Trust Estate to the Trustee, subject to customary exceptions
      acceptable to the initial purchasers of the Notes; (iii) upon the
      execution, authentication and delivery thereof, such Notes will have been
      duly and validly authorized and issued in accordance with the laws of the
      State and the provisions of this Indenture; (iv) such Notes are valid and
      binding obligations of the Corporation; (v) the Notes will be classified
      as the Corporation's debt for federal income tax purposes; and (vi) the
      Corporation shall have acquired a perfected security interest in all
      Financed Student Loans purchased, originated, or financed in favor of the
      Trustee in the manner provided for by the laws of the State and, with
      respect to FFELP Loans, the Higher Education Act. The Opinion of Counsel
      shall provide that each Credit Facility Provider, if any, may rely
      thereon.

                                       22
<PAGE>

            (d) A written order as to the delivery of such Notes, signed by an
      Authorized Representative.

            (e) In the event that there are then other Notes Outstanding
      hereunder, (i) a Rating Confirmation with respect to all other Notes
      Outstanding, and (ii) on the date of issuance and delivery of any
      additional Notes, a certification of an Authorized Representative to the
      effect that the Corporation is not then in default in the performance of
      any of the covenants, conditions, agreements or provisions contained in
      this Indenture, unless the issuance of such additional Notes and the
      application of the proceeds thereof is intended to, and will, cure such
      default upon the issuance of such additional Notes.

            (f) Such further documents, certificates, instruments and moneys as
      are required by any Supplemental Indenture entered into pursuant to
      Article VIII or IX hereof.

      The Trustee shall notify the Corporation of its receipt of proceeds from a
Series of Notes and shall deposit them to the funds provided in the Supplemental
Indenture.

      Section 2.04. Limited Obligations of Corporation. The Notes and, except as
otherwise may be provided therein, the payment obligations under all
Reimbursement Agreements, all Interest Rate Exchange Agreements and all Debt
Service Reserve Policies are special limited, not general, obligations of the
Corporation payable solely from the Trust Estate, subject to the application
thereof to the purposes and on the conditions permitted by this Indenture.

                                  ARTICLE III

                      GENERAL TERMS AND PROVISIONS OF NOTES

      Section 3.01. Place, Medium of Payment Denomination, Maturities, Credit or
Liquidity Facilities, Form and Date.

            (a) Except as otherwise provided in a Supplemental Indenture
      providing for the issuance thereof, (i) the principal of, and premium, if
      any, on the Notes are payable upon presentation and surrender thereof at
      the principal corporate trust office of the Paying Agent designated in the
      applicable Supplemental Indenture and (ii) interest on the Notes will be
      paid by check or draft drawn upon the Paying Agent and mailed to
      Registered Owners at their addresses shown on the Note register of the
      Registrar; provided that, at the written request of the Registered Owner
      of at least $1,000,000 in aggregate principal amount of Notes (which
      request shall be delivered at least 10 days prior to the applicable
      Interest Payment Date and may provide that it will remain in effect with
      respect to each subsequent Interest Payment Date unless and until changed
      or revoked at any time (but at least 10 days) prior to an Interest Payment
      Date by subsequent written notice to the Paying Agent) interest shall be
      paid by wire transfer or other method of transfer of immediately available
      funds acceptable to the Paying Agent and the Corporation. Payment as
      aforesaid shall be made in moneys of the United States of America which at
      the time of payment constitute legal tender for the payment of public

                                       23
<PAGE>

      and private debts. Each check or wire transfer of payments on the Notes
      shall identify by CUSIP Number the Notes to which such payment relates.

            (b) The date upon which any Principal Installment or Sinking Fund
      Payment with respect to a Series of Notes is to be payable shall be as set
      forth in the Supplemental Indenture authorizing such Notes. Interest, if
      any, on each Note shall be payable as set forth in the Supplemental
      Indenture authorizing such Notes. If any Note Payment Date shall fall on a
      day which is not a Business Day, principal of, premium, if any, and
      interest payable on the Notes or any portion thereof on such Note Payment
      Date shall be paid on the immediately succeeding Business Day, and no
      additional interest shall accrue on such Notes or the interest due thereon
      as a result thereof (except as may otherwise be provided as to a
      particular Series or priority of Notes in the related Supplemental
      Indenture and/or Reimbursement Agreement).

            (c) Notes shall be issued in fully registered form, without coupons.

            (d) All Series of Notes shall be dated as provided in the
      Supplemental Indenture authorizing such Notes. Notes of any Series
      authenticated on or after the dated date but prior to the first Interest
      Payment Date applicable to Notes of such Series shall bear interest from
      the dated date, but Notes authenticated on or subsequent to the first
      Interest Payment Date applicable to Notes of such Series shall bear
      interest from the Interest Payment Date next preceding the date of
      authentication thereof (unless such date of authentication shall be an
      Interest Payment Date, in which case they shall bear interest from such
      Interest Payment Date). If, however, as shown by the records of the
      Trustee and Registrar, interest on such Series of Notes shall be in
      default the Notes issued in lieu of such Notes surrendered for transfer or
      exchange shall bear interest from the date to which interest has been paid
      in full on the Notes surrendered.

            (e) In addition to registered Notes requiring physical delivery,
      Notes may be issued in Book-Entry Form if the Supplemental Indenture
      authorizing the issuance of such Notes so specifies.

            (f) The Notes of all or any portion of any Series may be Fixed Rate
      Notes, Adjustable Rate Notes, Capital Appreciation Notes, or some
      combination thereof, as shall be set forth in the Supplemental Indenture
      authorizing such Notes.

            (g) Payment of the principal, Purchase Price and Redemption Price of
      and interest on the Notes of any Series may be payable from or secured by
      a Credit Facility or Liquidity Facility (or any substitute or alternate
      therefor), as shall be set forth in the Supplemental Indenture authorizing
      such Series. The Credit Facility Provider or Liquidity Facility Provider
      for that Series may be granted such rights to consent to or approve of
      action required or permitted hereunder as shall be set forth in the
      Supplemental Indenture authorizing the Series of Notes benefiting from
      such Credit Facility or Liquidity Facility; provided, that the granting of
      such rights will not adversely affect the rating or ratings, if any, on
      any Outstanding Notes as evidenced by a Rating Confirmation.

                                       24
<PAGE>

      Section 3.02. Legends. The Notes of each Series may contain or have
endorsed thereon such provisions, restrictions as to transferability,
specifications and descriptive words not inconsistent with the provisions of
this Indenture as may be necessary or desirable to comply with the terms of the
offering, regulations, custom, or otherwise.

      Section 3.03. Interchangeability of Notes. Notes, upon surrender thereof
at the principal corporate trust office of the Registrar with a written
instrument of transfer satisfactory to the Registrar, duly executed by the
Registered Owner or his duly authorized attorney, may at the option of the
Registered Owner thereof, and upon payment by such Registered Owner of any
charges which the Authenticating Agent may make as provided in Section 3.06
hereof, be exchanged for an equal aggregate principal amount of Notes of the
same Series and maturity bearing the same rate of interest and having the same
terms, of any authorized denominations; provided, however, that the exchange of
Notes may be restricted by the Supplemental Indenture pursuant to which such
Notes are issued.

      Section 3.04. Negotiability, Transfer and Registry. Except as provided in
any Supplemental Indenture, all the Notes issued under this Indenture shall be
negotiable, subject to the provisions for registration, transfer and exchange
contained in this Indenture and in the Notes. So long as any of the Notes remain
Outstanding, the Corporation shall maintain and keep, at the principal corporate
trust office of the Registrar, books for the registration, transfer and exchange
of the Notes. Upon presentation thereof for such purpose at said office, the
Registrar shall register or cause to be registered in such books, and permit to
be transferred thereon, any Notes pursuant to such reasonable regulations as may
be set forth in a Supplemental Indenture. So long as any of the Notes remain
Outstanding, the Corporation shall make all necessary provisions to permit the
exchange of Notes at the principal corporate trust office of the Registrar.

      Each Note shall be transferable only upon the books of the Corporation,
which shall be kept for such purpose at the principal corporate trust office of
the Registrar, by the Registered Owner thereof in person or by his attorney duly
authorized in writing, upon surrender thereof, together with a written
instrument of transfer satisfactory to the Registrar duly executed by the
Registered Owner or his duly authorized attorney. Upon the transfer of any such
Note, the Corporation shall issue in the name of the transferee a new Note or
Notes, of the same aggregate principal amount, Series, interest rate and
maturity as the surrendered Note.

      Section 3.05. Persons Treated as Registered Owners. The Corporation and
any Indenture Agent may deem and treat the person in whose name any Note shall
be registered upon the books of the Corporation as the absolute owner of such
Note, whether such Note shall be overdue or not, for the purpose of receiving
payment of, or on account of, the principal of and interest on such Note and for
all other purposes, and all such payments so made to any such Registered Owner
or upon his order shall be valid and effectual to satisfy and discharge the
liability upon such Note to the extent of the sum or sums so paid, and neither
the Corporation nor any Indenture Agent shall be liable for any notice to the
contrary. If the Trustee is not the Registrar, the Registrar will deliver an
updated register of the Registered Owners of the Notes to the Trustee upon the
Trustee's request and in any case at least quarterly.

                                       25
<PAGE>

      Section 3.06. Regulations With Respect to Exchanges and Transfers. In all
cases in which the privilege of exchanging Notes or transferring Notes is
exercised, the Corporation shall execute and an Authenticating Agent shall
authenticate and deliver Notes in accordance with the provisions of this
Indenture. For every such exchange or transfer of Notes, whether temporary or
definitive, the Corporation or an Authenticating Agent may make a charge to the
requesting Registered Owner in an amount sufficient to reimburse it for any tax,
fee or other governmental charge required to be paid with respect to such
exchange or transfer. The Corporation will not be obligated to (a) register the
transfer of or exchange any Note of a Series during a period beginning on the
date Notes of the Series are selected for redemption and ending on the day of
the mailing of a notice of redemption of Notes selected for redemption or (b)
register the transfer of or exchange any Note selected for redemption in whole
or in part, except the unredeemed portion of a Note being redeemed in part.

      Section 3.07. Notes Mutilated, Destroyed, Stolen or Lost. In case any Note
shall become mutilated or be destroyed, stolen or lost, the Corporation shall
execute and an Authenticating Agent shall authenticate a new Note of like
Series, interest rate, maturity, principal amount and other terms of the Note so
mutilated, destroyed, stolen or lost. In the case of a mutilated Note, such new
Note shall be delivered only upon surrender and cancellation of such mutilated
Note. In the case of a Note issued in lieu of and substitution for a Note which
has been destroyed, stolen or lost, such new Note shall be delivered only upon
filing with the Trustee of evidence satisfactory to establish to the Corporation
and the Trustee that such Note has been destroyed, stolen or lost and to prove
the ownership thereof and upon furnishing the Corporation and the Trustee with
indemnity satisfactory to the Trustee. The person requesting the authentication
and delivery of a new Note pursuant to this Section shall comply with such other
reasonable regulations as the Corporation and the Trustee may prescribe and pay
such expenses as the Corporation and the Trustee may incur in connection
therewith. All Notes so surrendered to the Trustee shall be canceled by it.
Evidence of such cancellation shall be given to the Corporation.

      Section 3.08. Cancellation of Notes. All Notes paid or redeemed, either at
or before maturity, shall be delivered to the Trustee when such payment or
redemption is made, and such Notes, together with all Notes purchased by the
Trustee, shall thereupon be promptly canceled. The Trustee shall execute a
certificate of cancellation in duplicate by the signature of one of its
authorized officers describing the Notes so canceled. Such executed certificate
shall be filed with the Corporation and the other executed certificate shall be
retained by the Trustee.

      Section 3.09. Security Depository Procedures. Except as such procedures
conflict with the provisions of this Indenture, so long as any Series of Notes
are in Book-Entry Form under an agreement or agreements with a Securities
Depository, the policies and procedures of the Security Depository on receipt of
payments, tenders, transfer and exchange of such Notes and presentation of such
Notes for payment or cancellation shall govern such Series of Notes.

      Section 3.10. Preparation of Definitive Notes; Temporary Notes.

            (a) Definitive Notes shall be typewritten, lithographed or printed.
      Until definitive Notes are prepared, the Corporation may execute and
      deliver, in lieu of definitive Notes, but subject to the same provisions,
      limitations and conditions as the

                                       26
<PAGE>

      definitive Notes, except as to the denominations thereof and as to
      exchangeability, one or more temporary Notes, substantially of the tenor
      of the definitive Notes in lieu of which such temporary Notes are issued,
      in authorized denominations or any multiple thereof, and with such
      omissions, insertions and variations as may be appropriate to temporary
      Notes. Upon surrender of such temporary Notes for exchange and
      cancellation, the Corporation at its own expense shall prepare and execute
      and, without charge to the Registered Owner thereof, deliver in exchange
      therefor, at the corporate trust office of an Authenticating Agent,
      definitive Notes, of the same aggregate principal amount, Series and
      maturity, bearing the same rate of interest and having the same terms as
      the temporary Notes surrendered. Until so exchanged, the temporary Notes
      shall be in all respects entitled to the same benefits and security as
      definitive Notes issued pursuant to this Indenture.

            (b) All temporary Notes surrendered in exchange for definitive Notes
      shall be forthwith canceled by the Trustee.

      Section 3.11. Execution and Authentication.

            (a) After their authorization pursuant to a Supplemental Indenture,
      Notes of a Series may be executed pursuant to or on behalf of the
      Corporation and delivered to an Authenticating Agent for authentication.
      The Notes shall be executed in the name and on behalf of the Corporation
      by the manual or, to the extent permitted by law, the facsimile signature
      of the President of the Corporation and attested by the manual or, to the
      extent permitted by law, the facsimile signature of the Secretary of the
      Corporation or as otherwise may be required by the Supplemental Indenture
      authorizing the Notes of a Series. In case any one or more of the officers
      or employees who shall have signed any of the Notes shall cease to be such
      officer or employee before the Notes so signed shall have been actually
      delivered, such Notes may, nevertheless, be delivered as herein provided,
      and may be issued as if the person who signed such Notes had not ceased to
      hold such office or be so employed. Any Note may be signed on behalf of
      the Corporation by such persons as at the actual time of the execution of
      such Note shall be duly authorized or hold the proper office in or
      employment by the Corporation, although at the date of the Notes of such
      Series such persons may not have been so authorized or have held such
      office or employment.

            (b) The Notes of each Series shall bear thereon a certificate of
      authentication, in the form set forth in the Supplemental Indenture
      authorizing such Notes, executed manually by an Authenticating Agent. No
      Note shall be entitled to any right or benefit under this Indenture or
      shall be valid or obligatory for any purpose until such certificate of
      authentication shall have been duly executed by an Authenticating Agent.
      Such certificate of an Authenticating Agent upon any Note executed on
      behalf of the Corporation shall be conclusive evidence that the Note so
      authenticated was issued and delivered under this Indenture and that the
      Registered Owner thereof is entitled to the benefits hereof.

                                       27
<PAGE>

            (c) Issuance of Notes in Book-Entry Form shall take place upon the
      completion of such acts as may be specified and in the manner which may be
      specified in the Supplemental Indenture authorizing such issuance.

                                   ARTICLE IV

                 APPLICATION OF NOTE PROCEEDS AND OTHER AMOUNTS

      Section 4.01. Application of Note Proceeds, Accrued Interest and Premium.
Except as otherwise provided in a Supplemental Indenture, the proceeds of sale
of any Series of Notes, other than the proceeds of refinancing Notes, or the
proceeds of Notes issued to refinance other notes or obligations of the
Corporation not issued under this Indenture, shall, as soon as practicable upon
the delivery of the Notes, be applied as follows:

            (a) the amount, if any, necessary to cause the aggregate amount on
      deposit in the Debt Service Reserve Fund, together with any Debt Service
      Reserve Policy, to at least equal the aggregate amount of the Debt Service
      Reserve Requirement immediately following the time of such delivery shall
      be deposited into the Debt Service Reserve Fund, together with such
      additional amounts, if any, as may be specified in the Supplemental
      Indenture authorizing such Series;

            (b) upon the delivery of a Series of Notes, the amount, if any,
      received at such time as a premium above the aggregate principal amount of
      such Notes shall be applied by the Trustee as specified in the
      Supplemental Indenture authorizing such Series, and the amount, if any,
      received as accrued interest, if any, as designated by a Supplemental
      Indenture, shall be deposited into the Revenue Fund;

            (c) upon delivery of a Series of Notes, any amount required to be
      deposited in the Capitalized Interest Account of the Note Fund to pay a
      portion of the interest accruing on the Notes shall be deposited in such
      Account; and

            (d) upon delivery of a Series of Notes, any amount required to be
      deposited in the Capitalized Expense Account of the Revenue Fund to pay
      Program Expenses and Maintenance and Operating Expenses shall be deposited
      in such Account; and

            (e) the balance remaining after such deposits have been made shall
      be deposited into the Acquisition Fund.

      Section 4.02. Application of Proceeds of Refinancing. The proceeds of
Notes issued to refinance other Notes or obligations of the Corporation not
issued under this Indenture, shall be deposited as provided in the Supplemental
Indenture authorizing such Series of Notes.

      Section 4.03. Application of Amounts Pledged as Security for Notes
Defeased. The balance of any Fund or Account of the Corporation which is pledged
as security for any Series of Notes of the Corporation shall be distributed,
upon the defeasance of such Series, as prescribed in the Supplemental Indenture
authorizing such refinancing Notes.

                                       28
<PAGE>

                                   ARTICLE V

                      PLEDGE OF INDENTURE; ESTABLISHMENT OF
                               FUNDS AND ACCOUNTS

      Section 5.01. Pledge Effected by Indenture; Priority. The Trust Estate is
hereby pledged in accordance with the Recitals and the Granting Clauses hereof.
To the fullest extent provided by applicable law, the money and property hereby
pledged shall immediately be subject to the lien of such pledge and such lien
shall be valid and binding against all parties having claims in tort, contract
or otherwise against the Corporation, irrespective of whether such parties have
notice of the pledge.

      Section 5.02. Creation of Funds. There are hereby created and established
the following Funds to be held by the Trustee and maintained in accordance with
the provisions of this Indenture:

            (a) Acquisition Fund;

            (b) Revenue Fund, within which there may be a Capitalized Expense
      Account;

            (c) Note Fund, within which there shall be a Senior Principal
      Account, a Subordinate Principal Account, a Junior-Subordinate Principal
      Account, a Senior Interest Account, a Subordinate Interest Account and a
      Junior-Subordinate Interest Account and within which there may be
      Capitalized Interest Accounts for one or more Series of Notes;

            (d) Credit Proceeds Fund; and

            (e) Debt Service Reserve Fund.

      There is hereby created an Operating Fund which will be established by the
Corporation and which does not constitute a Fund and Account held by the Trustee
as part of the Trust Estate. The Operating Fund shall be held by a depository
bank for the benefit of the Corporation. None of the Registered Owners, any
Credit Facility Provider, any Liquidity Facility Provider or any Surety Provider
shall have any right, title or interest therein.

      There is also hereby created and established a Purchase Fund which is not
part of the Trust Estate and which shall be held by the Tender Agent for the
purposes described in Section 5.09 hereof.

      The Trustee is hereby authorized for the purpose of facilitating
administration of the Trust Estate to create further Accounts or subaccounts in
any of the various Funds and Accounts established hereunder which are deemed to
be desirable or necessary.

      The Corporation shall cause to be filed UCC financing statements (and
continuation statements) and shall direct the Trustee to execute custodian
agreements all as shall be necessary under applicable law to perfect and
maintain the security interest created by this Indenture in the Financed Student
Loans. Following the filing of any UCC financing statement with respect to

                                       29
<PAGE>

this Indenture the Trustee hereby agrees to notify the Corporation six months
prior to the expiration of such filing of the need to file continuation
statements, and to the extent permitted by law, the Trustee shall execute and
file such continuation statements without further direction from the
Corporation.

      Section 5.03. Acquisition Fund. There shall be deposited into the
Acquisition Fund amounts described in any Supplemental Indenture, moneys from
proceeds of any Notes, any Recoveries of Principal required to be transferred
thereto pursuant to a Supplemental Indenture and any moneys transferred thereto
from the Revenue Fund pursuant to Section 5.04 hereof. Financed Student Loans
shall be held by the Trustee or its agent or bailee (including any Servicer) and
shall be pledged to the Trust Estate and accounted for as a part of the
Acquisition Fund.

      Moneys on deposit in the Acquisition Fund shall be used, (a) to pay costs
of issuance of Notes; (b) to pay principal of and interest due on the Notes and
to pay Program Expenses, Maintenance and Operating Expenses and other costs upon
the transfer of such moneys to the Revenue Fund as provided in Section 5.12
hereof; (c) upon Corporation Order, to redeem Notes in accordance with the
provisions of any Supplemental Indenture; and (d) upon receipt by the Trustee of
a Student Loan Acquisition Certificate in the form attached as Exhibit A hereto,
to acquire Student Loans at a price which would permit the results of Cash Flow
Statements provided to each Credit Facility Provider and Rating Agency then
rating the Notes on any Issue Date of any Series of Notes not to be changed in a
material adverse manner as certified to the Trustee on the Student Loan
Acquisition Certificate; provided that such price may be increased if a Credit
Confirmation (or, for Notes not subject to a Credit Facility, a Rating
Confirmation) is obtained, based on new Cash Flow Statements containing such
assumptions as the Corporation shall reasonably determine. Any such Corporation
Order or Student Loan Acquisition Certificate shall state that such proposed use
of moneys is in compliance with the provisions of this Indenture. The Trustee
may conclusively rely on such Corporation Order or Student Loan Acquisition
Certificate. If the Corporation determines that all or any portion of such
moneys in the Acquisition Fund cannot be used to acquire Student Loans, then an
Authorized Representative of the Corporation may, by Corporation Order, direct
the Trustee to redeem Notes in accordance with any Supplemental Indenture. Prior
to the acquisition of any FFELP Loans, the Corporation, the Trustee or another
entity acting on their behalf shall be required to obtain an Eligible Lender
number from the Secretary and the Corporation shall be required to provide the
Trustee with an opinion of Bond Counsel that the Trustee will have a first
perfected security interest in such FFELP Loans.

      Notwithstanding the foregoing, if there are not sufficient moneys on
deposit in the Revenue Fund to make the transfers and disbursements required by
Section 5.04(b)(i) through (xvi) hereof, then, an amount equal to any such
deficiency may, upon Corporation Order, be transferred from the Acquisition Fund
to the Revenue Fund for transfer or disbursement.

      The Corporation will be the owner of the Financed Student Loans and it is
understood and agreed that the Trustee will have a security interest in the
Financed Student Loans for and on behalf of the Registered Owners, each Credit
Facility Provider, each Liquidity Facility Provider and each Surety Provider, as
applicable. While the Corporation will be the beneficial owner of the FFELP
Loans, it is understood and agreed that the Trustee (or another Person acting on
the

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<PAGE>

Corporation's behalf), as an Eligible Lender, will be the legal owner of the
FFELP Loans. In the case of a single Financed Student Loan evidenced by a
separate note, each such note will be held in the name of the Corporation (or
the Eligible Lender in the case of FFELP Loans), for the benefit of the
Registered Owners, each Credit Facility Provider and each Liquidity Facility
Provider, as applicable. In the case of FFELP Loans evidenced by a Master
Promissory Note, the Corporation shall cause the holder of the original Master
Promissory Note to indicate by book entry on its books and records that the
Eligible Lender acting on behalf of the Corporation is the Registered Owner of
the FFELP Loan and that the Trustee has a security interest in the FFELP Loan
for the benefit of the Registered Owners, each Credit Facility Provider, each
Liquidity Facility Provider and each Surety Provider, as applicable.

      Financed Student Loans shall be sold, transferred or otherwise disposed of
(other than for consolidation, serialization or transfer to a Guarantee Agency)
by the Trustee free from the lien of this Indenture at any time pursuant to a
Corporation Order and if the Trustee is provided with the following:

            (a) a Corporation Order stating the sale price and directing that
      Financed Student Loans be sold, transferred or otherwise disposed of and
      delivered to a transferee whose name shall be specified, provided that if
      the Financed Student Loan is a FFELP Loan and the Higher Education Act
      requires any such FFELP Loan to be held only by an Eligible Lender, the
      transferee shall be an Eligible Lender; and

            (b) a Certificate signed by an Authorized Representative of the
      Corporation to the effect that the disposition price is equal to or in
      excess of the amount required in Section 7.06(c) hereof.

      Further, Financed Student Loans shall also be sold, transferred or
otherwise disposed of by the Trustee, with a Credit Confirmation (or, for Notes
not subject to a Credit Facility, a Rating Confirmation), pursuant to a
Corporation Order in which the Corporation determines that such disposition of
Financed Student Loans from the Trust Estate is necessary in order to avoid the
occurrence of an Event of Default hereunder or to avoid any default in the
payment obligations of the Corporation under any Reimbursement Agreement, in
such amount and at such times and prices as may be specified in such Corporation
Order. The Trustee, following receipt of the foregoing and of a Certificate of
the Corporation indicating that such purchaser or transferee is one of the
entities described in clause (a) above, if applicable, shall deliver such
Financed Student Loans free from the lien of this Indenture upon the receipt of
the purchase price or consideration specified in a Corporation Order, in
compliance with the foregoing. The Trustee shall have no duty to know or
determine whether the purchaser or transferee is an Eligible Lender and may rely
on the certificate of the Corporation indicating that such purchase or
transferee is an Eligible Lender. The proceeds to be received upon any
disposition may consist of any combination of cash, Investment Securities and
Financed Student Loans.

      Section 5.04. Revenue Fund.

            (a) The Trustee shall deposit in the Revenue Fund the amounts
      described in any Supplemental Indenture, any other amounts deposited
      thereto on Corporation Order, all Revenues and any Recoveries of Principal
      required to be transferred thereto pursuant

                                       31
<PAGE>

      to a Supplemental Indenture, including earnings on amounts in the Funds
      and Accounts (except as specified herein), any transfers as set forth in
      Section 5.12 hereof, all payments of principal and interest, Special
      Allowance Payments, if any, together with any repurchase payments from
      Sellers, funds transferred to the Trustee from the Servicer's or
      Servicers' separate bank accounts maintained pursuant to any servicing
      agreement, Guarantee Agency payments (other than Recoveries of Principal,
      unless such Recoveries of Principal are required to be deposited to the
      Revenue Fund), and proceeds from the sale of Financed Student Loans (other
      than Recoveries of Principal, unless such Recoveries of Principal are
      required to be deposited to the Revenue Fund). Money in the Revenue Fund
      shall be kept separate and apart from all other Funds.

            A Supplemental Indenture for a Series of Notes may provide for the
      deposit of funds into a Capitalized Expense Account of the Revenue Fund.
      Unless otherwise provided in the Supplemental Indenture, the Trustee shall
      use the funds on deposit in a Capitalized Expense Account, upon
      Corporation Order, to solely pay Program Expenses and Maintenance and
      Operating Expenses for which the Capitalized Expense Account was created.

            (b) On each Monthly Calculation Date, the Corporation shall provide
      to the Trustee a Corporation Order directing the following reservations,
      payments, deposits or transfers in the following order of priority.

                  (i) there shall be reserved an amount equal to the fees and
            expenses of each Indenture Agent, the fees and expenses of the
            Servicer under any Servicing Agreement, the fees and expenses of any
            Auction Agent and Broker-Dealer, the fees and expenses of each
            Credit Facility Provider under any Credit Facility, the fees and
            expenses of each Surety Provider under any Debt Service Reserve
            Policy, the fees and expenses of each Liquidity Facility Provider
            under any Liquidity Facility and the fees and expenses of any
            Remarketing Agent then acting under any Supplemental Indenture, that
            will become payable during the following calendar month;

                  (ii) on a parity basis:

                        (A) with respect to each Series of Senior Notes on which
                  interest is paid at least every 30 days, there shall be
                  transferred to the Senior Interest Account established within
                  the Note Fund an amount equal to the interest that will become
                  payable on such Senior Notes during the following calendar
                  month. With respect to each Series of Senior Notes on which
                  interest is paid at intervals in excess of every 30 days,
                  there shall be made monthly deposits to the Senior Interest
                  Account established within the Note Fund on each Monthly
                  Calculation Date preceding each Interest Payment Date to
                  aggregate the full amount of the interest payable on such
                  Senior Notes on such Interest Payment Date. With respect to
                  any Senior Notes which are Adjustable Rate Notes for which any
                  such amount cannot be determined, such reservation shall be
                  made based upon assumptions set forth in the Supplemental
                  Indenture authorizing such Senior Notes; and

                                       32
<PAGE>

                        (B) with respect to any Interest Rate Exchange Agreement
                  relating to a Series of Senior Notes under which the
                  Corporation is required to make a payment at least every 30
                  days (other than any payment due upon termination of the
                  Interest Rate Exchange Agreement), there shall be deposited to
                  the Senior Interest Account established within the Note Fund
                  an amount equal to the amount of such payments that will
                  become payable under the Interest Rate Exchange Agreement
                  during the following calendar month. With respect to each
                  Interest Rate Exchange Agreement relating to any Series of
                  Senior Notes under which the Corporation is required to make
                  payments at intervals in excess of 30 days (other than any
                  payment due upon termination of the Interest Rate Exchange
                  Agreement), there shall be made monthly deposits to the Senior
                  Interest Account established within the Note Fund on each
                  Monthly Calculation Date preceding each date on which such
                  payments are due to aggregate the full amount of such payments
                  payable on such date. With respect to any Interest Rate
                  Exchange Agreement for which any such amount cannot be
                  determined, such reservation shall be made based upon
                  assumptions set forth in the Supplemental Indenture
                  authorizing such Interest Rate Exchange Agreement;

                  (iii) there shall be transferred to the Senior Principal
            Account established within the Note Fund for the Senior Notes an
            amount which, together with amounts already on deposit in the Senior
            Principal Account, is equal to all principal due with respect to the
            Senior Notes during the following calendar month;

                  (iv) to the extent necessary to reimburse a Surety Provider of
            a Debt Service Reserve Policy, payment shall be made to such Surety
            Provider of all other amounts due under the agreement with such
            provider relating to such Debt Service Reserve Policy and, to the
            extent necessary, to increase the balance therein to the Debt
            Service Reserve Requirement, a transfer shall be made to the Debt
            Service Reserve Fund;

                  (v) all other amounts due and owing to a Credit Facility
            Provider under a Reimbursement Agreement with such Credit Facility
            Provider relating to a Credit Facility securing any Senior Notes,
            together with any required interest thereon, shall be paid to such
            Credit Facility Provider;

                  (vi) all other amounts due and owing to the Liquidity Facility
            Providers under the agreement or agreements with such Liquidity
            Facility Providers relating to a Liquidity Facility providing for
            payment of the Purchase Price of any Senior Notes, together with any
            interest thereon, shall be paid to such Liquidity Facility Provider;

                  (vii) on a parity basis:

                                       33
<PAGE>

                              (A) with respect to each Series of Subordinate
                        Notes on which interest is paid at least every 30 days,
                        there shall be transferred to the Subordinate Interest
                        Account established within the Note Fund an amount equal
                        to the interest that will become payable on such
                        Subordinate Notes during the following calendar month.
                        With respect to each Series of Subordinate Notes on
                        which interest is paid at intervals in excess of every
                        30 days, there shall be made monthly deposits to the
                        Subordinate Interest Account established within the Note
                        Fund on each Monthly Calculation Date preceding each
                        Interest Payment Date to aggregate the full amount of
                        the interest payable on such Subordinate Notes on such
                        Interest Payment Date. With respect to any Subordinate
                        Notes which are Adjustable Rate Notes for which any such
                        amount cannot be determined, such reservation shall be
                        made based upon assumptions set forth in the
                        Supplemental Indenture authorizing such Subordinate
                        Notes; and

                              (B) with respect to any Interest Rate Exchange
                        Agreement relating to a Series of Subordinate Notes
                        under which the Corporation is required to make a
                        payment at least every 30 days (other than any payment
                        due upon termination of the Interest Rate Exchange
                        Agreement), there shall be deposited to the Subordinate
                        Interest Account established within the Note Fund an
                        amount equal to the amount of such payments that will
                        become payable under the Interest Rate Exchange
                        Agreement during the following calendar month. With
                        respect to each Interest Rate Exchange Agreement
                        relating to any Series of Subordinate Notes under which
                        the Corporation is required to make payments at
                        intervals in excess of 30 days (other than any payment
                        due upon termination of the Interest Rate Exchange
                        Agreement), there shall be made monthly deposits to the
                        Subordinate Interest Account established within the Note
                        Fund on each Monthly Calculation Date preceding each
                        date on which such payments are due to aggregate the
                        full amount of such payments payable on such date. With
                        respect to any Interest Rate Exchange Agreement for
                        which any such amount cannot be determined, such
                        reservation shall be made based upon assumptions set
                        forth in the Supplemental Indenture authorizing such
                        Interest Rate Exchange Agreement;

                  (viii) there shall be transferred to the Subordinate Principal
            Account established within the Note Fund for the Subordinate Notes
            an amount which, together with amounts already on deposit in the
            Subordinate Principal Account, is equal to all principal due with
            respect to the Subordinate Notes during the following calendar
            month;

                  (ix) all other amounts due and owing to a Credit Facility
            Provider under a Reimbursement Agreement with such Credit Facility
            Provider relating to a Credit Facility securing any Subordinate
            Notes, together with any required interest thereon, shall be paid to
            such Credit Facility Provider;

                                       34
<PAGE>

                  (x) all other amounts due and owing to the Liquidity Facility
            Providers under the agreement or agreements with such Liquidity
            Facility Providers relating to a Liquidity Facility providing for
            payment of the Purchase Price of any Subordinate Notes, together
            with any interest thereon, shall be paid to such Liquidity Facility
            Provider;

                  (xi) on a parity basis:

                              (A) with respect to each Series of
                        Junior-Subordinate Notes on which interest is paid at
                        least every 30 days, there shall be transferred to the
                        Junior-Subordinate Interest Account established within
                        the Note Fund an amount equal to the interest that will
                        become payable on such Junior-Subordinate Notes during
                        the following calendar month. With respect to each
                        Series of Junior-Subordinate Notes on which interest is
                        paid at intervals in excess of every 30 days, there
                        shall be made monthly deposits to the Junior-Subordinate
                        Interest Account established within the Note Fund on
                        each Monthly Calculation Date preceding each Interest
                        Payment Date to aggregate the full amount of the
                        interest payable on such Junior-Subordinate Notes on
                        such Interest Payment Date. With respect to any
                        Junior-Subordinate Notes which are Adjustable Rate Notes
                        for which any such amount cannot be determined, such
                        reservation shall be made based upon assumptions set
                        forth in the Supplemental Indenture authorizing such
                        Junior-Subordinate Notes; and

                              (B) with respect to any Interest Rate Exchange
                        Agreement relating to a Series of Junior-Subordinate
                        Notes under which the Corporation is required to make a
                        payment at least every 30 days (other than any payment
                        due upon termination of the Interest Rate Exchange
                        Agreement), there shall be deposited to the
                        Junior-Subordinate Interest Account established within
                        the Note Fund an amount equal to the amount of such
                        payments that will become payable under the Interest
                        Rate Exchange Agreement during the following calendar
                        month. With respect to each Interest Rate Exchange
                        Agreement relating to any Series of Junior-Subordinate
                        Notes under which the Corporation is required to make
                        payments at intervals in excess of 30 days (other than
                        any payment due upon termination of the Interest Rate
                        Exchange Agreement), there shall be made monthly
                        deposits to the Junior-Subordinate Interest Account
                        established within the Note Fund on each Monthly
                        Calculation Date preceding each date on which such
                        payments are due to aggregate the full amount of such
                        payments payable on such date. With respect to any
                        Interest Rate Exchange Agreement for which any such
                        amount cannot be determined, such reservation shall be
                        made based upon assumptions set forth in the
                        Supplemental Indenture authorizing such Interest Rate
                        Exchange Agreement;

                  (xii) there shall be transferred to the Junior-Subordinate
            Principal Account established within the Note Fund for the
            Junior-Subordinate Notes an

                                       35
<PAGE>

            amount which, together with amounts already on deposit in the
            Junior-Subordinate Principal Account, is equal to all principal due
            with respect to the Junior-Subordinate Notes during the following
            calendar month;

                  (xiii) all other amounts due and owing to a Credit Facility
            Provider under a Reimbursement Agreement with such Credit Facility
            Provider relating to a Credit Facility securing any
            Junior-Subordinate Notes, together with any required interest
            thereon, shall be paid to such Credit Facility Provider;

                  (xiv) all other amounts due and owing to the Liquidity
            Facility Providers under the agreement or agreements with such
            Liquidity Facility Providers relating to a Liquidity Facility
            providing for payment of the Purchase Price of any
            Junior-Subordinate Notes, together with any interest thereon, shall
            be paid to such Liquidity Facility Provider;

                  (xv) there shall be reserved an amount equal to the Program
            Expenses, other than those described in Section 5.04(b)(i) hereof,
            that will become payable during the next calendar month;

                  (xvi) the Trustee shall make a transfer to the Operating Fund,
            subject to the certification required in Section 5.08 hereof, in an
            amount sufficient to pay Maintenance and Operating Expenses that
            will become payable during the next calendar month;

                  (xvii) an amount up to the amounts due during the following
            month in connection with the termination of an Interest Rate
            Exchange Agreement shall be paid when due; and

                  (xviii) if, on any Interest Payment Date occurring in the next
            calendar month, Carry-over Amount (including any accrued interest
            thereon) is due and payable with respect to a Series of Notes, as
            provided in the related Supplemental Indenture (to the extent
            amounts are available therefor after taking into account all other
            amounts payable therefrom on such Interest Payment Date), an amount
            up to such Carry-over Amount (including any accrued interest
            thereon) shall be paid, first, to the applicable Registered Owners
            of Senior Notes, Second, to the applicable Registered Owners of
            Subordinate Notes and, third, to the applicable Registered Owners of
            Junior-Subordinate Notes;

                  (xix) as directed in a Corporation Order, any portion or all
            of the remaining money shall be transferred to the Acquisition Fund
            and applied as set forth in Section 5.03 hereof;

                  (xx) any money remaining after the foregoing applications may
            be transferred to the Corporation on the last Note Payment Date of
            each month, if permitted pursuant to Section 5.11 hereof and if all
            applicable provisions set forth in any Supplemental Indenture are
            satisfied.

                                       36
<PAGE>

            (c) Moneys in the Revenue Fund that have been reserved by the
      Trustee for the payment of the amounts specified in a Corporation Order
      shall be applied by the Trustee to the payment of such amounts when due in
      the priority described above. In the event amounts are payable to more
      than one Person pursuant to any one of the preceding clauses, and the
      money available is insufficient to pay all such amounts, the available
      money shall be applied, first, pro rata to the payment of amounts on or
      relating to Senior Notes based upon the amount payable thereto, second,
      pro rata to the payment of amounts on or relating to Subordinate Notes
      based upon the amount payable thereto and, third, pro rata to the payment
      of amounts on or relating to Junior-Subordinate Notes based upon the
      amount payable thereto.

      Section 5.05. Note Fund. The Trustee shall deposit into each Capitalized
Interest Account established within the Note Fund, the amount required to be
deposited therein pursuant to the Supplemental Indenture establishing such
Capitalized Interest Account. The Trustee shall deposit into each Interest
Account established within the Note Fund, the amount transferred thereto from
the Revenue Fund pursuant to Section 5.04(b) hereof and from the Debt Service
Reserve Fund pursuant to Section 5.07 hereof. The Trustee shall deposit into
each Principal Account established within the Note Fund, all Recoveries of
Principal required to be deposited therein, if any, pursuant to any Supplemental
Indenture, the amount transferred thereto from the Revenue Fund pursuant to
Section 5.04(b) hereof and from the Debt Service Reserve Fund pursuant to
Section 5.07 hereof.

      Amounts on deposit in each Capitalized Interest Account of the Note Fund
shall be used to pay interest on the Series of Notes for which such Capitalized
Interest Account was created or to pay Program Expenses to the extent amount in
any Capitalized Expense Account are insufficient to make such payments. Amounts
on deposit in each Interest Account of the Note Fund shall be used (a) to pay
interest on the Notes or payments due on related Interest Rate Exchange
Agreements (other than any payment due upon termination of the Interest Rate
Exchange Agreement) for which such Interest Account was created and (b) if such
Notes are secured by a Credit Facility which is not a bond insurance policy, to
reimburse such Credit Facility Provider for a drawing upon its Credit Facility
to pay interest on the related Notes. Amounts on deposit in each Principal
Account of the Note Fund shall be used (i) to pay the principal of, and premium,
if any, on the Notes for which such Principal Account was created and (ii) if
such Notes are secured by a Credit Facility which is not a bond insurance
policy, to reimburse such Credit Facility Provider for a drawing upon its Credit
Facility to pay principal on the related Notes.

      Section 5.06. Credit Proceeds Fund. The first source of payment of
principal and interest on a Series of Notes secured by a Credit Facility that is
not a bond insurance policy shall be a designated Account within the Credit
Proceeds Fund established for such Series of Notes. The Trustee shall deposit
into such designated Account of the Credit Proceeds Fund the proceeds of each
drawing on that Credit Facility (other than drawings to provide the Purchase
Price of tendered Notes) immediately upon receipt. The Trustee shall draw under
such Credit Facility in accordance with its terms in time and amount sufficient
to provide for the payment of principal of and interest on the related Series of
Notes secured by that Credit Facility on each Note Payment Date, whether at
maturity or upon earlier proceedings for redemption or acceleration, or
otherwise, in an amount equal to the full amount of the interest or principal
coming due on such date with respect to all such Series of Notes then
Outstanding (except with respect to Notes of

                                       37
<PAGE>

such Series then registered to the order or in the name of such Credit Facility
Provider or the Corporation). The Trustee shall, following deposit of such
proceeds into the Credit Proceeds Fund, apply the amounts in such designated
Account solely to pay such principal and interest on the related Series of Notes
as they become due.

      Amounts on deposit in the Credit Proceeds Fund shall not be commingled
with any other Fund or Account established hereunder. The Trustee shall have the
sole right of withdrawal from the Credit Proceeds Fund, and the Corporation
shall have no legal, beneficial or equitable right, title or interest therein.
The Credit Proceeds Fund is established solely for the benefit of the Registered
Owners (except the Corporation and any Credit Facility Provider as to Notes
purchased with the proceeds of drawings under that Credit Facility), from time
to time, of the Notes secured by a Credit Facility. The Trustee shall have no
lien on amounts on deposit in the Credit Proceeds Fund for payment of its fees
or expenses.

      Notwithstanding anything contained herein to the contrary, the Trustee
shall only make payments of principal, Redemption Price of, Purchase Price of
(to the extent remarketing proceeds are not available for such purposes) and
interest on Notes secured by a Credit Facility, first, from moneys drawn from
the Credit Facility and, if insufficient, then from other moneys in the Funds
and Accounts established hereunder.

      The Trustee shall not require any indemnity as a condition to presenting a
draw certificate under the Credit Facility.

      Section 5.07. Debt Service Reserve Fund. The Trustee shall deposit in the
Debt Service Reserve Fund the Debt Service Reserve Requirement specified in any
Supplemental Indenture and any transfers thereto from the Revenue Fund as set
forth in Section 5.04(b) hereof. Amounts on deposit in the Debt Service Reserve
Fund shall be applied as provided in Section 5.12 hereof and in conjunction with
the final payment of the principal of and interest on the last Outstanding
Notes.

      To the extent moneys on deposit in the Debt Service Reserve Fund exceed
the Debt Service Reserve Requirement, as required under a Supplemental
Indenture, the Corporation may by Corporation Order direct the Trustee to
transfer such excess to the Revenue Fund. The Debt Service Reserve Fund shall be
replenished from amounts on deposit in the Revenue Fund as provided in Section
5.04(b) hereof.

      The Corporation may substitute for some or all of the cash deposit
required to be maintained hereunder a Debt Service Reserve Policy or Policies
with the written approval of each Credit Facility Provider to such substitution.
Any such Debt Service Reserve Policy shall be delivered to the Trustee who shall
draw upon the Debt Service Reserve Policy in accordance with its terms and in
the manner provided in a Supplemental Indenture. Notwithstanding any of the
foregoing, amounts available under any Debt Service Reserve Policy shall not be
used to make any payments with respect to any Interest Rate Exchange Agreement.

      Section 5.08. Operating Fund. The Operating Fund shall be maintained in an
account established by the Corporation with the Trustee or another depository
financial institution. Except as may be set forth in any Supplemental Indenture,
the Corporation shall be entitled to

                                       38
<PAGE>

withdraw in accordance with Section 5.04(b) hereof, moneys from the Revenue Fund
to pay Maintenance and Operating Expenses. The amount deposited in the Operating
Fund by transfer from the Revenue Fund and the schedule of deposits shall be
determined by the Corporation, but Maintenance and Operating Expenses expended
in any one Fiscal Year shall not exceed the amount shown in the most recent Cash
Flow Statement as Maintenance and Operating Expenses for such Fiscal Year with
respect to the Notes. The requisition, in the form of a Corporation Order, shall
include a certification that the amount requisitioned, when combined with the
amount requisitioned previously in the Fiscal Year and any other Maintenance and
Operating Expenses paid, does not exceed the amount shown in the most recent
Cash Flow Statement as Maintenance and Operating Expenses for such Fiscal Year
with respect to the Notes. The Trustee may conclusively rely upon such
Corporation Order. Upon the receipt of such requisition, the Trustee shall
withdraw the amount requisitioned from the Revenue Fund and transfer the same
into the Operating Fund. In the event there is not sufficient money on hand in
the Revenue Fund, after transfers authorized by Section 5.12 hereof, to transfer
the full amount requisitioned, the Trustee shall notify the Corporation and the
Corporation shall then determine the amount to be transferred. The Operating
Fund shall be used to pay Maintenance and Operating Expenses of the Corporation
in connection with its participation in the Student Loan Program, but shall not
be a part of the Trust Estate.

      Section 5.09. Purchase Fund. The Purchase Fund is not part of the Trust
Estate and is a fund to be held by the Tender Agent. The Tender Agent shall
deposit to the credit of the Purchase Fund only the following promptly upon
receipt:

            (a) the Purchase Price of tendered Notes or Undelivered Notes sold
      pursuant to a remarketing agreement (other than to the Corporation); and

            (b) all amounts derived from a Liquidity Facility to purchase
      tendered Notes or Undelivered Notes.

      The Tender Agent shall disburse amounts held for the credit of the
Purchase Fund to purchase Notes, on behalf of the persons purchasing the same.

      No Notes shall be remarketed to the Corporation by any Remarketing Agent.

      Section 5.10. Investment of Funds. The Trustee shall invest money held for
the credit of any Fund and Account as directed in writing (or orally, confirmed
in writing) by the Corporation or its designee to the fullest extent practicable
and reasonable, but only in Investment Securities which shall mature or be
redeemable at the option of the holder, in any event, prior to the respective
dates when the money held for the credit of such Fund and Account shall be
required for the purposes intended and in accordance with the investment and
maturity limitations set forth in the following paragraph.

      Money held for the credit of the Credit Proceeds Fund shall be invested
only in Governmental Obligations which mature at the lesser of 30 days or when
needed or Investment Securities having a maturity of one day. Money held for the
credit of the Note Fund shall be invested only in Governmental Obligations which
mature at the lesser of 30 days or when needed or Investment Securities having a
maturity of one day, or in the shares of any no-load investment

                                       39
<PAGE>

company registered under the Investment Company Act of 1940 that operates as a
money market fund under Rule 2a-7. Any money held by the Tender Agent in any
account in the Purchase Fund shall not be invested.

      The Investment Securities purchased shall be held by the Trustee and shall
be deemed at all times to be part of such Fund and Account or combination of
Funds and Accounts, and the Trustee shall inform the Corporation of the details
of all such investments. The Trustee shall use its best efforts to sell or
present for redemption any Investment Securities purchased by it as an
investment whenever it shall be necessary to provide money to meet any payment
from the applicable Fund or Account.

      Notwithstanding the foregoing, the Trustee shall not be responsible or
liable for any losses on investments made by it or sold by it hereunder or for
keeping all funds held by it fully invested at all times, its only
responsibility being to comply with the investment instructions of the
Corporation or its designee in a non-negligent manner and to invest in
Investment Securities.

      The Trustee shall advise the Corporation and each Credit Facility
Provider, if any, in writing, on or before the fifteenth day of each calendar
month (or such later date as reasonably consented to by the Corporation), of all
investments held for the credit of each Fund and Account as of the end of the
preceding month and the value thereof.

      If the period between Interest Payment Dates for any Series of Notes is
greater than thirty days, the Trustee shall determine the cash available in the
Funds and Accounts established under this Indenture on the fifth Business Day
prior to any Note Payment Date for that Series of Notes. If at such time, the
available moneys in the Funds and Accounts established with it are insufficient
for the respective purpose for which the Funds and Accounts were established,
taking into consideration the obligations of payment from each Fund or Account
as of such Note Payment Date, the Trustee shall so notify the Corporation or its
agent, and, after the expiration of two Business Days, unless otherwise
directed, the Trustee may sell, to the extent possible on the open market, an
amount of Investment Securities as may be required to meet such deficiency or
anticipated deficiency, and the Trustee shall not be liable for any loss
resulting from such sale. The Trustee shall provide notice of any such sale to
the Credit Facility Provider.

      When reference is made to the amount on deposit or required to be on
deposit at any one time in any Fund established under this Indenture, such
reference shall include (a) cash on deposit in such fund; and (b) the value,
determined pursuant to this Indenture and the applicable Supplemental Indenture,
of Investment Securities held in such fund.

      Section 5.11. Withdrawal of Excess Coverage. At any time, but no more
frequently than once every month, the Corporation may deliver to the Trustee a
Corporation Order, evidencing the fact that there is then Excess Coverage on
deposit hereunder and specifying the amount thereof. On the Monthly Calculation
Date following Trustee's receipt of that Corporation Order, the Trustee shall
release such Excess Coverage to the Corporation from the Revenue Fund pursuant
to Section 5.04(b)(xx) hereof (to the extent available) for any of its corporate
purposes; provided the Corporation has received, and provided to the Trustee, a
Credit Confirmation (or, for Notes not subject to a Credit Facility, a Rating
Confirmation) with respect to such transfer.

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<PAGE>

      Section 5.12. Order of Use of Amounts in Funds For Payment of Program
Expenses, Maintenance and Operating Expenses, Notes and Reimbursement
Obligations. Except as may be set forth in any Supplemental Indenture, in the
event there shall be a deficiency in the amounts available in the Revenue Fund
to be applied to the payment of those items described in Sections 5.04(b)(i)
through (xvi) hereof, the Trustee shall transfer moneys on deposit in the
Acquisition Fund to the Revenue Fund to the extent of such deficiency. In the
event that after such transfer or transfers there remains a deficiency in the
amounts available in the applicable Principal Account or Interest Account of the
Note Fund to pay the principal of or interest on any Notes issued hereunder, the
Trustee shall transfer moneys on deposit in the Debt Service Reserve Fund to the
appropriate Principal Account or Interest Account of the Note Fund or, if
applicable, draw on any Debt Service Reserve Policy, in accordance with its
terms, to pay such principal or interest when due; provided, however, transfers
from the Debt Service Reserve Fund to the Note Fund shall be deposited, first,
to the Senior Interest Account and the Senior Principal Account to the extent
necessary, second, to the Subordinate Interest Account and the Subordinate
Principal Account to the extent necessary and, third, to the Junior-Subordinate
Interest Account and the Junior-Subordinate Principal Account to the extent
necessary..

      Section 5.13. Investment Requirements. Any investment of funds in
Investment Securities shall be held by a financial institution in accordance
with the following requirements:

            (a) all Investment Securities shall be held in an account with such
      financial institution in the name of the Trustee;

            (b) all Investment Securities held in such account shall be
      delivered to the Trustee in the following manner:

                  (i) with respect to bankers' acceptances, commercial paper,
            negotiable certificates of deposit and other obligations that
            constitute "instruments" within the meaning of Section 9-105(1)(i)
            of the UCC (other than certificated securities) and are susceptible
            to physical delivery, transferred to the Trustee by physical
            delivery to the Trustee, indorsed to, or registered in the name of,
            the Trustee or its nominee or indorsed in blank; or such additional
            or alternative procedures as may hereafter become appropriate to
            effect the complete transfer of ownership of any such Investment
            Securities to the Trustee free of any adverse claims, consistent
            with changes in applicable law or regulations or the interpretation
            thereof;

                  (ii) with respect to a "certificated security" (as defined in
            Section 8-102(a)(4) of the UCC), transferred:

                              (A) by physical delivery of such certificated
                        security to the Trustee, provided that if the
                        certificated security is in the registered form, it
                        shall be indorsed to, or registered in the name of, the
                        Trustee or indorsed in blank;

                              (B) by physical delivery of such certificated
                        security in registered form to a "securities
                        intermediary" (as defined in Section 8-102(a)(14) of the
                        UCC) acting on behalf of the Trustee if the

                                       41
<PAGE>

                        certificated security has been specially indorsed to the
                        Trustee by an effective indorsement;

                  (iii) with respect to any security issued by the U.S.
            Treasury, the Federal Home Loan Mortgage Corporation or by the
            Federal National Mortgage Association that is a book-entry security
            held through the Federal Reserve System pursuant to Federal
            book-entry regulations, the following procedures, all in accordance
            with applicable law, including applicable federal regulations and
            Articles 8 and 9 of the UCC: book-entry registration of such
            property to an appropriate book-entry account maintained with a
            Federal Reserve Bank by a securities intermediary which is also a
            "depositary" pursuant to applicable federal regulations and issuance
            by such securities intermediary of a deposit advice or other written
            confirmation of such book-entry registration to the Trustee of the
            purchase by the securities intermediary on behalf of the Trustee of
            such book-entry security; the making by such securities intermediary
            of entries in its books and records identifying such book-entry
            security held through the Federal Reserve System pursuant to Federal
            book-entry regulations as belonging to the Trustee and indicating
            that such securities intermediary holds such book-entry security
            solely as agent for the Trustee; or such additional or alternative
            procedures as may hereafter become appropriate to effect complete
            transfer of ownership of any such Investment Securities to the
            Trustee free of any adverse claims, consistent with changes in
            applicable law or regulations or the interpretation thereof;

                  (iv) with respect to any "uncertificated security" (as defined
            in Section 8-102(a)(18) of the UCC) that is not governed by clause
            (iii) above, transferred:

                              (A)   (1) by registration to the Trustee as
                              the registered owner thereof, on the books and
                              records of the issuer thereof, or

                                    (2) by registration to another Person (not a
                              securities intermediary) that either becomes the
                              registered owner of the uncertificated security on
                              behalf of the Trustee or, have become the
                              registered owner, acknowledges that it holds for
                              the Trustee; or

                              (B) by the issuer thereof having agreed that it
                        will comply with instructions originated by the Trustee
                        without further consent of the registered owner thereof;

                              (C) with respect to any "security entitlement" (as
                        defined in Section 8-102(a)(17) of the UCC);

                              (D) if a securities intermediary

                                    (1) indicates by book entry that a
                              "financial asset" (as defined in Section
                              8-102(a)(9) of the UCC) has been credited to

                                       42
<PAGE>

                              the Trustee's "securities account" (as defined in
                              Section 8-501 (a) of the UCC),

                                    (2) receives a financial asset (as so
                              defined) from the Trustee or acquires a financial
                              asset for the Trustee, and, in either case,
                              accepts it for credit to the Trustee's securities
                              account (as so defined),

                                    (3) becomes obligated under other law,
                              regulation or rule to credit a financial asset to
                              the Trustee's securities account, or

                                    (4) has agreed that it will comply with
                              "entitlement orders" (as defined in Section
                              8-102(a)(8) of the UCC) originated by the Trustee,
                              without further consent by the "entitlement
                              holder" (as defined in Section 8-102(a)(7) of the
                              UCC), and

                              (E) such financial asset either is such Investment
                        Security or a security entitlement evidencing a claim
                        thereto; and

                              (F) in each case of delivery contemplated pursuant
                        to clauses (A) through (E) above, the Trustee shall make
                        appropriate notations on its records, and shall cause
                        the same to be made on the records of its nominees,
                        indicating that such Investment Security is held in
                        trust pursuant to and as provided in this Indenture.

      Any cash held by the Trustee shall not be considered a "financial asset"
for purposes of this Section. Subject to the other provisions hereof, the
Trustee shall have sole control over each such investment and the income
thereon, and any certificate or other instrument evidencing any such investment,
if any, shall be delivered directly to the Trustee or its agent, together with
each document of transfer, if any, necessary to transfer title to such
investment to the Trustee in a manner which complies with this paragraph.

                                   ARTICLE VI

                               REDEMPTION OF NOTES

      Section 6.01. Privilege of Redemption and Redemption Price. Notes may be
subject to redemption prior to maturity as set forth in a Supplemental
Indenture. Such Notes shall be redeemable as set forth in this Article, except
as may be otherwise provided in a Supplemental Indenture.

      Section 6.02. Optional Redemption. In the case of any redemption of Notes
other than as provided in Section 6.03 hereof, the Corporation shall give
written notice to the Trustee and each Credit Facility Provider providing a
Credit Facility for the Notes to be redeemed, if any (a) of its election or
direction so to redeem, on the specified Redemption Date, (b) of the aggregate
principal amount of the Notes within each Series and maturities to be redeemed
(which Redemption Date, Series, maturities and principal amounts thereof to be
redeemed shall be determined by the Corporation in its sole discretion, subject
to any limitations with respect

                                       43
<PAGE>

thereto contained in or permitted by the respective Supplemental Indenture) and
(c) of any moneys to be applied to the payment of the Redemption Price. Except
as set forth in the respective Supplemental Indenture, the notice from the
Corporation to the Trustee shall be given not less than 10 Business Days prior
to the last day on which the Trustee can give notice of redemption to Registered
Owners, unless a shorter period is acceptable to the Trustee. In the event
notice of redemption shall have been given as provided in Section 6.05 hereof,
the Trustee, if it holds the moneys to be applied to the payment of the
Redemption Price, shall prior to the Redemption Date, pay or cause to be paid to
the appropriate Paying Agent or Paying Agents an amount which, in addition to
other moneys, if any, available therefor held by such Paying Agent or Paying
Agents, will be sufficient to redeem on the Redemption Date at the Redemption
Price thereof, all the Notes to be redeemed. Such moneys shall be derived from
the Credit Proceeds Fund if the Notes to be redeemed are secured by a Credit
Facility other than a bond insurance policy. Except as provided in the preceding
sentence, funds used to optionally redeem Notes under this Section shall, to the
extent any Credit Facility other than a bond insurance policy is in effect, be
Eligible Funds.

      In addition, the Outstanding Notes are subject to redemption in whole
prior to their maturity at the option of the Corporation on any Interest Payment
Date on which the aggregate current principal balance of the Notes Outstanding
shall be less than or equal to 10% of the initial aggregate principal balance of
the Notes on their respective Issue Dates, at a redemption price equal to 100%
of the principal amount of such Notes being redeemed, together with accrued
interest thereon (including any Carry-over Amount thereon and any accrued
interest on such Carry-over Amount) to the date of redemption. The amount
deposited pursuant to this paragraph shall be paid to the Registered Owners on
the related Interest Payment Date following the date of such deposit.

      Section 6.03. Mandatory Redemption. Whenever by the terms of this
Indenture, the Trustee is required to redeem Notes otherwise than at the
election or direction of the Corporation, and subject to and in accordance with
the terms of the related Supplemental Indenture and this Article, the Trustee
shall select the Redemption Date of the Notes to be redeemed, give the notice of
redemption (with a copy to each Credit Facility Provider, if any) and transfer
the Redemption Price to the appropriate Paying Agents.

      Section 6.04. Selection of Notes to Be Redeemed. Except as may be
otherwise provided in a Supplemental Indenture, in the event of redemption of
less than all the Outstanding Notes of like Series and maturity, the Trustee
shall assign to each Outstanding Note within the Series and maturity designated
for partial redemption a distinctive number for each minimum denomination of the
principal amount thereof so as to distinguish each such minimum denomination
from each other portion of the Notes subject to such redemption. Subject to the
terms of any Supplemental Indenture, the Trustee shall select by "lot" or in
such other manner as the Trustee shall deem fair and reasonable, the aggregate
principal amount of Notes required to be redeemed from the numbers of all such
Notes then Outstanding of such maturity within the Series designated for partial
redemption, as many numbers as, at the minimum denomination for each Note, shall
equal the principal amounts of such Notes to be redeemed. The Notes to be
redeemed shall be the Notes to which were assigned numbers so selected; but only
so much of the principal amount of each such Notes of a denomination of more
than the minimum denomination shall be redeemed as shall equal the minimum
denomination for each number

                                       44
<PAGE>

assigned to it and so selected. For the purposes of this Section, Notes which
have theretofore been selected by lot for redemption shall not be deemed
Outstanding.

      Each Supplemental Indenture may specify the minimum authorized
denominations for Notes of the Series and redemptions of a portion of any Series
of Notes issued hereunder shall be effected in integral multiples of the
applicable minimum authorized denominations.

      Section 6.05. Notice of Redemption. When the Trustee shall receive notice
from the Corporation of its election or direction to redeem Notes pursuant to
Section 6.02 hereof or whenever redemption of Notes is required by this
Indenture pursuant to Section 6.03 hereof, but in each case, on the dates and at
the Redemption Prices specified in the related Supplemental Indenture, the
Trustee shall give notice, in the name of the Corporation, of the redemption of
such Notes. Such notice shall specify the complete name and Series, CUSIP
Number, interest rate, date of issue, and maturities of the Notes to be
redeemed, the Redemption Date and the place or places where amounts due upon
such redemption will be payable (with the name, address and phone number of a
contact person for the Trustee) and, if less than all the Notes of any Series
and maturity are to be redeemed, the letters and numbers or other distinguishing
marks of such Notes to be redeemed and, in the case of Notes to be redeemed in
part only, such notice shall also specify the respective portions of the
principal amount thereof to be redeemed. Such notice shall further state that on
such date there shall become due and payable upon each Note to be redeemed the
Redemption Price thereof, or the Redemption Price of the specified portions of
the principal thereof in the case of Notes to be redeemed in part only, and that
from and after such date interest thereon shall cease to accrue and be payable.
Such notice shall be given by first-class mail, not less than 15 days in the
case of Adjustable Rate Notes, and not less than 30 days, in the case of Fixed
Rate Notes, and in each case not more than 60 days before the Redemption Date,
to the Registered Owners of any Notes or portions of Notes which are to be
redeemed, at their addresses appearing upon the Note registration books;
provided, however, that shorter periods before the Redemption Date during which
notice pursuant to this Section must be given may be prescribed by a
Supplemental Indenture as to Notes issued pursuant to such Supplemental
Indenture. Failure so to mail any such notice shall not affect the validity of
the proceedings for the redemption of Notes with respect to which no such
failure occurred. As directed by the Corporation, further notice shall be given
by the Trustee in such manner as may be required or suggested by regulations or
market practice at the applicable time, but no defect in such further notice nor
any failure to give all or any portion of such further notice shall in any
manner defeat the effectiveness of a call for redemption if notice thereof is
nonetheless given as prescribed herein.

      In addition, the Trustee shall send a second notice of redemption not more
than 60 days subsequent to the redemption date to Registered Owners of Notes or
portions thereof redeemed but who failed to deliver such Notes for redemption
prior to the thirtieth day following such redemption date. Failure to give all
or any portion of such further notice shall not in any manner defeat the
effectiveness of the call for redemption.

      In addition to the foregoing, further notice of any redemption of Notes
hereunder shall be given by the Trustee, at least two business days in advance
of the mailed notice to Registered Owners, by registered or certified mail or
overnight delivery service, to all registered securities depositories then in
the business of holding substantial amounts of obligations of types

                                       45
<PAGE>

comprising the Notes and to at least two national information services that
disseminate notices of redemption of obligations such as the Notes. Such further
notice shall contain the information required above. Failure to give all or any
portion of such further notice shall not in any manner defeat the effectiveness
of a call for redemption.

      Section 6.06. Payment of Redeemed Notes. Notice having been given by mail
in the manner provided in Section 6.05 hereof, the Notes or portions thereof so
called for redemption shall become due and payable on the Redemption Date so
designated at the Redemption Price, and, upon presentation and surrender thereof
at the office specified in such notice, such Notes, or portions thereof, shall
be paid at the Redemption Price. If there shall be called for redemption less
than the entire principal amount of a Note, the Corporation shall execute, the
Authenticating Agent shall authenticate and the Paying Agent shall deliver, upon
the surrender of such Note, without charge to the Registered Owner thereof, for
the unredeemed balance of the principal amount of the Note so surrendered at the
option of the Registered Owner, Notes of like Series and maturity in any of the
authorized denominations. If, on the Redemption Date, moneys for the redemption
of all the Notes or portions thereof of any like Series and maturity to be
redeemed, together with interest to the Redemption Date, shall be held by the
Paying Agent so as to be available therefor on said date and if notice of
redemption shall have been mailed as aforesaid, then, from and after the
Redemption Date, interest on the Notes or portions thereof of such Series and
maturities so called for redemption shall cease to accrue. If said moneys shall
not be available on the Redemption Date, such Notes or portions thereof shall
continue to bear interest until paid at the same rate as they would have borne
had they not been called for redemption.

                                  ARTICLE VII

          REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION

      Section 7.01. Payment of Notes. The Corporation shall duly and punctually
pay or cause to be paid, as herein provided, the principal or Redemption Price
of every Note and the interest, if any, thereon, at the dates and places and in
the manner stated in the Notes, according to the true intent and meaning
thereof.

      Section 7.02. Designation of Indenture Agents. The Corporation shall
designate such Indenture Agents, in addition to or replacing the Trustee as to
the agencies to which they are appointed, as Tender Agent, Paying Agents,
Registrar or Authenticating Agent as it may deem appropriate under the
provisions of any Supplemental Indenture.

      Section 7.03. Power to Issue Notes and Pledge Trust Estate. The
Corporation is duly authorized under all applicable laws to authorize and issue
the Notes and to enter into, execute and deliver this Indenture and to pledge
the Trust Estate pledged hereby in the manner and to the extent herein provided.
The Trust Estate so pledged is and will be free and clear of any pledge, lien,
charge or encumbrance thereon, or with respect thereto, prior to the pledge
created hereby, and all action on the part of the Corporation to that end has
been and will be duly and validly taken. The Notes and the provisions of this
Indenture are and will be the valid and legally enforceable limited obligations
of the Corporation in accordance with their terms and the terms of this
Indenture.

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<PAGE>

      Section 7.04. Further Assurances. At any and all times, the Corporation
shall, so far as it may be authorized by law, pass, make, do, execute,
acknowledge and deliver, all and every such further resolutions, acts, deeds,
conveyances, assignments, transfers and assurances as may be necessary or
desirable for the better assuring, conveying, granting, pledging, assigning and
confirming all and singular the Trust Estate, rights and assets hereby pledged
or assigned, or intended so to be, or which the Corporation may become bound to
pledge or assign.

      Section 7.05. Accounts and Reports.

            (a) The Corporation shall keep, or cause to be kept, proper books of
      record and account in which complete and accurate entries shall be made of
      all of its transactions relating to the Financed Student Loans and all
      Funds established by this Indenture which shall upon reasonable notice and
      at all reasonable times be subject to the inspection of the Trustee, any
      Credit Facility Provider and the Registered Owners of an aggregate of not
      less than 25% in principal amount of Notes then Outstanding or their
      representatives duly authorized in writing.

            (b) The Corporation shall annually, within 150 days after the end of
      the Corporation's first Fiscal Year and within 120 days after the close of
      each Fiscal Year thereafter, file with the Trustee, any Credit Facility
      Provider, any Liquidity Facility Provider and the Rating Agencies then
      rating the Notes: (i) audited financial statements for such Fiscal Year
      for any Person for which the Corporation has been consolidated for
      financial accounting purposes (or for the Corporation if the Corporation
      is not then consolidated with any other Person for financial accounting
      purposes) and (ii) a balance sheet showing the assets and liabilities of
      the Trust Estate at the end of such Fiscal Year. The financial statements
      shall be accompanied by an Accountant's Certificate stating that the
      financial statements examined present fairly the financial position of
      such Person (or the Corporation) at the end of the Fiscal Year, the
      results of its operations and the changes in financial position for the
      period examined, in conformity with generally accepted accounting
      principles.

            (c) The Trustee shall have no duty or responsibility with respect to
      the Corporation's financial statements or accounts and reports set forth
      herein except to make them available at no charge, upon request, to the
      Registered Owners as hereinbefore provided and to persons or entities that
      claim in writing to be a beneficial owner of Notes. The Trustee shall be
      entitled to reimbursement for all expenses and charges related to the
      Trustee providing such financial statements to the Registered Owners.

            Section 7.06. Student Loan Program.

            (a) The Corporation, through its Servicers and Subservicers, shall
      diligently collect all principal and interest payments on all the Financed
      Student Loans held under this Indenture, and Default Claims, if any, which
      relate to such Financed Student Loans. The Corporation, through its
      Servicer or Subservicers, shall cause the filing and assignment of such
      claims within the time prescribed, with respect to Private Loans acquired
      with proceeds of Notes, by the Regulations of each Guarantee Agency
      guaranteeing Private Loans acquired with proceeds of Notes and, with
      respect to FFELP

                                       47
<PAGE>

      Loan acquired with proceeds of Notes, the Higher Education Act and the
      Regulations of the Secretary and the Guarantee Agencies guaranteeing FFELP
      Loans acquired with proceeds of Notes. The Corporation will comply with
      the provisions of the Higher Education Act, if any, which apply to the
      FFELP Loans acquired with proceeds of Notes.

            (b) No amount in the Acquisition Fund shall be expended or applied
      for the purpose of purchasing, originating or financing a Student Loan,
      and no Student Loan shall be financed hereunder, unless the Corporation
      has determined that each of the Student Loans meets the requirements of
      Section 7.12 hereof.

            (c) The Corporation may at any time exchange a Financed Student Loan
      for another Student Loan that does not meet the similar characteristics
      requirement of paragraph (e) of this Section provided that is has a
      maturity, an aggregate principal amount and interest rate not less than
      the aggregate principal amount and interest rate of the Financed Student
      Loan being exchanged, or sell, assign, transfer or otherwise dispose of a
      Financed Student Loan at a price:

                        (i) in excess of the principal amount thereof (plus
                  accrued borrower interest) or in excess of the purchase price
                  paid by the Corporation for such Financed Student Loan (less
                  principal amounts received with respect to such Financed
                  Student Loan);

                        (ii) equal to the principal amount thereof (plus accrued
                  borrower interest), when the amounts on deposit in the Funds
                  and Accounts and the Financed Student Loans in the Acquisition
                  Fund (including accrued interest thereon), are at least equal
                  to the principal amount of the Outstanding Notes plus accrued
                  interest or in order to pay current Debt Service on the Notes
                  or to avoid any default in the payment obligations of the
                  Corporation under any Reimbursement Agreement or otherwise; or

                        (iii) lower than the principal amount thereof (plus
                  accrued borrower interest) if the Corporation has received a
                  Credit Confirmation (or, for Notes not subject to a Credit
                  Facility, a Rating Confirmation);

      provided, however, that such exchanges, sales, assignments, transfers or
      dispositions shall not collectively exceed 5% of the aggregate principal
      amount of the Financed Student Loans in any one year without the written
      consent of each Credit Facility Provider, if any.

            (d) To the extent permitted by this Indenture and each Supplemental
      Indenture, the Corporation will use its best efforts to evaluate the
      reinvestment of Recoveries of Principal and interest receipts with respect
      to Financed Student Loans to ensure that it will continue to be able to
      fulfill its debt service requirements hereunder.

            (e) Notwithstanding anything herein to the contrary, the Corporation
      may, without limitation, at any time and from time to time exchange
      Financed Student Loans for other Student Loans having similar
      characteristics (including insurance or guarantees, if any, maturities and
      payment status) and an aggregate principal amount and interest rate

                                       48
<PAGE>

      not less than the aggregate principal amount and interest rate of the
      Financed Student Loans being exchanged.

      Section 7.07. Servicing of Financed Student Loans. The Corporation shall
cause all Financed Student Loans to be properly serviced and the payment and
collection of all payments of principal and interest to be enforced by the
Servicer or any additional or successor Servicer evidencing, in the judgment of
the Corporation, the capability and experience necessary to adequately service
student loans, including, with respect to FFELP Loans, in accordance with
regulations issued under the Higher Education Act, if applicable. The
Corporation covenants that the Servicer will be its agent and subject to its
general direction under a contract with the Servicer. The Servicer may perform
its duties through Subservicers, except as may be provided by any Supplemental
Indenture. The Corporation shall cause all Financed Student Loan notes to be
held in trust as part of the Trust Estate subject to the lien of this Indenture.

      The Corporation shall cause to be diligently enforced, and take all
reasonable steps, actions and proceedings necessary for the enforcement of, all
terms, covenants and conditions of all Servicing Agreements, including the
prompt payment of all principal and interest payments and all other amounts due
the Corporation thereunder. The Corporation shall not permit the release of the
obligations in any manner that materially adversely affects the rights or
security of the Registered Owners, any Credit Facility Provider or any Liquidity
Facility Provider of any Servicer under any Servicing Agreement and shall at all
times, to the extent permitted by law, cause to be defended, enforced, preserved
and protected the rights and privileges of the Corporation, the Trustee and the
Registered Owners under or with respect to each Servicing Agreement. The
Corporation shall not consent or agree to or permit any amendment or
modification of any Servicing Agreement which will in any manner materially
adversely affect the rights or security of the Trustee, the Registered Owners,
any Credit Facility Providers or any Liquidity Facility Providers.

      Section 7.08. Issuance of Additional Notes.

            (a) After the issuance of the initial Series of Notes under this
      Indenture, the Corporation shall not create or permit the creation of or
      issue any obligations or create any additional indebtedness which will be
      secured by a lien or charge on the Trust Estate, except as follows: (i)
      additional Series of Notes may be issued from time to time, subject to the
      provisions of Section 2.03 hereof, including a Rating Confirmation and
      written consent of each Credit Facility Provider, if any, for Senior
      Notes, which may have any priority designation and which may be superior
      to (but not superior to Senior Notes), on a parity with, or subordinate to
      one or more initial Series of Notes or Interest Rate Exchange Agreements;
      and (ii) Interest Rate Exchange Agreements may be entered into from time
      to time which may have any priority designation and which may be superior
      to (but not superior to Senior Notes), on a parity with or subordinate to
      one or more Series of Notes or Interest Rate Exchange Agreements. The
      Corporation shall not enter into an Interest Rate Exchange Agreement
      without obtaining a Credit Confirmation (or, for Notes not subject to a
      Credit Facility, a Rating Confirmation).

            (b) No Series of Notes shall be issued under this Indenture except
      in accordance with Section 2.03 hereof.

                                       49
<PAGE>

            (c) The Corporation hereby expressly reserves the right to execute
      and deliver one or more additional general indentures, to issue
      indebtedness thereunder, and to pledge other assets not in the Trust
      Estate to payment of such indebtedness.

      Section 7.09. Compliance With Conditions Precedent. The Corporation
represents that upon the date of issuance of any of the Notes, all conditions,
acts and things required by law or by this Indenture to exist, to have happened
or to have been performed precedent to or in the issuance of such Notes shall
exist, have happened and have been performed, or will have happened or been
performed, and such Notes, together with all other indebtedness of the
Corporation, shall be within every debt and other limit prescribed by law.

      Section 7.10. General Compliance with Conditions in this Indenture and any
Reimbursement Agreements. The Corporation shall do and perform or cause to be
done and performed all acts and things required to be done or performed by or on
behalf of the Corporation under the provisions of this Indenture and any
Reimbursement Agreement in accordance with the terms of such provisions. The
Corporation agrees that, if there is any conflict between this Indenture and any
Reimbursement Agreement, the provisions of this Indenture shall control. In the
event of a conflict between the terms of Reimbursement Agreements pertaining to
the Notes, the Reimbursement Agreement pertaining to the Senior Notes shall
govern (or if no Senior Notes are Outstanding, the Reimbursement Agreement
pertaining to the Subordinate Notes shall govern and, if no Senior Notes or
Subordinate Notes are Outstanding, the Reimbursement Agreement pertaining to the
Junior-Subordinate Notes shall govern).

      Section 7.11. Additional Covenants. The Corporation covenants that it will
acquire or cause to be acquired Student Loans as described herein. The
Registered Owners of the Notes shall not in any circumstances be deemed to be
the owner or holder of the Financed Student Loan.

      The Corporation, or its designated agent, shall be responsible for each of
the following actions:

            (a) With respect to Financed Student Loans originated under the
      Higher Education Act, the Corporation, or its designated agent, shall be
      responsible for dealing with the Secretary with respect to the rights,
      benefits and obligations under the certificates of insurance and the
      contract of insurance with respect to Financed Student Loans originated
      under the Higher Education Act, and the Corporation shall be responsible
      for dealing with the Guarantee Agency with respect to the rights, benefits
      and obligations under any Guarantee Agreement with respect to the Financed
      Student Loans.

            (b) With respect to Financed Student Loans originated under the
      Higher Education Act, the Corporation, or its designated agent, shall
      comply, and shall cause all of its officers, directors, employees and
      agents to comply, with the provisions of the Higher Education Act and any
      regulations or rulings thereunder, and with the provisions of any
      Guarantee Agreement with respect to the Financed Student Loans.

                                       50
<PAGE>

            (c) The Corporation, or its designated agent, shall cause the
      benefits of the Guarantee Agreements, the Interest Subsidy Payments and
      the Special Allowance Payments to flow to the Trustee.

            (d) The Trustee shall have no obligation to administer, service or
      collect the loans in the Trust Estate or to maintain or monitor the
      administration, servicing or collection of such loans.

      The Trustee shall not be deemed to be the designated agent for the
purposes of this Section unless it has agreed in writing to be such agent.

      Section 7.12. Covenant Regarding Financed Student Loans. The Corporation
hereby covenants that all Student Loans to be acquired hereunder will meet the
following:

            (a) Each Student Loan is evidenced by an executed promissory note,
      which note is a valid and binding obligation of the borrower, enforceable
      by or on behalf of the holder thereof in accordance with its terms,
      subject to bankruptcy, insolvency and other laws relating to or affecting
      creditors' rights.

            (b) The amount of the unpaid principal balance of each Student Loan
      is due and owing, and no counterclaim, offset, defense or right to
      rescission exists with respect to any such Student Loan which can be
      asserted and maintained or which, with notice, lapse of time, or the
      occurrence or failure to occur of any act or event, could be asserted and
      maintained by the borrower against the Corporation as assignee thereof.
      The Corporation shall take all reasonable actions to assure that no maker
      of a Student Loan has or may acquire a defense to the payment thereof.

            (c) No Student Loan has a payment that is more than 60 days overdue.

            (d) The Corporation has full right, title and interest in each
      Student Loan free and clear of all liens, pledges or encumbrances
      whatsoever.

            (e) Each Student Loan was made in compliance with all applicable
      local, state and federal laws, rules and regulations, including, without
      limitation, all applicable nondiscrimination, truth-in-lending, consumer
      credit and usury laws.

            (f) Except as otherwise approved in writing by each Credit Facility
      Provider, all loan documentation shall be delivered to the Servicer (as
      custodian for the Trustee) prior to payment of the purchase price of such
      Student Loan.

            (g) Each Student Loan is accruing interest (whether or not such
      interest is being paid currently, either by the borrower or the Secretary,
      or is being capitalized), except as otherwise expressly permitted by this
      Indenture.

            (h) Each FFELP Loan evidenced by a Master Promissory Note in the
      form mandated by Section 432(m)(1)(D) of the Higher Education Act and any
      Private Loan evidenced by a master promissory note shall be acquired
      pursuant to a loan purchase agreement with a Seller containing language
      similar to that contained in Exhibit B hereto.

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<PAGE>

      Section 7.13. Continued Existence; Successor of Corporation. The
Corporation agrees that it will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights and franchises
as a corporation under the laws of the State, except as otherwise permitted by
this Section. The Corporation further agrees that it will not (a) sell, transfer
or otherwise dispose of all or substantially all, of its assets (except Financed
Student Loans if such sale, transfer or disposition will discharge this
Indenture in accordance with Article XII hereof); (b) consolidate with or merge
into another corporation or entity; or (c) permit one or more other corporations
or entities to consolidate with or merge into it. The preceding restrictions in
clauses (a), (b) and (c) shall not apply to a transaction if the transferee or
the surviving or resulting corporation or entity, if other than the Corporation,
by proper written instrument for the benefit of the Trustee, irrevocably and
unconditionally assumes the obligation to perform and observe the agreements and
obligations of the Corporation under this Indenture.

      Section 7.14. Servicer Computer Operations. The Corporation, if it has
prior knowledge of a proposed conversion, shall not permit any Servicer to
transfer material components of its computer servicing operations from an
existing application system to a new application system unless it has notified
each Credit Facility Provider of the proposed timing and extent of conversion
and it has received the written consent of each Credit Facility Provider, if
any. The Corporation also agrees to provide each Credit Facility Provider
information regarding the operating and efficiency of the Servicer's system
following such conversion within 30 days following conversion or such longer
time as is consented to in writing by each Credit Facility Provider and in any
event the Corporation agrees to provide each Credit Facility Provider with a due
diligence audit within 90 days following conversion or such longer time as is
consented to in writing by such Credit Facility Provider.

      Section 7.15. Representations; Negative Covenants. The Corporation hereby
makes the following representations and warranties to the Trustee on which the
Trustee relies in authenticating the Notes and on which the Registered Owners
have relied in purchasing the Notes. Such representations and warranties shall
survive the transfer and assignment of the Trust Estate to the Trustee.

            (a) Organization and Good Standing. The Corporation is duly
      organized and validly existing under the laws of the State of Delaware,
      and has the power to own its own assets and to transact the business in
      which it presently engages.

            (b) Due Qualification. The Corporation is duly qualified to do
      business and is in good standing, and has obtained all material, necessary
      licenses and approvals, in all jurisdictions where the failure to be so
      qualified, have such good standing or have such licenses or approvals
      would have a material adverse effect on the Corporation's business and
      operations or in which the actions as required by this Indenture require
      or will require such qualification.

            (c) Authorization. The Corporation has the power, authority and
      legal right to execute, deliver and perform its obligations under this
      Indenture and to grant the Trust Estate to the Trustee and the execution
      and delivery of and the performance of its obligations under this
      Indenture and grant of the Trust Estate to the Trustee have been duly
      authorized by the Corporation by all necessary corporation action.

                                       52
<PAGE>

            (d) Binding Obligation. This Indenture, assuming due authorization,
      execution and delivery by the Trustee, constitutes a legal, valid and
      binding obligation of the Corporation enforceable against the Corporation
      in accordance with its terms, except that (i) such enforcement may be
      subject to bankruptcy, insolvency, reorganization, moratorium or other
      similar laws (whether statutory, regulatory or decisional) now or
      hereafter in effect relating to creditors' rights generally; and (ii) the
      remedy of specific performance and injunctive and other forms of equitable
      relief may be subject to certain equitable defenses and to the discretion
      of the court before which any proceeding therefor may be brought, whether
      a proceeding at law or in equity.

            (e) No Violation. The consummation of the transactions contemplated
      by this Indenture and the fulfillment of the terms hereof does not
      conflict with, result in any breach of any terms and provisions of or
      constitute (with or without notice, lapse of time or both) a default under
      the organizational documents of the Corporation, or any material
      indenture, agreement, mortgage, deed of trust or other instrument to which
      the Corporation is a party or by which it is bound, or result in the
      creation or imposition of any lien upon any of its material properties
      pursuant to the terms of any such indenture, agreement, mortgage, deed of
      trust or other instrument, other than this Indenture, nor violate any law
      or any order, rule or regulation applicable to the Corporation of any
      court or of any federal or state regulatory body, administrative agency,
      or other governmental instrumentality having jurisdiction over the
      Corporation or any of its properties.

            (f) No Proceedings. There are no proceedings, injunctions, writs,
      restraining orders or investigations to which the Corporation or any of
      its Affiliates is a party pending, or, to the best of such entity's
      knowledge, threatened, before any court, regulatory body, administrative
      agency, or other tribunal or governmental instrumentality (i) asserting
      the invalidity of this Indenture, (ii) seeking to prevent the issuance of
      any Notes or the consummation of any of the transactions contemplated by
      this Indenture or (iii) seeking any determination or ruling that might
      materially and adversely affect the performance by the Corporation of its
      obligations under, or the validity or enforceability of this Indenture.

            (g) Approvals. All approvals, authorizations, consents, orders or
      other actions of any person, corporation or other organization, or of any
      court, governmental agency or body or official, required on the part of
      the Corporation in connection with the execution and delivery of this
      Indenture have been taken or obtained on or prior to the Issue Date.

            (h) Place of Business. The Corporation's place of business and chief
      executive office is 3320 Holcomb Bridge Road, NW, Norcross, Georgia 30092.

            (i) Tax and Accounting Treatment. The Corporation intends to treat
      the transactions contemplated by Student Loan Purchase Agreements for
      Student Loan as an absolute transfer rather than as a pledge of the
      Student Loans from the Seller for federal income tax, and the Corporation
      will be treated as the owner of the Financed Student Loans for all
      purposes. The Corporation further intends to treat the Notes as its
      indebtedness for federal income tax.

                                       53
<PAGE>

            (j) Taxes. The Corporation has filed (or caused to be filed) all
      federal, state, county, local and foreign income, franchise and other tax
      returns required to be filed by it through the date hereof, and has paid
      all taxes reflected as due thereon. The Corporation has taken all steps
      necessary to ensure that it is eligible to file a consolidated federal
      income tax return with UICI and such returns will be filed for all taxable
      years in which the Notes are Outstanding. There is no pending dispute with
      any taxing authority that, if determined adversely to the Corporation,
      would result in the assertion by any taxing authority of any material tax
      deficiency, and the Corporation has no knowledge of a proposed liability
      for any tax year to be imposed upon such entity's properties or assets for
      which there is not an adequate reserve reflected in such entity's current
      financial statements.

            (k) Legal Name. The legal name of the Corporation is "CFLD-I, Inc."
      and has not changed since its inception. The Corporation has no trade
      names, fictitious names, assumed names or "dba's" under which it conducts
      its business and has made no filing in respect of any such name.

            (l) Business Purpose. The Corporation will acquire Student Loans
      conveyed to it under Student Loan Purchase Agreements for a bona fide
      business purpose rather than as an agent of any other person. The
      Corporation has no subsidiaries, has adopted and operated consistently
      with all corporate formalities with respect to its operations and has
      engaged in no other activities other than those specified in this
      Indenture and its organizational documents and in accordance with the
      transactions contemplated herein and therein.

            (m) Compliance with Laws. The Corporation is in compliance with all
      applicable laws and regulations with respect to the conduct of its
      business and has obtained and maintains all permits, licenses and other
      approvals as are necessary for the conduct of its operations.

            (n) Valid Business Reasons; No Fraudulent Transfers. The
      transactions contemplated by this Indenture are in the ordinary course of
      the Corporation's business and the Corporation has valid business reasons
      for granting the Trust Estate pursuant to this Indenture. At the time of
      each such grant: (i) the Corporation granted the Trust Estate to the
      Trustee without any intent to hinder, delay, or defraud any current or
      future creditor of the Corporation; (ii) the Corporation was not insolvent
      and did not become insolvent as a result of any such grant; (iii) the
      Corporation was not engaged and was not about to engage in any business or
      transaction for which any property remaining with such entity was an
      unreasonably small capital or for which the remaining assets of such
      entity are unreasonably small in relation to the business of such entity
      or the transaction; (iv) the Corporation did not intend to incur, and did
      not believe or should not have reasonably believed, that it would incur,
      debts beyond its ability to pay as they become due; and (v) the
      consideration paid received by the Corporation for the grant of the Trust
      Estate was reasonably equivalent to the value of the related grant.

                                       54
<PAGE>

            (o) No Management of Affairs of Affiliates. The Corporation is not
      and will not be involved in the day-to-day management of the Corporation's
      parent or any Affiliate.

            (p) No Intercorporate Transfers with Seller or Affiliates. Other
      than the acquisition of assets and the transfer of any Notes pursuant to
      this Indenture, the Corporation does not engage in and will not engage in
      any intercorporate transactions with any of its Affiliates, except as
      provided herein.

            (q) Ability to Perform. There has been no material impairment in the
      ability of the Corporation to perform its obligations under this
      Indenture.

            (r) Financial Condition. No material adverse change has occurred in
      the Corporation's financial status since the date of its formation.

            (s) Event of Default. No Event of Default has occurred and no event
      has occurred that, with the giving of notice, the passage of time, or
      both, would become an Event of Default.

            (t) Acquisition of Student Loans Legal. The Corporation has complied
      with all applicable, federal, state and local laws and regulations in
      connection with its acquisition of the Student Loans from the Seller.

            (u) No Material Misstatements or Omissions. No information,
      certificate of an officer, statement furnished in writing or report
      delivered to the Trustee, any Servicer, any Guarantee Agency, any Credit
      Facility Provider, any Liquidity Facility Provider, any Surety Provider or
      any Registered Owner by the Corporation contains any untrue statement of a
      material fact or omits a material fact necessary to make such information,
      certificate, statement or reporting not misleading.

            Section 7.16. Corporation Covenants. So long as any of the Notes are
      Outstanding:

            (a) The Corporation shall not engage in any business or activity
      other than in connection with the activities contemplated hereby and in
      the Student Loan Purchase Agreements, and in connection with the issuance
      of Notes.

            (b) The funds and other assets of the Corporation shall not be
      commingled with those of any other individual, corporation, estate,
      partnership, joint venture, association, joint stock company, trust,
      unincorporated organization, or government or any agency or political
      subdivision thereof.

            (c) The Corporation shall not be, become or hold itself out as being
      liable for the debts of any other party.

            (d) The Corporation shall not form, or cause to be formed, any
      subsidiaries.

                                       55
<PAGE>

            (e) The Corporation shall act solely in its own name and through its
      duly authorized officers or agents in the conduct of its business, and
      shall conduct its business so as not to mislead others as to the identity
      of the entity with which they are concerned.

            (f) The Corporation shall maintain its records and books of account
      and shall not commingle its records and books of account with the records
      and books of account of any other Person. The books of the Corporation
      maybe kept (subject to any provision contained in the statutes) inside or
      outside the State at such place or places as may be designated from time
      to time by the board of trustees or in the bylaws of the Corporation.

            (g) All actions of the Corporation shall be taken by a duly
      authorized officer or agent of the Corporation.

            (h) The Corporation shall not amend, alter, change or repeal any
      provision contained in this Section without (i) the prior written consent
      of the Trustee and each Credit Facility Provider or Liquidity Facility
      Provider, if required by the Reimbursement Agreement relating to such
      Liquidity Facility, and (ii) a Rating Confirmation from each Rating Agency
      rating any Notes Outstanding (a copy of which shall be provided to the
      Trustee) that such amendment, alteration, change or repeal will have no
      adverse effect on the rating assigned to the Notes.

            (i) The Corporation shall not amend its Articles of Incorporation
      without first obtaining the prior written consent of each Rating Agency
      and each Credit Facility Provider, if any.

            (j) All audited financial statements of the Corporation that are
      consolidated with those of any Affiliate thereof will contain detailed
      notes clearly stating that (i) all of the Corporation's assets are owned
      by the Corporation, and (ii) the Corporation is a separate entity with
      creditors who have received ownership and/or security interests in the
      Corporation's assets.

            (k) The Corporation will strictly observe legal formalities in its
      dealings with any of its Affiliates, and funds or other assets of the
      Corporation will not be commingled with those of any of its Affiliates.
      The Corporation shall not maintain joint bank accounts or other depository
      accounts to which any of its Affiliate has independent access. None of the
      Corporation's funds will at any time be pooled with the funds of any of
      its Affiliates.

            (l) The Corporation will maintain an arm's length relationship with
      the Seller (and any Affiliate). Any Person that renders or otherwise
      furnishes services to the Corporation will be compensated by the
      Corporation at market rates for such services it renders or otherwise
      furnishes to the Corporation except as otherwise provided in this
      Indenture. Except as contemplated in this Indenture, the Student Loan
      Purchase Agreements or the Servicing Agreements, the Corporation will not
      hold itself out to be responsible for the debts of the Seller, the parent
      or the decisions or actions respecting the daily business and affairs of
      the Seller or parent.

                                       56
<PAGE>

            (m) The Corporation shall not sell, transfer, exchange or otherwise
      dispose of any portion of the Trust Estate except as expressly permitted
      by this Indenture.

            (n) The Corporation shall not claim any credit on, or make any
      deduction from, the principal amount of any of the Notes by reason of the
      payment of any taxes levied or assessed upon any portion of the Trust
      Estate.

            (o) The Corporation shall not permit the validity or effectiveness
      of this Indenture, any Supplement or any grant hereunder to be impaired,
      or permit the lien of this Indenture to be amended, hypothecated,
      subordinated, terminated or discharged, or permit any Person to be
      released from any covenants or obligations under this Indenture, except as
      may be expressly permitted hereby.

                                  ARTICLE VIII

                      SUPPLEMENTAL INDENTURES NOT REQUIRING
                          CONSENT OF REGISTERED OWNERS

      Section 8.01. Supplemental Indentures Not Requiring the Consent of
Registered Owners. For any one or more of the following purposes and at any time
or from time to time subject to the provisions of Section 8.02 hereof and with
written approval of each Credit Facility Provider, if any, a Supplemental
Indenture not requiring the consent of Registered Owners may be executed and
delivered by the Corporation and the Trustee for the following purposes:

            (a) to close this Indenture, or provide limitations and restrictions
      in addition to the limitations and restrictions contained in this
      Indenture on, the authentication and delivery of Notes or the issuance of
      other evidences of indebtedness;

            (b) to add to the covenants and agreements of the Corporation in
      this Indenture other covenants and agreements to be observed by the
      Corporation which are not contrary to or inconsistent with this Indenture
      as theretofore in effect;

            (c) to add to the limitations and restrictions in this Indenture
      other limitations and restrictions to be observed by the Corporation which
      are not contrary to or inconsistent with this Indenture as theretofore in
      effect;

            (d) to surrender any right, power or privilege reserved to or
      conferred upon the Corporation by the terms of this Indenture, but only if
      the surrender of such right, power or privilege is not contrary to or
      inconsistent with the covenants and agreements of the Corporation
      contained in this Indenture;

            (e) to confirm, as further assurance, any pledge under, and the
      subjection to any lien or pledge created or to be created by, this
      Indenture, of the Trust Estate or of any other revenues or assets;

            (f) to modify any of the provisions of this Indenture in any respect
      whatever, but only if (i) such modification shall be, and be expressed to
      be, effective only after all Notes Outstanding at the date of the
      execution of such Supplemental Indenture shall

                                       57
<PAGE>

      cease to be Outstanding, and (ii) such Supplemental Indenture shall be
      specifically referred to in the text of all Notes authenticated and
      delivered after the date of the execution of such Supplemental Indenture
      and of Notes issued in exchange therefor or in place thereof;

            (g) to authorize the issuance of one or more Series of Notes and to
      prescribe the terms and conditions upon which such Notes may be issued;

            (h) to create additional special trust accounts for the further
      securing of all Notes, all Senior Notes, all Subordinate Notes, all
      Junior-Subordinate Notes or all Notes of a Series issued pursuant to this
      Indenture if along with such Supplemental Indenture there is filed an
      Opinion of Counsel to the effect that the creation and operation of such
      account will in no way impair the existing security of the Registered
      Owner of any Outstanding Note;

            (i) to cure any ambiguity, supply any omission, or cure or correct
      any defect or inconsistent provisions in this Indenture;

            (j) to insert such provisions clarifying matters or questions
      arising under this Indenture as are necessary or desirable and are not
      contrary to or inconsistent with this Indenture as theretofore in effect;

            (k) to provide for additional duties of the Trustee in connection
      with the Financed Student Loans;

            (l) to satisfy the requirements of a Rating Agency in order to
      obtain, maintain or improve the rating on any of the Notes;

            (m) to replace, change or alter the Rating Agencies then rating the
      Notes;

            (n) to provide for the orderly sale or remarketing of Notes;

            (o) to make any other change which, in the judgment of the Trustee
      acting in reliance on an Opinion of Counsel is necessary or desirable to
      maintain the tax status of the Notes as debt for federal tax purposes;

            (p) to make any change which, in the judgment of the Trustee acting
      in reliance upon an Opinion of Counsel, to the extent the Trustee deems
      such opinion desirable, is not to the prejudice of the Trustee or the
      Registered Owners;

            (q) to make any change that affects only the rights of a Credit
      Facility Provider or Liquidity Facility Provider which has issued a Credit
      Facility or Liquidity Facility with respect to any of the Notes, with the
      prior written consent of such Credit Facility Provider or Liquidity
      Facility Provider;

            (r) to provide for the conversion of the interest rate on any Series
      of Notes as provided in a Supplemental Indenture;

                                       58
<PAGE>

            (s) to allow the Trustee, or any other Person acting on behalf of
      the Corporation, to become, or continue as, an Eligible Lender under the
      Higher Education Act;

            (t) to make any other change with a Credit Confirmation (or, for
      Notes not subject to a Credit Facility, a Rating Confirmation); or

            (u) to modify, amend or supplement this Indenture or any
      Supplemental Indenture in such manner as to permit the qualification
      hereof and thereof under the Trust Indenture Act of 1939, as amended or
      any similar federal statute hereafter in effect or to permit the
      qualification of the Notes for sale under the securities laws of the
      United States of America or of any of the states of the United States of
      America, and, if they so determine, to add to this Indenture or any
      Supplemental Indenture hereto such other terms, conditions and provisions
      as may be permitted by said Trust Indenture Act of 1939, as amended or
      similar federal statute.

      Section 8.02. General Provisions.

            (a) Any Supplemental Indenture permitted or authorized by Section
      8.01 hereof may be executed by the Corporation without the consent of any
      of the Registered Owners, but with the consent of each Credit Facility
      Provider, and the Liquidity Facility Provider for the Series of Notes
      affected. The Corporation shall further notify the Rating Agencies then
      Rating the Notes of the execution of such Supplemental Indenture. The copy
      of every Supplemental Indenture filed with the Trustee shall be
      accompanied by an Opinion of Counsel including a statement that such
      Supplemental Indenture has been duly and lawfully executed in accordance
      with the provisions of this Indenture and any applicable Reimbursement
      Agreement, is authorized or permitted by this Indenture, and, assuming due
      authorization, execution and delivery by the other parties thereto, is
      valid and binding upon the Corporation.

            (b) The Trustee is hereby authorized to execute any Supplemental
      Indenture referred to and permitted or authorized by Section 8.01 or
      Article IX hereof, and to make all further agreements and stipulations
      which may be therein contained, and the Trustee, in taking such action,
      shall be fully protected in relying on an Opinion of Counsel that such
      Supplemental Indenture is authorized or permitted by the provisions of
      this Indenture.

            (c) No Supplemental Indenture shall change or modify any of the
      rights or obligations of any Indenture Agent without its written assent
      thereto.

                                   ARTICLE IX

                             SUPPLEMENTAL INDENTURES
                     REQUIRING CONSENT OF REGISTERED OWNERS

      Section 9.01. Mailing of Notice of Amendment. Any provision of this
Article for the mailing of a notice or other document to Registered Owners shall
be fully complied with if it is mailed postage prepaid (a) to each Registered
Owner of Notes then Outstanding at his address

                                       59
<PAGE>

appearing upon the Note registration books of the Corporation, (b) to the
Trustee, (c) to the Rating Agencies then rating the Notes, (d) to each Credit
Facility Provider, if any, and (e) to each Liquidity Facility Provider for any
Notes to which such notice or other document relates.

      Section 9.02. Powers of Amendment. Except as provided in Article VIII
hereof, any modification of or amendment to this Indenture and of the rights and
obligations of the Corporation, any Credit Facility Provider, or any Liquidity
Facility Provider under a Supplemental Indenture, and of the Registered Owners
of the Notes of any particular Series, may be made by a Supplemental Indenture,
with the written consent: (a) of the Registered Owners of at least 51% in
principal amount of the Senior Notes Outstanding (or, if no Senior Notes are
Outstanding, then by Registered Owners of at least 51% in principal amount of
the Subordinate Notes Outstanding at the time such consent is given or, if no
Senior Notes or Subordinate Notes are Outstanding, then by Registered Owners of
at least 51% in principal amount of the Junior-Subordinate Notes Outstanding at
the time such consent is given); (b) in case less than all of the several Series
of Notes then Outstanding are affected by the modification or amendment, of the
Registered Owners of at least 51% in aggregate principal amount of the Notes of
each Series so affected and Outstanding at the time such consent is given, (c)
in case the modification or amendment changes the terms of any Sinking Fund
Payment, of the Registered Owners of at least 100% in principal amount of the
Notes of the particular Series and maturity entitled to such Sinking Fund
Payment and Outstanding at the time such consent is given, and (d) of each
Credit Facility Provider, if any.

      In the event that a Credit Facility Provider has issued a Credit Facility
or a Liquidity Facility Provider has issued a Liquidity Facility respecting a
Series of Notes and unless such Credit Facility Provider or such Liquidity
Facility Provider is then in receivership, bankruptcy or reorganization or is
then continuing wrongfully to dishonor drawings under the Credit Facility or
Liquidity Facility, such Credit Facility Provider or, in the event there is no
Credit Facility Provider, such Liquidity Facility Provider shall be considered
as the Registered Owner of 100% of such Series of Notes for the purpose of
consenting to any modification of or amendment to this Indenture, but, only if
so required by the applicable Reimbursement Agreement in the case of the
Liquidity Facility Provider.

      If any such modification or amendment will not take effect so long as any
Notes of any specified maturity remain Outstanding, the consent of the
Registered Owners of such Notes shall not be required and such Notes shall not
be deemed to be Outstanding for the purpose of any calculation of Outstanding
Notes under this Section. No such modification or amendment shall permit a
change in the terms of redemption or maturity of the principal of any
Outstanding Note or of any installment of interest thereon or a reduction in the
principal amount or the Redemption Price thereof or in the rate of interest
thereon without the consent of the Registered Owner of such Note (which consent
shall not be deemed to be effected by a Credit Facility Provider or Liquidity
Facility Provider), or shall reduce the percentages or otherwise affect the
Series of Notes that must consent to any modification or amendment of this
Indenture without the consent of all of Registered Owners of the Notes of that
Series, or shall change or modify any of the rights or obligations of any
Indenture Agent without its written assent thereto. For the purposes of this
Section, a Series of Notes shall be deemed to be affected by a modification or
amendment of this Indenture if the same adversely affects or diminishes the
rights of the Registered Owners of Notes of such Series. The Trustee may
determine, upon receipt of an Opinion of Counsel,

                                       60
<PAGE>

whether Notes of any particular Series would be affected by any modification or
amendment hereof and any such determination shall be binding and conclusive on
the Corporation, any Credit Facility Provider or Liquidity Facility Provider and
all Registered Owners of Notes.

      Section 9.03. Consent of Registered Owners.

            (a) A copy of any Supplemental Indenture making a modification or
      amendment which is not permitted by the provisions of Section 8.01 hereof
      (or brief summary thereof or reference thereto in a form approved by the
      Trustee), together with a request to Registered Owners for their consent
      thereto in a form satisfactory to the Trustee, shall be mailed by the
      Registrar on behalf of the Corporation to each Credit Facility Provider,
      if any, and the Registered Owner of any Note to be affected by such
      proposed amendment or modification. Such Supplemental Indenture shall not
      be effective unless and until there shall have been filed with the Trustee
      (A) the written consents of Registered Owners of the percentages of
      Outstanding Notes and each Credit Facility Provider specified in Section
      9.02 hereof and (B) an Opinion of Counsel stating that such Supplemental
      Indenture has been duly executed by the Corporation in accordance with the
      provisions of this Indenture and any applicable Reimbursement Agreement,
      is authorized or permitted hereby and, assuming due authorization,
      execution and delivery by the other parties thereto, is valid and binding
      upon the Corporation.

            (b) Any such consent shall be binding upon the Registered Owner of
      the Notes giving such consent and upon any subsequent Registered Owner of
      such Notes and of any Notes issued in exchange therefor (whether or not
      such subsequent Registered Owner thereof has notice thereof) unless such
      consent is revoked in writing by the Registered Owner of such Notes giving
      such consent or a subsequent Registered Owner thereof by filing with the
      Trustee, prior to the time when the written statement of the Trustee
      hereinafter provided for in this Section is filed, such revocation.

            (c) At any time after the Registered Owners of the required
      percentages of Notes shall have filed their consents to the Supplemental
      Indenture, the Trustee shall make and file with the Corporation and the
      Trustee a written statement that the Registered Owners of such required
      percentages of Notes have filed such consents. Such written statements
      shall be conclusive that such consents have been so filed. At any time
      thereafter, notice, stating in substance that the Supplemental Indenture
      (which may be referred to as a Supplemental Indenture dated as of a stated
      date, a copy of which is on file with the Trustee) has been consented to
      by the Registered Owners of the required percentages of Notes and will be
      effective as provided in this Section shall be given to Registered Owners
      by the Corporation by mailing such notice to the Registered Owners not
      more than 90 days after the Registered Owners of the required percentages
      of Notes shall have filed their consents to the Supplemental Indenture and
      the written statement of the Trustee herein above provided for is filed.
      The Corporation shall file with the Trustee proof of the mailing of such
      notice. A record, consisting of the papers required or permitted by this
      Section to be filed with the Trustee, shall be proof of the matters
      therein stated. Such Supplemental Indenture making such amendment or
      modification shall be deemed conclusively binding upon the Corporation,
      the Indenture Agents and the Registered Owners of all Notes after the
      filing with the Trustee of the proof of the

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      mailing of the notice of such consent, except in the event of a final
      decree of a court of competent jurisdiction setting aside such
      Supplemental Indenture in a legal action or equitable proceeding for such
      purpose.

      Section 9.04. Modifications by Unanimous Consent. The terms and provisions
of this Indenture and the rights and obligations of the Corporation and of the
Registered Owners of the Notes hereunder may be modified or amended in any
respect upon the execution by the Corporation and the Trustee of a Supplemental
Indenture with the consent of the Registered Owners of all the Notes then
Outstanding, such consent to be given as provided in Section 9.03 hereof, but no
such modification or amendment shall change or modify any of the rights or
obligations of any Indenture Agent without the filing with the Trustee of the
written assent thereto of such Indenture Agent in addition to the consent of the
Registered Owners. No notice of any such modification, amendment, assent or
publication thereof shall be required.

      Section 9.05. Exclusion of Notes. Notes owned or held by the Corporation
shall not be deemed Outstanding for the purpose of consent or other action or
any calculation of Outstanding Notes provided for in this Article, and the
Corporation shall not be entitled with respect to such Notes to give any consent
or take any other action provided for in this Article. At the time of any
consent or other action taken under this Article, the Corporation shall furnish
the Trustee a Certificate of an Authorized Representative, upon which the
Trustee may rely, describing all Notes so to be excluded.

      Section 9.06. Notation on Notes. Notes authenticated and delivered after
the effective date of any action taken as provided in Article VIII hereof or
this Article may and, if the Trustee so determines, shall bear a notation by
endorsement or otherwise in form approved by the Corporation and the Trustee as
to such action, and in that case upon demand of the Registered Owner of any
Outstanding Note at such effective date and presentation of his Note for the
purpose at the principal corporate trust office of the Trustee or upon any
transfer or exchange of any Note Outstanding at such effective date, suitable
notation shall be made on such Note or upon any Note issued upon any such
transfer or exchange by the Trustee as to any such action. If the Corporation or
the Trustee shall so determine, new Notes modified to conform to such action in
the opinion of the Trustee and the Corporation shall be prepared, executed,
authenticated and delivered, and upon demand of the Registered Owner of any Note
then Outstanding shall be exchanged, without cost to such Registered Owner, upon
surrender of such Outstanding Note.

                                   ARTICLE X

                              DEFAULTS AND REMEDIES

      Section 10.01. Events of Default. Each of the following events is an
"Event of Default":

            (a) payment by the Corporation of the principal, Purchase Price, or
      Redemption Price, if any, with respect to the Senior Notes Outstanding
      shall not be made when and as the same shall become due, whether at
      maturity or upon call for redemption or otherwise (or, if no Senior Notes
      are Outstanding, payment by the Corporation of the

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      principal, Purchase Price, or Redemption Price, if any, with respect to
      the Subordinate Notes Outstanding shall not be made when and as the same
      shall become due, whether at maturity or upon call for redemption or
      otherwise, or, if no Senior Notes or Subordinate Notes are Outstanding,
      payment by the Corporation of the principal, Purchase Price, or Redemption
      Price, if any, with respect to the Junior-Subordinate Notes Outstanding
      shall not be made when and as the same shall become due, whether at
      maturity or upon call for redemption or otherwise); or

            (b) payment by the Corporation of any installment of interest with
      respect to the Senior Notes Outstanding shall not be made when and as the
      same shall become due (or, if no Senior Notes are Outstanding, payment by
      the Corporation of any installment of interest with respect to the
      Subordinate Notes Outstanding shall not be made when and as the same shall
      become due, or, if no Senior Notes or Subordinate Notes are Outstanding,
      payment by the Corporation of any installment of interest with respect to
      the Junior-Subordinate Notes Outstanding shall not be made when and as the
      same shall become due); or

            (c) the Corporation shall fail or refuse to comply with the
      provisions of this Indenture, or shall default in the performance or
      observance of any of the other covenants, agreements or conditions on its
      part contained herein or in any Supplemental Indenture or the Notes, other
      than those described in paragraph (a) or (b) of this Section, and such
      failure, refusal or default shall continue for a period of 30 days after
      written notice thereof has been delivered to the Corporation by the
      Trustee or by the Registered Owners of not less than 25% in principal
      amount of the Outstanding Notes;

            (d) (i) except for each Series of Notes that is secured by a Credit
      Facility which is an insurance policy, with respect to any Series of Notes
      secured by a Credit Facility or Liquidity Facility, the related Credit
      Facility Provider or Liquidity Facility Provider has delivered written
      notice to the Trustee to the effect that the Corporation has failed to
      reimburse or otherwise pay such Credit Facility Provider or Liquidity
      Facility Provider pursuant to the terms of its Reimbursement Agreement as
      and when such reimbursement or payment becomes due and payable, and
      pursuant to the terms of the applicable Reimbursement Agreement, it is
      requiring that such Notes be accelerated, or (ii) for a Series of Notes
      secured by a Credit Facility that is an insurance policy, the related
      Credit Facility Provider has delivered written notice to the Trustee that
      it is requiring that such Notes be accelerated pursuant to the terms of
      this Indenture; or

            (e) the Corporation shall have commenced a voluntary case or other
      proceeding seeking liquidation, reorganization or other relief with
      respect to itself or its debts under any bankruptcy, insolvency, or other
      similar law now or hereafter in effect, or an involuntary case or other
      proceeding shall have been commenced against the Corporation seeking
      liquidation, reorganization or other relief with respect to it or its
      debts under any bankruptcy, insolvency or other similar law now or
      hereafter in effect.

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Section 10.02. Remedies.

            (a) Upon the occurrence and continuance of any Event of Default
      specified in paragraphs (a), (b), (d) or (e) of Section 10.01 hereof, the
      Trustee shall promptly notify the Corporation, each Credit Facility
      Provider, each Liquidity Facility Provider, each Surety Provider, each
      counterparty to an Interest Rate Exchange Agreement and each Indenture
      Agent of the existence of such Event of Default and shall proceed upon
      indemnification to the Trustee's satisfaction with the consent of each
      Credit Facility Provider or at the written direction of each Credit
      Facility Provider subject to the provisions of Article XI hereof, or upon
      the occurrence and continuance of any Event of Default specified in
      paragraph (c) of Section 10.01 hereof, the Trustee shall promptly notify
      the Corporation, each Credit Facility Provider, each Liquidity Facility
      Provider, each Surety Provider, each counterparty to an Interest Rate
      Exchange Agreement and each Indenture Agent of the existence of such Event
      of Default and may, with the written consent of each Credit Facility
      Provider, but shall not be required to (or, if instructed by the
      Registered Owners as described in Section 10.05 hereof with the written
      consent of each Credit Facility Provider, if any, or, if instructed in
      writing by each Credit Facility Provider, shall) proceed in its own name,
      subject to the provisions of Article XI hereof, to protect and enforce the
      rights of the Registered Owners by such of the following remedies, as the
      Trustee, being advised by counsel, shall deem most effectual to protect
      and enforce such rights:

                  (i) by mandamus or other suit, action or proceeding at law or
            in equity, to enforce all rights of the Registered Owners, including
            the right to require the Corporation to carry out the covenants and
            agreements as to, and the assignment of, the Financed Student Loans
            and to require the Corporation to carry out any other covenants or
            agreements with Registered Owners and to perform its duties as
            prescribed by law;

                  (ii) by bringing suit upon the Notes;

                  (iii) by action or suit in equity, to require the Corporation
            to account as if it were the trustee of an express trust for the
            Registered Owners of the Notes;

                  (iv) by action or suit in equity to enjoin any acts or things
            which may be unlawful or in violation of the rights of the
            Registered Owners of the Notes; or

                  (v) upon the occurrence of an Event of Default specified in
            paragraphs (a) or (b), (d) or (e) of Section 10.01 hereof, the
            Trustee shall, but only with the written consent or at the written
            direction of each Credit Facility Provider, if any, and in the case
            of an Event of Default specified in paragraph (c), the Trustee
            shall, upon the written direction of the Registered Owners with the
            written consent or the written direction of each Credit Facility
            Provider, if any, as provided in Section 10.05 hereof, after written
            notice to the Corporation, to the extent required by law, declare
            the principal of the Notes then Outstanding to be immediately due
            and payable, whereupon the principal and the accrued interest on
            such Notes through the date of acceleration shall, without further
            action, become

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            and be immediately due and payable, anything in this Indenture, or
            in the Notes to the contrary notwithstanding. If all defaults shall
            be cured, then, the Trustee may annul such declaration and its
            consequences with the written consent of each Credit Facility
            Provider, if any; provided each Credit Facility or Liquidity
            Facility for the Notes previously in effect is fully reinstated and
            in full force and effect.

            (b) If Notes secured by a Credit Facility are accelerated upon the
      written consent or direction of each Credit Facility Provider, the Trustee
      shall make a drawing or claim on the Credit Facility concurrently with
      such acceleration for the principal and accrued interest on such Notes
      then due. Such drawing shall be made notwithstanding any right of such
      Credit Facility Provider to control remedies provided in Section 10.05
      hereof, and the Trustee shall not require any indemnity for making such
      drawing.

            (c) In the enforcement of any rights and remedies under this
      Indenture, the Trustee shall be entitled to sue for, enforce payment of
      and receive any and all amounts then or during any default becoming, and
      at any time remaining, due and unpaid from the Corporation for principal,
      interest or otherwise, under any provisions of this Indenture or a
      Supplemental Indenture or of the Notes, with interest on overdue payments
      at the rate of interest specified in such Notes, together with any and all
      costs and expenses of collection and of all proceedings thereunder and
      under such Notes without prejudice to any other right or remedy of the
      Trustee or of the Registered Owners, and to recover and enforce a judgment
      or decree against the Corporation for any portion of such amounts
      remaining unpaid, with interest, costs and expenses (including without
      limitation pretrial, trial and appellate attorney fees), and to collect
      from the Corporation any moneys adjudged or decreed to be payable;
      provided, however, any recovery against the Corporation is limited to the
      Trust Estate.

            (d) Upon the occurrence of any Event of Default, and on the filing
      of suit or other commencement of judicial proceedings to enforce the
      rights of the Registered Owners under this Indenture, the Trustee shall be
      entitled, as a matter of right, to the appointment of a receiver or
      receivers of the Trust Estate and of the assets of the Corporation
      relating to the Student Loan Program, pending such proceedings, with such
      powers as the court making such appointment shall confer.

            (e) Except upon the occurrence and during the continuance of an
      Event of Default hereunder, the Corporation hereby expressly reserves and
      retains the privilege to receive and, subject to the terms and provisions
      of this Indenture, to keep or dispose of, claim, bring suit upon or
      otherwise exercise, enforce or realize upon its rights and interest in and
      to the Financed Student Loans and the proceeds of any collections
      therefrom, and neither the Trustee nor any Registered Owner shall in any
      manner be or be deemed to be an indispensable party to the exercise of any
      such privilege, claim or suit.

            (f) The Trustee shall select and liquidate or sell Trust Estate
      assets as provided in the following paragraph or as provided in the last
      paragraph of this Section but only at the written direction of each Credit
      Facility Provider, if any, and shall not be liable to any Registered
      Owner, any Credit Facility Provider, any Liquidity Facility Provider or
      the Corporation by reason of such selection, liquidation or sale.

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<PAGE>

      Whenever moneys are to be applied pursuant to this Article irrespective of
and whether other remedies authorized under this Indenture shall have been
pursued in whole or in part, the Trustee may cause any or all of the assets of
the Trust Estate to be sold. The Trustee may so sell the assets of the Trust
Estate and all right, title, interest, claim and demand thereto and the right of
redemption thereof, in one or more parts, at any such place or places, and at
such time or times and upon such notice and terms as the Trustee may deem
appropriate with written consent of each Credit Facility Provider, if any, or at
the written direction of each Credit Facility Provider and as may be required by
law and apply the proceeds thereof in accordance with the provisions of this
Section at the written direction of each Credit Facility Provider or with the
written consent of each Credit Facility Provider. Upon such sale, the Trustee
may make and deliver to the purchaser or purchasers a good and sufficient
assignment or conveyance for the same, which sale shall be a perpetual bar both
at law and in equity against the Corporation, each Credit Facility Provider,
each Liquidity Facility Provider, the Registered Owners, and all other persons
claiming such properties. No purchaser at any sale shall be bound to see to the
application of the purchase money proceeds thereof or to inquire as to the
authorization, necessity, expediency or regularity of any such sale.
Nevertheless, if so requested by the Trustee, the Corporation shall ratify and
confirm any sale or sales by executing and delivering to the Trustee or to such
purchaser or purchasers all such instruments as may be necessary or, in the
judgment of the Trustee, proper for the purpose which may be designated in such
request.

      To the extent that funds are not otherwise available to pay amounts due to
a Credit Facility Provider or a Liquidity Facility Provider under its
Reimbursement Agreement pursuant to this Section, and unless otherwise provided
in a Supplemental Indenture, the Trustee, at the request and in the sole
discretion of the Corporation (except as provided in the final paragraph of this
Section), shall convey or sell and deliver Financed Student Loans purchased with
assets of the Trust Estate to such Credit Facility Provider or such Liquidity
Facility Provider in partial or complete satisfaction of such obligations of the
Corporation, subject to the acceptance of such Financed Student Loans by such
Credit Facility Provider or such Liquidity Facility Provider at a purchase price
equal to the principal outstanding plus accrued interest.

      Should an event of default under a Reimbursement Agreement have occurred
and be continuing unremedied for more than 15 days each Credit Facility Provider
under its Reimbursement Agreement shall be entitled to direct the Trustee in
writing to sell Financed Student Loans constituting part of the Trust Estate and
to apply the proceeds thereof as provided in Section 10.03 hereof.

      Section 10.03. Priority of Payments After Default.

            (a) In the event that upon the occurrence and during the continuance
      of any Event of Default, the funds held by the Trustee and Paying Agents
      shall be insufficient for the payment of principal or Redemption Price of
      and interest then due on the Notes, such funds (other than funds held for
      the payment of particular Notes pursuant to Article XII hereof or which
      have theretofore become due at maturity) and any other amounts received or
      collected by the Trustee acting pursuant to this Article, after providing
      for the payment of any fees and expenses, including attorney's fees,
      necessary in the opinion of the Trustee to protect the interest of the
      Registered Owners of the Notes and for the payment of the fees, charges
      and expenses and liabilities incurred and

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      advances made by the Trustee or another Indenture Agent in the performance
      of their respective duties under this Indenture, including any fees due
      and owing (except that no lien shall attach to the proceeds of any drawing
      under a Credit Facility or Liquidity Facility or on any remarketing
      proceeds for the payment of such fees, charges and expenses), shall be
      applied as follows:

                  (i) If the principal of all of the Notes is not due and
            payable:

                  FIRST: To the payment to the persons entitled thereto of all
            installments of interest then due on Senior Notes and unpaid
            installments of amounts then due on any Interest Rate Exchange
            Agreements secured on a parity with the Senior Notes in the order of
            the maturity of such installments, and, if the amount available
            shall not be sufficient to pay in full any installment, then to the
            payment thereof ratably, according to the amounts due on such
            installment, to the persons entitled thereto, without any
            discrimination or preference.

                  SECOND: To the payment to the persons entitled thereto of the
            unpaid principal or Redemption Price of any Senior Notes then due
            and, if the amounts available shall not be sufficient to pay in full
            all the Senior Notes due, then to the payment thereof ratably,
            according to the amounts of principal or Redemption Price due on
            such date, to the persons entitled thereto, without any
            discrimination or preference.

                  THIRD: To the payment of any amounts then due and owing on a
            Credit Facility or Liquidity Facility for Senior Notes not paid
            pursuant to Section 10.03(a)(iv) hereof.

                  FOURTH: To the payment of any amounts then due and owing to
            the provider of a Debt Service Reserve Policy.

                  FIFTH: To the payment to the persons entitled thereto of all
            installments of interest then due on Subordinate Notes and unpaid
            installments of amounts then due on any Interest Rate Exchange
            Agreements secured on a parity with Subordinate Notes in the order
            of the maturity of such installments, and, if the amount available
            shall not be sufficient to pay in full any installment, then to the
            payment thereof ratably, according to the amounts due on such
            installment, to the persons entitled thereto, without any
            discrimination or preference.

                  SIXTH: To the payment to the persons entitled thereto of the
            unpaid principal or Redemption Price of any Subordinate Notes then
            due and, if the amounts available shall not be sufficient to pay in
            full all the Subordinate Notes due, then to the payment thereof
            ratably, according to the amounts of principal or Redemption Price
            due on such date, to the persons entitled thereto, without any
            discrimination or preference.

                  SEVENTH: To the payment of any amounts then due and owing on a
            Credit Facility or Liquidity Facility for Subordinate Notes not paid
            pursuant to Section 10.03(a)(iv) hereof.

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                  EIGHTH: To the payment to the persons entitled thereto of all
            installments of interest then due on Junior-Subordinate Notes and
            unpaid installments of amounts then due on any Interest Rate
            Exchange Agreements secured on a parity with Junior-Subordinate
            Notes in the order of maturity of such installments, and, if the
            amount available shall not be sufficient to pay in full any
            installment, then to the payment thereof ratably, according to the
            amounts due on such installment, to the persons entitled thereto,
            without any discrimination or preference.

                  NINTH: To the payment to the persons entitled thereto of the
            unpaid principal or Redemption Price of any Junior-Subordinate Notes
            then due and, if the amounts available shall not be sufficient to
            pay in full all the Junior-Subordinate Notes due, then to the
            payment thereof ratably, according to the amounts of the principal
            or Redemption Price due on such date, to the persons entitled
            thereto, without any discrimination or preference.

                  TENTH: To the payment of any amounts then due and owing on a
            Credit Facility or Liquidity Facility for Junior-Subordinate Notes
            not paid pursuant to Section 10.03(a)(iv) hereof.

                  (ii) If the principal of all of the Notes have become or have
            been declared due and payable:

                  FIRST, to the payment of the principal and interest then due
            and unpaid upon the Senior Notes and amounts payable on Interest
            Rate Exchange Agreements secured on a parity with Senior Notes
            without preference or priority of principal over interest or of
            interest over principal, or of any installment of interest on an
            Interest Rate Exchange Agreement secured on a parity with the Senior
            Notes over any other installment of interest, or of any Senior Notes
            or Interest Rate Exchange Agreements secured on a parity with Senior
            Notes over any other Senior Note or Interest Rate Exchange
            Agreements secured on a parity with Senior Notes, ratably, according
            to the amounts due respectively for principal and interest, to the
            persons entitled thereto without any discrimination or preference
            except as to any difference in the respective rates of interest
            specified in the Senior Notes or any Interest Rate Exchange
            Agreements secured on a parity with Senior Notes;

                  SECOND, to the payment of any amounts then due and owing on a
            Credit Facility or Liquidity Facility for Senior Notes not paid
            pursuant to Section 10.03(a)(iv) hereof;

                  THIRD, to the payment of any amounts then due and owing to any
            provider of a Debt Service Reserve Policy;

                  FOURTH, to the payment of the principal and interest then due
            and unpaid upon the Subordinate Notes and amounts payable on
            Interest Rate Exchange Agreements secured on a parity with
            Subordinate Notes without

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            preference or priority of principal over interest or of interest
            over principal, or of any installment of interest on an Interest
            Rate Exchange Agreement secured on a parity with the Subordinate
            Notes over any other installment of interest, or of any Subordinate
            Notes or Interest Rate Exchange Agreements secured on a parity with
            Subordinate Notes over any other Subordinate Note or Interest Rate
            Exchange Agreements secured on a parity with Subordinate Notes,
            ratably, according to the amounts due respectively for principal and
            interest, to the persons entitled thereto without any discrimination
            or preference except as to any difference in the respective rates of
            interest specified in the Subordinate Notes or any Interest Rate
            Exchange Agreements secured on a parity with Subordinate Notes;

                  FIFTH, to the payment of any amounts then due and owing on a
            Credit Facility or Liquidity Facility for Subordinate Notes not paid
            pursuant to Section 10.03(a)(iv) hereof;

                  SIXTH, to the payment of the principal and interest then due
            and unpaid upon the Junior-Subordinate Notes and amounts payable on
            Interest Rate Exchange Agreements secured on a parity with
            Junior-Subordinate Notes without preference or priority of principal
            over interest or of interest over principal, or of any installment
            of interest on an Interest Rate Exchange Agreement secured on a
            parity with the Junior-Subordinate Notes over any other installment
            of interest, or of any Junior-Subordinate Notes or Interest Rate
            Exchange Agreements secured on a parity with Junior-Subordinate
            Notes over any other Junior-Subordinate Note or Interest Rate
            Exchange Agreements secured on a parity with Junior-Subordinate
            Notes, ratably, according to the amounts due respectively for
            principal and interest, to the persons entitled thereto without any
            discrimination or preference except as to any difference in the
            respective rates of interest specified in the Junior-Subordinate
            Notes or any Interest Rate Exchange Agreements secured on a parity
            with Junior-Subordinate Notes;

                  SEVENTH, to the payment of any amounts then due and owing on a
            Credit Facility or Liquidity Facility for Junior-Subordinate Notes
            not paid pursuant to Section 10.03(a)(iv) hereof.

                  (iii) If the principal of all the Notes shall have been
            declared immediately due and payable, and if such declarations shall
            thereafter have been rescinded and annulled under the provisions of
            this Article, then, subject to the provisions of Section 10.02(a)(v)
            hereof in the event that the principal of all the Notes shall later
            become due or be declared due and payable, the moneys shall be
            applied in accordance with the provisions of Section 10.03(a)(i)
            hereof.

                  (iv) With respect to any payment made under this Section
            10.03(a), in the event the Notes on which a payment is to be made
            are secured by a Credit Facility, payment of principal and interest
            on such Notes shall be paid from a drawing on the Credit Facility as
            set forth in Section 5.06 hereof and each Credit Facility Provider
            shall be reimbursed for the drawing in the priority given to such
            Notes in subsections (i) and (ii) above.

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            (b) Whenever moneys are to be applied by the Trustee pursuant to the
      provisions of this Section, such moneys shall be applied by the Trustee at
      such times, and from time to time, as the Trustee in its sole discretion
      shall determine, having due regard to the amount of such moneys available
      for application and the likelihood of additional money becoming available
      for such application in the future. The deposit of such moneys with the
      Paying Agents, or otherwise setting aside such moneys in trust for the
      proper purpose, shall constitute proper application by the Trustee, and
      the Trustee shall incur no liability whatsoever to the Corporation, to any
      Registered Owner or to any other person for any delay in applying any such
      moneys, so long as the Trustee acts with reasonable diligence, having due
      regard for the circumstances, and ultimately applies the same in
      accordance with such provisions of this Indenture as may be applicable at
      the time of application by the Trustee. Whenever the Trustee shall
      exercise such discretion in applying such moneys, it shall fix the date
      (which shall be an Interest Payment Date unless the Trustee shall deem
      another date more suitable) upon which such application is to be made and
      upon such date interest on the amounts of principal to be paid on such
      date shall cease to accrue. The Trustee shall give such notice as it may
      deem appropriate for the fixing of any such date. The Trustee shall not be
      required to make payment to the Registered Owner of any unpaid Note unless
      such Note shall be presented to the Trustee for appropriate endorsement or
      for cancellation if fully paid.

      Section 10.04. Termination of Proceedings. In case any proceedings taken
by the Trustee on account of any Event of Default shall have been discontinued
or abandoned for any reason, then in every such case the Corporation, the
Trustee and the Registered Owners shall be restored to their former positions
and rights hereunder, respectively, and all rights, remedies, powers and duties
of the Trustee shall continue as though no such proceeding had been taken;
provided each Credit Facility or Liquidity Facility for the Notes previously in
effect is fully reinstated and in full force and effect.

      Section 10.05. Registered Owners' Direction of Proceedings. Whenever it is
provided in this Article that the Registered Owners of the Notes shall enjoy
certain rights, be permitted to exercise certain remedies or to direct the
Trustee to take certain actions, this Section shall control. Upon the occurrence
of an Event of Default described in Section 10.01(c), (d) or (e) hereof, each
Credit Facility Provider, if any, for or the Registered Owners of not less than
100% in principal amount of the Senior Notes then Outstanding, but only with the
written consent of each Credit Facility Provider, if any, for the Senior Notes
(or, if no Senior Notes are Outstanding, each Credit Facility Provider, if any,
for or the Registered Owners of not less than 100% in principal amount of the
Subordinate Notes then Outstanding, but only with the written consent of each
Credit Facility Provider, if any, for the Subordinate Notes, or, if no Senior
Notes or Subordinate Notes are Outstanding, each Credit Facility Provider, if
any, or the Registered Owners of not less than 100% in principal amount of the
Junior-Subordinate Notes then Outstanding, but only with the written consent of
each Credit Facility Provider, if any, for the Junior-Subordinate Notes), or,
upon the occurrence of an Event of Default described in Section 10.01(a) or (b)
hereof, each Credit Facility Provider, if any, for or the Registered Owners of a
majority in the principal amount of the Senior Notes then Outstanding, but only
with the written consent of each Credit Facility Provider, if any, for the
Senior Notes (or, if no Senior Notes are Outstanding, each Credit Facility
Provider, if any, for or the Registered Owners of a majority in principal amount
of the Subordinate Notes then Outstanding, but only with the

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written consent of each Credit Facility Provider, if any, for the Subordinate
Notes, or, if no Senior Notes or Subordinate Notes are Outstanding, each Credit
Facility Provider, if any, or the Registered Owners of a majority in principal
amount of the Junior-Subordinate Notes then Outstanding, but only with the
written consent of each Credit Facility Provider, if any, for the
Junior-Subordinate Notes), shall have the right to direct the Trustee to take
all or any of the actions described in Section 10.02(a) hereof. In the event
that each Credit Facility Provider or such Registered Owners have previously
given to the Trustee written notice of an Event of Default and shall have
afforded the Trustee a reasonable opportunity, following the offer to the
Trustee of security and indemnity satisfactory to it against the fees, costs,
expenses and liabilities to be incurred therein or thereby, either to proceed to
exercise the powers herein granted or to pursue a remedy described herein, and
the Trustee shall have refused or neglected to comply with such request, then
each Credit Facility Providers, if any, for or the Registered Owners of the
requisite percentage in principal amount of the Senior Notes with the written
consent of each Credit Facility Provider for the Senior Notes (or, if no Senior
Notes are Outstanding, each Credit Facility Provider, if any, for or the
Registered Owners of requisite percentage in principal amount of the Subordinate
Notes then Outstanding, but only with the written consent of each Credit
Facility Provider, if any, for the Subordinate Notes, or, if no Senior Notes or
Subordinate Notes are Outstanding, each Credit Facility Provider, if any, or the
Registered Owners of requisite percentage in principal amount of the
Junior-Subordinate Notes then Outstanding, but only with the written consent of
each Credit Facility Provider, if any, for the Junior-Subordinate Notes), shall
have the right to direct the Trustee in writing to take all or any of the
actions described in Section may exercise such rights.

      In the event that a Credit Facility Provider has issued a Credit Facility
or a Liquidity Facility Provider has issued a Liquidity Facility respecting a
Series of Notes and unless such Credit Facility Provider or such Liquidity
Facility Provider is then in receivership, bankruptcy or reorganization or is
then continuing wrongfully to dishonor drawings under the Credit Facility or
Liquidity Facility, upon the occurrence of any Event of Default or any other
event described below, such Credit Facility Provider or, in the event there is
no Credit Facility Provider, such Liquidity Facility Provider (provided amounts
are owing to the Liquidity Facility Provider under the applicable Reimbursement
Agreement) shall be considered as the Registered Owner of 100% of such Series of
Notes solely for the purpose of directing the actions of the Trustee under this
Article. All rights and remedies described in this Article shall apply not only
following the occurrence of an Event of Default, but also following the
occurrence of any event which gives rights to a Credit Facility Provider or
Liquidity Facility Provider upon the occurrence of an event of default under the
Reimbursement Agreement with that Credit Facility Provider or Liquidity Facility
Provider. Notwithstanding anything else herein, if the Trustee receives contrary
written direction from the Registered Owners, any Credit Facility Provider and
any Liquidity Facility Provider for the same Series of Notes, it shall act on
the direction of such Credit Facility Provider provided (a) the direction
complies with the requirements of this Indenture (including the provisions of
satisfactory indemnity), and (b) such Credit Facility Provider is not then in
receivership, bankruptcy or reorganization or continuing to dishonor wrongfully
a drawing on the Credit Facility. If the conditions for direction by such Credit
Facility Provider are not met, the Trustee shall act on the direction of the
Liquidity Facility Provider provided (i) the direction complies with the
requirements of this Indenture (including the provisions of satisfactory
indemnity), (ii) the Liquidity Facility Provider is not then in receivership,
bankruptcy or reorganization or continuing to dishonor wrongfully a drawing on
the Liquidity Facility, and

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(iii) amounts are owing to the Liquidity Facility Provider under the applicable
Reimbursement Agreement. If the conditions for direction by such Credit Facility
Provider and Liquidity Facility Provider are not met, the Trustee shall act on
the direction of the Registered Owners provided in the manner described in this
Section.

      Any provision of this Indenture to the contrary notwithstanding, the
consent or approval of a Credit Facility Provider or Liquidity Facility Provider
shall not be necessary where, in the case of consent or approval by a Credit
Facility Provider, such Credit Facility Provider is in bankruptcy, insolvency,
receivership or similar proceeding or in default of or contesting its
obligations under any Credit Facility, and in the case of consent or approval of
a Liquidity Facility Provider, such Liquidity Facility Provider is in
bankruptcy, insolvency, receivership or similar proceeding, or is in default of
or contesting its obligations under any Liquidity Facility.

      Section 10.06. Limitation on Rights of Registered Owners.

            (a) Except as otherwise specifically provided by Section 10.05
      hereof or by this Section, no Registered Owner of any Note shall have any
      right to institute any suit, action, mandamus or other proceeding in
      equity or at law hereunder, or for the protection or enforcement of any
      right under this Indenture. It is understood and intended that, except as
      otherwise above provided, no one, or more Registered Owners of the Notes
      shall have any right in any manner whatever by its or their action to
      affect, disturb or prejudice the security of this Indenture, or to enforce
      any right hereunder with respect to the Notes or this Indenture, except in
      the manner herein provided, and that all proceedings at law or in equity
      shall be instituted, had and maintained in the manner herein provided and
      for the benefit of Registered Owners of the Outstanding Notes.

            (b) Anything to the contrary notwithstanding contained in this
      Section, or any other provision of this Indenture, each Registered Owner
      of any Note by his acceptance thereof shall be deemed to have agreed that
      any court in its discretion may require, in any suit for the enforcement
      of any right or remedy under this Indenture or any Supplemental Indenture,
      or in any suit against the Trustee for any action taken or omitted by it
      as Trustee, the filing by any party litigant in such suit of an
      undertaking to pay the reasonable costs of such suit, and that such court
      may in its discretion assess reasonable costs, including reasonable
      pretrial, trial and appellate attorneys fees, against any party litigant
      in any such suit, having due regard to the merits and good faith of the
      claims or defenses made by such party litigant; but the provisions of this
      paragraph shall not apply to any suit instituted by the Trustee.

      Section 10.07. Possession of Notes by Trustee Not Required. All rights of
action under this Indenture or under any of the Notes, enforceable by the
Trustee, may be enforced by it without the possession of any of the Notes or the
production thereof on the trial or other proceeding relative thereto, and any
such suit, action or proceeding instituted by the Trustee shall be brought in
its name for the benefit of all the Registered Owners of such Notes, subject to
the provisions of this Indenture.

      Section 10.08. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee or to the Registered Owners of the Notes is intended to
be exclusive of any other

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remedy or remedies, and each and every such remedy shall be cumulative and shall
be in addition to any other remedy given hereunder or now or hereafter existing
at law or in equity or by statute.

      Section 10.09. No Waiver of Default. No delay or omission of the Trustee
or of any Registered Owner of the Notes to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to
be a waiver of any such default or an acquiescence therein and every power and
remedy given by this Indenture to the Trustee and the Registered Owners of the
Notes, respectively, may be exercised from time to time and as often as may be
deemed expedient.

      Section 10.10. Notice of Event of Default; Acceleration. The Trustee shall
give to all the Registered Owners, the Corporation, each Indenture Agent, each
Credit Facility Provider, each Liquidity Facility Provider and each Surety
Provider notice of each Event of Default hereunder known by a trust officer in
the corporate trust department of the Trustee within 90 days after actual
knowledge of the occurrence thereof, unless such Event of Default shall have
been remedied or cured before the giving of such notice; provided, that, the
Trustee shall be protected in withholding such notice from the Registered Owners
if and so long as the board of directors, the executive committee, or a trust
committee of directors or responsible officers of the Trustee in good faith
determines that the withholding of such notice is in the interest of the
Registered Owners. The Trustee shall be deemed to have actual knowledge of any
Event of Default under Section 10.01(a) and (b) and any other Event of Default
for which an Indenture Agent, a Credit Facility Provider, a Liquidity Facility
Provider or a Registered Owner has provided the Trustee with written notice of
such Event of Default. Each such notice of Event of Default shall be given by
the Trustee by mailing written notice thereof: (a) to all Registered Owners of
Notes, as the names and addresses of such Registered Owners appear upon the
books for registration and transfer of Notes as kept by the Trustee, and (b) to
such other persons, at the addresses given herein or in the related Supplemental
Indenture.

      The Trustee shall give to all Registered Owners, the Corporation, each
Indenture Agent, each Credit Facility Provider, each Liquidity Facility Provider
and each Surety Provider notice of acceleration of a Series of Notes as soon as
possible, but in any event no later than the second Business Day after an
acceleration.

                                   ARTICLE XI

                         CONCERNING THE INDENTURE AGENTS

      Section 11.01. Appointment and Acceptance of Duties of Trustee. Zions
First National Bank is hereby appointed as Trustee. By executing this Indenture,
the Trustee hereby accepts the trusts and obligations imposed upon it by this
Indenture and agrees to perform such trusts and obligations, but only upon and
subject to the following express terms and conditions:

            (a) The Trustee, prior to the occurrence of an Event of Default and
      after the curing of all Events of Default which may have occurred,
      undertakes to perform such duties and only such duties as are specifically
      set forth in this Indenture and there shall be no implied duties or
      obligations. In case an Event of Default has occurred (which has not

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      been cured or waived) the Trustee shall exercise such of the rights and
      powers vested in it by this Indenture, and use the same degree of care and
      skill in their exercise, as a prudent man would exercise or use in the
      circumstances in the conduct of his own affairs.

            (b) The Trustee may execute any of the trusts or powers hereof and
      perform, any of its duties by or through attorneys, agents, receivers or
      employees but shall be answerable for the conduct of the same in
      accordance with the standard specified above, and shall be entitled to
      act, upon the opinion or advice of its counsel concerning all matters
      hereof, and may in all cases be reimbursed hereunder for reasonable
      compensation paid to all such attorneys, agents, receivers and employees
      as may reasonably be employed in connection with the trust hereof. The
      Trustee may act upon an Opinion of Counsel, and shall not be responsible
      for any loss or damage resulting from any action by it taken or omitted to
      be taken in good faith in reliance upon such Opinion of Counsel. The
      Trustee may act upon a Corporation Order and shall not be responsible for
      any loss or damage resulting from any action by it taken or omitted to be
      taken in good faith in reliance upon such Corporation Order without
      negligence or willful default. The Trustee need not investigate or make
      any independent determination of the facts, representations or conclusions
      contained in a Corporation Order. Prior to taking any action hereunder,
      the Trustee shall be entitled to a Corporation Order and/or an Opinion of
      Counsel that all conditions precedent under this Indenture and any
      Supplemental Indenture to the taking of such action have been satisfied.

            (c) The recitals of fact (other than those expressly made by the
      Trustee) contained herein and in the Notes shall be taken as statements of
      the Corporation and the Trustee shall not be responsible for any recital
      herein or in the Notes (except in respect to the certificate of the
      Trustee endorsed on the Notes), or for the validity of the execution by
      the Corporation of this Indenture or of any supplements thereto or
      instruments of further assurance, or for the sufficiency of, or filing of
      documents related to, the security for the Notes issued hereunder or
      intended to be secured hereby, and the Trustee shall not be bound to
      ascertain or inquire as to the observance or performance of any covenants,
      conditions or agreements on the part of the Corporation except as set
      forth in subsection (j) of this Section. The Trustee makes no
      representations as to the value of the Financed Student Loans, the Trust
      Estate, the Funds and Accounts or any part thereof, or as to the title of
      the Corporation thereto or as to the security or priority afforded thereby
      and hereby, or as to the validity or sufficiency of this Indenture or of
      the Notes issued hereunder and the Trustee shall not be responsible or
      liable for any loss suffered directly or indirectly in connection with any
      investment of funds made by it in accordance with this Indenture.

            (d) The Trustee shall not be accountable for the use of any Notes
      authenticated or delivered hereunder. The commercial bank or trust company
      acting as Trustee and its directors, officers, employees or agents may in
      good faith buy, sell, own, hold and deal in the Notes and may join in any
      action which any Registered Owner may be entitled to take with like effect
      as if such commercial bank or trust company were not the Trustee. To the
      extent permitted by law, such bank or trust company may also receive
      tenders and purchase in good faith Notes from itself, including any
      department, affiliate or subsidiary, with like effect as if it were not
      the Trustee.

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            (e) The Trustee shall be protected in acting upon any notice,
      request, consent, certificate, order, affidavit, letter, telegram, opinion
      or other paper or document reasonably believed by it to be genuine and
      correct and to have been signed or sent by the proper person or persons.
      Any action taken by the Trustee pursuant to this Indenture upon the
      request or authority or consent of any person who at the time of making
      such request or giving such authority or consent is the Registered Owner
      of any Note shall be conclusive and binding upon all future Registered
      Owners of the same Note and upon Notes issued in exchange there for or in
      place thereof.

            (f) As to the existence or nonexistence of any fact or as to the
      sufficiency or validity of any document, instrument, certificate, paper or
      proceeding, the Trustee shall be entitled to rely upon a certificate
      believed in good faith to be genuine and correct, signed on behalf of the
      Corporation by an Authorized Representative as sufficient evidence of the
      facts therein contained, the Trustee may also accept a similar certificate
      to the effect that any particular dealing, transaction or action is
      necessary or expedient, but may at its discretion secure such further
      evidence deemed necessary or advisable, but shall in no case be bound to
      secure the same. The Trustee may accept a certificate of an Authorized
      Representative of the Corporation to the effect that a resolution in the
      form therein set forth has been adopted by the Corporation as conclusive
      evidence that such resolution has been duly adopted and is in full force
      and effect.

            (g) The permissive right of the Trustee to do things enumerated in
      this Indenture shall not be construed as a duty and the Trustee shall not
      be answerable for other than its negligence or willful default. The
      immunities and exceptions from liability of the Trustee shall extend to
      its officers, directors, employees and agents.

            (h) The Trustee shall not be required to give any Note or surety in
      respect to the execution of its rights and obligations hereunder.

            (i) All moneys received by the Trustee shall, until used or applied
      or invested as herein provided, be held in trust in the manner and for the
      purposes for which they were received but need not be segregated from
      other funds except to the extent required by this Indenture or by law. The
      Trustee shall not be under any liability for interest on any moneys
      received hereunder except such as may be agreed upon.

            (j) The Trustee shall not be required to take notice or be deemed to
      have notice of any Event of Default hereunder except Events of Default of
      which the Trustee has, through a trust officer of its corporate trust
      department, actual knowledge, and in the absence of such knowledge the
      Trustee may conclusively assume there is no Event of Default except as
      aforesaid.

            (k) Notwithstanding anything contained elsewhere in this Indenture,
      the Trustee shall have the right, but shall not be required, to demand, in
      respect of the authentication of any Notes, the withdrawal of any cash,
      the release of any property, or any action whatsoever within the purview
      of this Indenture, any showings, certificates, opinions, appraisals or
      other information, or corporate action or evidence thereof, in addition to
      that required by the terms hereof as a condition of such action by the
      Trustee,

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      reasonably and in good faith deemed necessary by the Trustee, for the
      purpose of establishing the right of the Corporation to the authentication
      of any Notes, the withdrawal of any cash, or the taking of any other
      action by the Trustee.

            (l) Except for establishing and notifying Registered Owners of
      mandatory tenders, mandatory redemptions and acceleration of the Notes and
      actions required to effect drawings under a Credit Facility or a Liquidity
      Facility and the payment of proceeds thereof to entitled Registered
      Owners, before taking any action hereunder, whether permissive or
      mandatory, the Trustee may require that security and/or indemnification
      satisfactory to it be furnished for the reimbursement of all fees and
      expenses to which it may be put and to protect it against all liability,
      except liability which is adjudicated to have resulted from its negligence
      or willful default by reason of any action so taken.

            (m) If the Trustee receives different or conflicting instructions or
      directions from more than one group of Registered Owners of Notes of a
      given Series or priority of Notes, each of which is provided in accordance
      with the Indenture, the Trustee shall act in accordance with the
      instructions or directions provided by the group of Registered Owners
      representing the larger aggregate principal amount with such Series or
      priority of Notes then Outstanding.

            (n) Recitals, statements and representations contained in any
      document in the nature of an official statement or offering circular,
      preliminary or final, relating to any Series of Notes shall not be taken
      or construed as made by the Trustee, and the Trustee neither assumes or
      shall be under any responsibility for the correctness or truth of the
      same. Except for information concerning the Trustee provided in writing by
      the Trustee, if any, the Trustee shall have no duty or responsibility to
      examine or review and shall have no liability for the contents of any
      documents submitted or delivered to any Registered Owner in the nature of
      an official statement or offering circular, preliminary or final.

            (o) The Trustee shall not be accountable or responsible in any
      manner whatsoever for any action of the Corporation, any other Indenture
      Agent, any Servicer or Subservicer, any Guarantee Agency, any Remarketing
      Agent or for the application of moneys by any Servicer or Subservicer or
      moneys on deposit in the Operating Fund until such time as funds are
      received by the Trustee. The Servicer shall prepare for filing with the
      Secretary any required reports. The Trustee shall have no duty to monitor
      or supervise any actions relating to the servicer's obligations under any
      Servicing Agreement.

            (p) In fulfilling its responsibilities hereunder, under any other
      instruments or agreements, or under law the Trustee may act in full
      reliance upon the Corporation or any Servicer or Subservicer with respect
      to all such determinations made, actions taken and directions to the
      Trustee given by them, and the Trustee shall have no duty or
      responsibility to the Corporation, any Servicer, any Subservicer, the
      Registered Owners of the Notes or any other person or entity for any
      action (or inaction) of the Trustee taken in reliance upon any such
      determinations, actions or directions. The Corporation shall

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      hold the Trustee harmless for any error or omission resulting from the
      Trustee's reliance upon the Corporation, any Indenture Agent or any
      Servicer or Subservicer unless in connection with such action or omission
      the Trustee has unreasonably or negligently failed to perform its
      obligations under an agreement with any Servicer or under this Indenture.

            (q) Before taking any action hereunder (other than a draw on a
      Credit Facility, Liquidity Facility or Debt Service Reserve Policy)
      requested by the Registered Owner, or by any Credit Facility Provider or
      any Liquidity Facility Provider, the Trustee may require that it be
      furnished an indemnity note or other indemnity and security satisfactory
      to it, for the reimbursement of all expenses to which it may be put and to
      protect it against all liability, except liability which results from the
      gross negligence or willful misconduct of the Trustee pursuant to this
      Indenture, by reason of any action so taken by the Trustee.

            (r) No provision of this Indenture shall require the Trustee to
      expend or risk its own funds or otherwise incur any financial liability in
      the performance of any of its duties hereunder, or in the exercise of any
      of its rights or powers (other than the Trustee's duty to draw on a Credit
      Facility, a Liquidity Facility or a Debt Service Reserve Policy), unless
      it shall have indemnity and security satisfactory to it for the
      reimbursement of all payments and expenses to which it may be put and to
      protect it against all liability.

      Section 11.02. Appointment and Acceptance of Duties of Paying Agents Note
Registrar and Other Indenture Agents.

            (a) The Corporation may appoint one or more Indenture Agents as the
      Corporation deems necessary, provided that each such Indenture Agent shall
      at all times be a commercial bank or trust company organized and doing
      business under the laws of the United States or of any state with a
      combined capital and surplus of at least $25,000,000 and authorized under
      such laws to exercise corporate trust powers subject to supervision or
      examination by a Federal or state regulatory authority. If such
      corporation publishes reports of condition at least annually pursuant to
      law or the requirements of such regulatory authority, then for the
      purposes of this Section the combined capital and surplus of such
      corporation shall be deemed to be its combined capital and surplus as set
      forth in its most recent report of condition to be published. Such
      Indenture Agents shall include one or more Paying Agents and a Registrar
      for the Notes and the Corporation may at any time or from time to time
      appoint one or more other Paying Agents having the qualifications set
      forth above for a successor Paying Agent, along with such other Indenture
      Agents as may be required in connection with any Notes in accordance with
      the provisions of and by designation in the Supplemental Indenture
      authorizing such Notes with the written consent of each Credit Facility
      Provider, if any.

            (b) Each Paying Agent, Registrar and other Indenture Agent (other
      than the Trustee) shall signify its acceptance of the duties and
      obligations imposed upon it by this Indenture by a written statement of
      acceptance executed and delivered to the Corporation and the Trustee which
      shall include the address to which notice may be delivered in accordance
      with Section 13.04 hereof.

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            (c) The principal or corporate trust officers of the Paying Agents
      are hereby designated as the respective agents of the Corporation for the
      payment of the Notes.

      Section 11.03. Responsibility of Indenture Agents. The recitals of fact
herein and in the Notes contained shall be taken as the statements of the
Corporation and no Indenture Agent assumes any responsibility for the
correctness of the same. No Indenture Agent makes any representations as to the
validity or sufficiency of this Indenture or of any Notes issued hereunder or in
respect of the security afforded by this Indenture, and no Indenture Agent shall
incur any responsibility in respect thereof. The Authenticating Agent shall,
however, be responsible for its representations contained in its certificate on
the Notes. No Indenture Agent shall be under any responsibility or duty with
respect to the issuance of the Notes for value or the application of the
proceeds thereof or the application of any moneys paid to the Corporation. No
Indenture Agent shall be under any responsibility or duty with respect to the
application of any moneys paid to any other Indenture Agent. No Indenture Agent
shall be under any obligation or duty to perform any act which would involve it
in expense or liability or to institute or defend any suit in respect hereof, or
to advance any of its own moneys, unless indemnified to its satisfaction (but no
such indemnification shall be made with proceeds of a drawing on a Credit
Facility or a Liquidity Facility or with remarketing proceeds). No Indenture
Agent shall be liable in connection with the performance of its duties hereunder
except for its own negligence or willful default. Neither the Trustee nor any
Paying Agent shall be under any responsibility or duty with respect to the
application of any moneys paid to any one of the others.

      Section 11.04. Evidence on Which Indenture Agents May Act. Each Indenture
Agent shall be protected in acting upon any notice, indenture, request, consent,
order, certificate, report, Opinion of Counsel, Note or other paper or document
believed by it to be genuine, and to have been signed or presented by the proper
party or parties. Each Indenture Agent may consult with counsel, who may be
counsel to the Corporation, and the Opinion of Counsel of such counsel shall be
full and complete authorization and protection in respect of any action taken or
suffered by it hereunder in good faith and in accordance therewith. Whenever any
Indenture Agent shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action hereunder, including payment
of moneys out of any Fund or Account, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by a Authorized
Representative or by another Indenture Agent if so specified herein or in the
applicable Supplemental Indenture, and such certificate shall be full warrant
for any action taken or suffered in good faith under the provisions of this
Indenture upon the faith thereof, but in its sole discretion the Indenture Agent
may in lieu thereof accept other evidence of such fact or matter or may require
such further or additional evidence as to it may seem reasonable. Neither the
Trustee nor any successor Trustee or other Indenture Agent shall be liable to
the Corporation, the Registered Owners of any of the Notes, any Credit Facility
Provider, any Liquidity Facility Provider, or any other person for any act or
omission done or omitted to be done by such Indenture Agent in reliance upon any
instruction, direction or certification received by the Trustee pursuant to this
Indenture or for any act or omission done or omitted in good faith and without
negligence or willful default. Except as otherwise expressly provided herein,
any request, order, notice or other direction required or permitted to be
furnished pursuant to any provision hereof by the Corporation to any Indenture
Agent shall be sufficiently executed if executed in the name of the Corporation
by an Authorized Representative.

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      Section 11.05. Compensation and Indemnification. Except as may be
otherwise provided in a Supplemental Indenture, the Corporation shall pay to
each Indenture Agent from time to time reasonable compensation for all services
rendered under this Indenture, and also all reasonable expenses, charges,
counsel fees and other disbursements, including those of their attorneys, agents
and employees, incurred in and about the performance of their powers and duties
under this Indenture. The Corporation further agrees to indemnify and save each
Indenture Agent harmless against any liabilities which it may incur in the
exercise and performance of its powers and duties hereunder, and which are not
due to its negligence or willful default, to the extent solely payable from the
Trust Estate, but not from the proceeds of a drawing on a Credit Facility or a
Liquidity Facility or from remarketing proceeds.

      Section 11.06. Permitted Acts and Functions. Any Indenture Agent may
become the Registered Owner of any Notes, with the same rights it would have if
it were not an Indenture Agent. Any Indenture Agent may permit any of its
officers or directors to act as a member of, or in any other capacity with
respect to, any committee formed to protect the rights of Registered Owners or
to effect or aid in any reorganization growing out of the enforcement of the
Notes or this Indenture, whether or not any such committee shall represent the
Registered Owners of a majority in principal amount of the Notes then
Outstanding. Any Indenture Agent may be a participant in the Student Loan
Program and may sell Student Loans to the Corporation. Any Indenture Agent may
be an underwriter in connection with the sale of the Notes or of any other
securities offered or issued by the Corporation.

      Section 11.07. Trustee Covenants with Respect to Eligible Lender Status.
The Trustee covenants as follows:

            (a) if requested by the Corporation, the Trustee will fulfill the
      requirements to become an Eligible Lender and will remain an Eligible
      Lender so long as the Trustee remains Trustee under this Indenture;
      provided, however, that the Trustee shall have no responsibility or
      liability hereunder if it fails to remain as an Eligible Lender as a
      result of the actions or inactions of the Corporation or any Servicer; and

            (b) if requested by the Corporation to become an Eligible Lender,
      the Trustee shall take such actions, but only such actions, with respect
      to being an Eligible Lender as shall be reasonably requested by the
      Corporation; such actions do not include taking steps or instituting
      suits, actions or proceedings necessary or appropriate for the enforcement
      of all terms covenants and conditions of all Student Loans and agreements
      in connection therewith, including the prompt payment of all principal and
      interest payments and all other amounts due thereunder, for which the
      Corporation is solely responsible.

      Section 11.08. Trustee's Status as an Eligible Lender. If the Trustee is
requested by the Corporation to act as an Eligible Lender under this Indenture,
for the purposes of this Indenture and all documents, agreements, understandings
and arrangements relating to this Indenture that are executed by the Trustee,
such documents have been executed by the Trustee with the understanding that it
may be deemed to be an Eligible Lender under the Higher Education Act. The
Corporation hereby agrees that it will indemnify and hold harmless the Trustee
and its officers, directors, employees and agents for any and all liability
which may be incurred because of Trustee's status as an Eligible Lender or
because of the Trustee's entering

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into this Indenture or any of the other transaction documents that results from
the actions or inactions of the Corporation or any Servicer. The Corporation
agrees that it will not seek recourse or commence any action against the Trustee
or its officers, directors, employees or agents or any of their personal assets
for the performance or payment of any obligation under the Act. The Trustee
shall have no liability or responsibility with respect to any of the duties and
obligations specifically undertaken by the Corporation pursuant to Section 7.11
hereof.

      Section 11.09. Resignation of Trustee. The Trustee may at any time resign
and be discharged of the duties and obligations created by this Indenture by
giving not less than 60 days' written notice to the Corporation, each Indenture
Agent, each Credit Facility Provider, each Liquidity Facility and each Surety
Provider, and mailing notice thereof specifying the date when such resignation
shall take effect, to the Registered Owners, and such resignation shall take
effect upon the day specified in such notice unless a successor shall have been
appointed as provided in Section 11.11 hereof, in which event such resignation
shall take effect immediately on the appointment of such successor.
Notwithstanding the foregoing, no resignation of the Trustee hereunder shall
become effective until a successor Trustee has been appointed with the written
consent of each Credit Facility Provider, if any, and accepted its appointment
and each Credit Facility, each Liquidity Facility and each Debt Service Reserve
Policy has been properly transferred to the successor Trustee in accordance with
their respective terms.

      Section 11.10. Removal of Trustee. The Trustee shall be removed by the
Corporation if at any time so requested by an instrument or concurrent
instruments in writing, filed with the Trustee and the Corporation and signed by
each Credit Facility Provider, if any, or by the Registered Owners of a majority
in principal amount of the Notes then Outstanding or their attorney-in-fact duly
authorized, excluding any Notes held by or for the account of the Corporation,
with the written consent of each Credit Facility Provider, if any, shall have
been obtained. The Corporation may remove the Trustee at any time, except during
the existence of an Event of Default, for such cause as shall be determined in
the sole discretion of the Corporation by filing with the Trustee an instrument
signed by an Authorized Representative. The Corporation shall remove the Trustee
if directed to do so in writing by each Credit Facility Provider for cause by
filing with the Trustee an instrument signed by an Authorized Representative and
such Credit Facility Provider. Notwithstanding the foregoing, no removal of the
Trustee hereunder shall become effective until a successor has been appointed
and has accepted such appointment and until each Credit Facility, each Liquidity
Facility and each Debt Service Reserve Policy then in effect has been properly
transferred to a successor Trustee in accordance with their respective terms.

      Section 11.11. Appointment of Successor Trustee.

            (a) If at any time the Trustee shall resign or shall be removed or
      shall become incapable of acting, or shall be adjudged bankrupt or
      insolvent, or if a receiver, liquidator or conservator of the Trustee, or
      of its property, shall be appointed, or if any public officer shall take
      charge or control of the Trustee, or of its property or affairs, the
      Corporation covenants and agrees that it will promptly thereupon appoint a
      successor Trustee. The Corporation shall mail notice of any such
      appointment made by it within 20 days after such appointment to all
      Registered Owners of Notes.

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<PAGE>

            (b) If no appointment of a successor Trustee shall have been made
      pursuant to the provisions of subsection (a) above within 45 days after
      the Trustee shall have given to the Corporation written notice, as
      provided in Section 11.09 hereof, or after a vacancy in the office of the
      Trustee shall have occurred by reason of its inability to act, the Trustee
      or the Registered Owner of any Note may apply to any court of competent
      jurisdiction to appoint a successor Trustee. Said court may thereupon,
      after such notice, if any, as such court may deem proper and prescribe,
      appoint a successor Trustee.

      Every successor Trustee appointed pursuant to this Section shall be a
commercial bank or trust company in good standing, duly authorized to exercise
trust powers and subject to examination by federal or state authority, having a
reported capital and surplus of not less than $25,000,000, shall otherwise meet
the requirements of Section 11.02(a) hereof, shall be acceptable to each Credit
Facility Provider and, if requested by the Corporation, shall be an Eligible
Lender as required by Section 11.07 hereof.

      Section 11.12. Transfer of Rights and Properly to Successor Trustee. Any
successor Trustee appointed under this Indenture shall execute, acknowledge and
deliver to its predecessor Trustee, and also to the Corporation, an instrument
accepting such appointment, and thereupon such successor Trustee, without any
further act, deed or conveyance, shall become fully vested with all moneys,
estates, properties, rights, powers, duties and obligations of such predecessor
Trustee, with like effect as if originally named as Trustee, but the Trustee
ceasing to act shall nevertheless, on the request of the Corporation, or of its
successor Trustee, upon payment in full of all fees, costs and expenses,
execute, acknowledge and deliver such instruments of conveyance and further
assurance and do such other things as may reasonably be required for more fully
and certainly vesting and confirming in such successor Trustee all the right,
title and interest of the predecessor Trustee in and to any property held by it
under this Indenture, and shall pay over, assign and deliver to the successor
Trustee any money or other property subject to the trusts and conditions herein
set forth. Should any deed, conveyance or instrument in writing from the
Corporation be required by such successor Trustee for more fully and certainly
vesting in and confirming to such successor Trustee any such estates, rights,
powers and duties, any and all such deeds, conveyances and instruments in
writing shall, on request, and so far as may be authorized by law, be executed,
acknowledged and delivered by the Corporation. Any such successor Trustee shall
promptly notify each Indenture Agent, each Credit Facility Provider, each
Liquidity Facility and each Surety Provider of its appointment as Trustee. Upon
the effectiveness of the resignation or removal of the Trustee, such Trustee's
authority to act pursuant to this Indenture shall terminate and such Trustee
shall have no further responsibility or liability whatsoever for performance of
this Indenture as Trustee.

      Section 11.13. Merger or Consolidation. Any company into which any
Indenture Agent may be merged or converted or with which it may be consolidated
or any company resulting from any merger, conversion or consolidation to which
it shall be a party or any company to which any Indenture Agent may sell or
transfer all or substantially all of its corporate trust business, provided such
company shall be a trust company or bank which is qualified to be a successor to
such Indenture Agent under Section 11.11 or 11.15 hereof and shall be authorized
by law to perform all the duties imposed upon it by this Indenture, shall be the
successor to such Indenture Agent without the execution or filing of any paper
or the performance of any further act, anything herein to the contrary
notwithstanding.

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<PAGE>

      Section 11.14. Adoption of Authentication. In case any of the Notes
contemplated to be issued under this Indenture shall have been authenticated but
not delivered, any successor Authenticating Agent may adopt the certificate of
authentication of any predecessor Authenticating Agent so authenticating such
Notes and deliver such Notes so authenticated, and in case any of the said Notes
shall not have been authenticated, any successor Authenticating Agent may
authenticate such Notes in the name of the successor Authenticating Agent, and
in all such cases such certificate shall have the full force provided anywhere
in said Notes or in this Indenture.

      Section 11.15. Resignation or Removal of the Tender Agent, Paying Agents,
Registrar and Other Indenture Agents and Appointment of Successors.

            (a) The Tender Agent, any Paying Agent, the Registrar and any other
      Indenture Agent (other than the Trustee) may at any time resign and be
      discharged of the duties and obligations created by this Indenture by
      giving at least 60 days' written notice to the Corporation, the Trustee,
      each Auction Agent, each Broker-Dealer, each Credit Facility Provider,
      each Liquidity Facility Provider, each Surety Provider, each Remarketing
      Agent, the Registered Owners and any other Person required to get notice
      pursuant to a Supplemental Indenture. The Tender Agent, any Paying Agent,
      the Registrar and any other Indenture Agent (other than the Trustee) may
      be removed at any time by an instrument signed by an Authorized
      Representative and filed with the Tender Agent, any Paying Agent,
      Registrar or such other Indenture Agent, each Credit Facility Provider and
      with the Trustee. Any successor Tender Agent, Paying Agent, Registrar or
      other Indenture Agent (other than the Trustee) shall be appointed by the
      Corporation with the written consent of each Credit Facility Provider, if
      any, and shall be a trust company or commercial bank having trust powers,
      having a reported capital and surplus aggregating at least $25,000,000,
      shall otherwise meet the requirements of Section 11.02(a) hereof and be
      willing and able to accept the office of Tender Agent, Paying Agent,
      Registrar or Indenture Agent (other than the Trustee), as the case may be,
      on reasonable and customary terms and shall be authorized by law to
      perform all the duties imposed upon it by this Indenture. Notwithstanding
      any other provision of this Indenture, no resignation or removal of the
      Tender Agent, any Paying Agent, Registrar or Indenture Agent shall take
      effect until a successor shall be appointed and has accepted such
      appointment.

            (b) In the event of the resignation or removal of the Tender Agent,
      any Paying Agent, Registrar or other Indenture Agent (other than the
      Trustee), the Tender Agent, such Paying Agent, Registrar or other
      Indenture Agent (other than the Trustee) shall, after payment of its fees,
      costs and expenses, pay over, assign and deliver any moneys held by it to
      its successor.

      Section 11.16. Evidence of Signatures of Registered Owners and Ownership
of Notes.

            (a) Any request, consent or other instrument which this Indenture
      may require (or permit) to be executed by Registered Owners may be
      executed by such Registered Owners or by their attorneys pursuant to
      powers of attorney or instruments of similar

                                       82
<PAGE>

      tenor and shall be signed or executed by such Registered Owners in person
      or by their attorneys appointed in writing. Proof of (i) the execution of
      any such instrument, or of an instrument appointing any such attorney, or
      (ii) the holding by any person of the Notes shall be sufficient for any
      purpose of this Indenture (except as otherwise herein expressly provided)
      if made in the following manner, but the Trustee may nevertheless in its
      sole discretion require further or other proof in cases where it deems the
      same desirable.

            The fact and date of the execution by any Registered Owner or his
      attorney of such instrument may be proved by the Certificate, which need
      not be acknowledged or verified, of an officer of a bank or trust company,
      financial institution or other member of the National Association of
      Securities Dealers, Inc. or of any notary public or other officer
      authorized to take acknowledgments of deeds to be recorded in the state in
      which he purports to act, that the person signing such request or other
      instrument acknowledged to him the execution thereof, or by an affidavit
      of a witness of such execution, duly sworn to before such notary public or
      other officer. The authority of the person or persons executing any such
      instrument on behalf of a corporate Registered Owner may be established
      without further proof if such instrument is signed by a person purporting
      to be the president or vice president of such corporation with a corporate
      seal affixed and attested by a person purporting to be its secretary or an
      assistant secretary.

            (b) The ownership of Notes and the amount, numbers and other
      identification, and date of holding the same shall be proved by the
      registry books.

            (c) Any request, consent or vote of the Registered Owner of any Note
      shall bind all future Registered Owners of such Note in respect of
      anything done or suffered to be done by the Corporation or any Indenture
      Agent in accordance therewith.

      Section 11.17. Preservation and Inspection of Documents. All Indenture
Agents under the provisions of this Indenture or any Supplemental Indenture
shall maintain adequate records relating to the performance of their duties
consistent with industry practices, which records shall be subject at all
reasonable times to the inspection of the Corporation, any other Indenture
Agent, any Credit Facility Provider and any Registered Owner and their agents
and their representatives, any of whom may make copies thereof.

      Section 11.18. Statement of Trustee of Funds and Accounts and Other
Matters. Not more than 30 days after the close of each Fiscal Year the Trustee
shall furnish the Corporation and each Credit Facility Provider a statement
setting forth (to the extent applicable) in respect to such Fiscal Year, (a) all
transactions relating to the receipt, disbursement and application of all money
received by the Trustee pursuant to all terms of this Indenture, (b) the
balances held by the Trustee at the end of such Fiscal Year to the credit of
each Fund, (c) a brief description of all moneys and Investment Securities held
by the Trustee as part of the balance of each Fund as of the end of such Fiscal
Year, and (d) any other information which the Corporation may reasonably
request.

      The Corporation, not more than 30 days after the close of each Fiscal Year
and 25 days after the close of each calendar month, shall furnish to each Credit
Facility Provider, Moody's and the Trustee a statement setting forth in respect
to such Fiscal Year or month, a brief

                                       83
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description (including aggregate principal balance plus accrued interest) of all
Financed Student Loans in the form attached as Exhibit C hereto.

                                  ARTICLE XII

                                   TERMINATION

      Section 12.01. Termination of the Trust.

            (a) The trust created by this Indenture (the "Trust") shall
      terminate upon the earlier of (i) the later of (A) payment to the
      Registered Owners and to the Trustee of all amounts required to be paid to
      them pursuant to this Indenture and any Supplemental Indenture and the
      disposition of all property held as part of the Trust Estate or (B) the
      day following the date on which all reimbursement obligations to each
      Credit Facility Provider, each Liquidity Facility Provider, each Surety
      Provider and each provider of an Interest Rate Exchange Agreement, if any,
      and any other Person as may be provided for in any Supplemental Indenture
      have been paid in full, (ii) the expiration of 21 years from the death of
      the last survivor of the descendants of Joseph P. Kennedy (the late
      ambassador of the United States to the Court of St. James) living on the
      date of this Indenture or (iii) subject to Section 12.01(d) hereof, upon
      the occurrence of a Liquidation Event (as defined in Section 12.01(c)
      hereof). The Corporation shall promptly notify the Trustee of any
      prospective termination pursuant to this Section.

            (b) Notice of any prospective termination, specifying the Interest
      Payment Date for payment of the final distribution and requesting the
      surrender of the Notes for cancellation, shall be given promptly by the
      Trustee by letter to Registered Owners mailed not less than 10 nor more
      than 15 days preceding the specified Interest Payment Date stating (i) the
      Interest Payment Date upon which final payment of the Notes shall be made,
      (ii) the amount of any such final payment and (iii) the location for
      presentation and surrender of the Notes. Payment of the final distribution
      which shall be made only upon presentation and surrender of the Notes at
      the corporate trust office of the Trustee specified in the notice.

            (c) A "Liquidation Event" shall be deemed to have occurred, subject
      to Section 12.01(d) hereof, upon Dissolution of the Corporation.

            (d) The Corporation shall not voluntarily take any action that would
      cause it to be deemed dissolved within the meaning of this Article.

            In the event of the Dissolution of the Corporation or any action
      that would cause the Corporation to cease being deemed a general partner
      of the Trust if the Trust were deemed a limited partnership formed under
      the Delaware Revised Uniform Limited Partnership Act, and the
      Corporation's interest were deemed to represent the sole general
      partnership interest in such a partnership, the Trust shall terminate 90
      days after the date of such event and its assets liquidated in accordance
      with Section 12.01(e) hereof unless both of the following occur:

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<PAGE>

                  (i) the Registered Owners representing a majority of the
            aggregate principal of the Notes Outstanding, inform the Trustee in
            writing before the end of such 90 day period that they disapprove of
            the liquidation of the assets of the Trust; and

                  (ii) the Corporation, the Trustee, each Credit Facility
            Provider and each Liquidity Facility Provider shall receive an
            Opinion of Counsel to the effect that the continuation of the Trust
            shall not cause the Trust to be treated as an association taxable as
            a corporation for federal income tax purposes.

            (e) Upon receipt by the Trustee from the Corporation of notice of
      the occurrence of a Liquidation Event (as defined in Section 12.01(c)
      hereof), the Trustee shall, subject to the direction of the Registered
      Owners representing a majority of the aggregate principal of the Notes
      Outstanding (provided that, if Registered Owners representing a majority
      of the aggregate principal of the Notes Outstanding shall not have
      provided such direction to the Trustee within 30 days of the Trustee
      having sent a written request for such direction to the Registered Owners,
      the Trustee shall proceed without such direction) sell the remaining
      assets of the Trust Estate, if any, at public or private sale, in a
      commercially reasonable manner and on commercially reasonable terms. The
      Corporation agrees to cooperate with the Trustee to effect any such sale,
      including by executing such instruments of conveyance or assignment as
      shall be necessary or required by the purchaser. Proceeds of sale, net of
      expenses, shall be treated as collections on the assets of the Trust and
      shall be deposited into the Revenue Fund. On the next Interest Payment
      Date the Trustee shall cause to be paid to Registered Owners and the
      Corporation amounts distributable on such Interest Payment Date pursuant
      to Article V hereof. Following the termination of the Trust, all right,
      title and interest in and to the Financed Student Loans and other property
      and funds in the Trust Estate (other than funds on deposit in certain
      accounts for the payment of expenses) shall be conveyed and transferred to
      the Corporation.

      Section 12.02. Notice. The Trustee shall give notice of termination of the
Trust to the Corporation and each Rating Agency.

                                  ARTICLE XIII

                      DEFEASANCE; MISCELLANEOUS PROVISIONS

      Section 13.01. Defeasance.

            (a) If the Corporation shall pay or cause to be paid to the
      Registered Owners of the Notes, the principal or Redemption Price and
      interest to become due thereon at the times and in the manner stipulated
      in the Notes and in this Indenture, and pay or cause to be paid (i) to
      each Indenture Agent its fees, costs and expenses, (ii) to each Credit
      Facility Provider and each Liquidity Facility Provider all amounts owing
      under each Credit Facility, each Liquidity Facility and each Reimbursement
      Agreement relating thereto, (iii) to each Surety Provider all amounts
      owing under the agreement relating its Debt Service Reserve Policy, (iv)
      to each Remarketing Agent all amounts owing under each

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<PAGE>

      remarketing agreement and (v) to each party to any Interest Rate Exchange
      Agreement all amounts owing to it, then the pledge of the Trust Estate,
      including any Revenues, Recoveries of Principal and other moneys,
      securities, funds and property hereby pledged and all other rights granted
      hereby shall be discharged and satisfied. In such event, the Trustee
      shall, upon the request of the Corporation, execute and deliver to the
      Corporation all such instruments as may be desirable to evidence such
      discharge and satisfaction and the Indenture Agents shall pay over or
      deliver to the Corporation all moneys or securities held by them pursuant
      to this Indenture which are not required for the payment of Notes not
      theretofore surrendered for such payment.

            (b) Except as otherwise provided in any Supplemental Indenture, all
      Notes shall, prior to the maturity or Redemption Date thereof, be deemed
      to have been paid and no longer Outstanding if (i) in case any of said
      Notes are to be redeemed on any date prior to their maturity, the
      Corporation shall have given to the Trustee in form satisfactory to it
      irrevocable instructions to mail as provided in Article VI hereof notice
      of redemption on said date, (ii) there shall have been deposited with the
      Trustee either moneys (which shall be Eligible Funds to the extent any
      Liquidity Facility or Credit Facility other than a bond insurance policy
      is in effect for such Notes) in an amount which shall be sufficient, or
      noncallable and nonprepayable Governmental Obligations (including any
      Governmental Obligations issued or held in book entry form on the books of
      the Department of the Treasury of the United States of America) (which
      Governmental Obligations shall have been purchased with Eligible Funds to
      the extent any Liquidity Facility or Credit Facility other than a bond
      insurance policy is in effect for such Notes) the principal of and the
      interest on which when due, without reinvestment, will provide moneys
      which together with the moneys, if any, deposited with the Trustee at the
      same time, shall be sufficient to pay when due the principal of and
      interest to become due on such Notes on and prior to the Redemption Date
      or maturity date thereof, as the case may be, verified as to sufficiency
      by a report of an Accountant, and (iii) in the event said Notes are not by
      their terms subject to redemption within the next succeeding 60 days, the
      Corporation shall have given the Trustee in form satisfactory to it
      irrevocable instructions to mail, as soon as practicable, a notice to the
      Registered Owners of such Notes that the deposit required by clause (ii)
      above has been made with the Trustee and that said Notes are deemed to
      have been paid in accordance with this Section and stating such maturity
      or Redemption Date upon which moneys are to be available for the payment
      of the principal or Redemption Price, if any, on said Notes. In the event
      the Notes are Adjustable Rate Notes, for periods in which the interest
      rate has not been determined, a rate equal to the maximum rate such Notes
      may bear shall be assumed. Neither Governmental Obligations or moneys
      deposited with the Trustee pursuant to this Section nor principal or
      interest payments on any such Governmental Obligations shall be withdrawn
      or used for any purpose other than, and shall be held in trust for, the
      payment of the principal of or Redemption Price, if any, and interest on
      said Notes; but any cash received from such principal or interest payments
      on such Governmental Obligations deposited with the Trustee, if not then
      needed for such purpose, shall, to the extent practicable, be reinvested
      in Governmental Obligations maturing at times and in amounts sufficient to
      pay when due the principal or Redemption Price, if any, and interest to
      become due on said Notes on and prior to such maturity date thereof, as
      the case may be, and interest earned from such reinvestments shall, as
      contemplated by a report of an

                                       86
<PAGE>

      Accountant verifying continued sufficiency, be paid over to the
      Corporation, as received by the Trustee, free and clear of any trust, lien
      or pledge; provided, however, that such reinvestment may be effected only
      upon receipt by the Trustee of an approving Opinion of Counsel. The
      Trustee shall deposit the moneys to be set aside for payment of the
      Redemption Price of the Notes hereunder in a separate redemption account
      or pursuant to a separate escrow agreement, if the Corporation so
      designates, and shall use the money for the purpose of reimbursing each
      Credit Facility Provider for a drawing on its Credit Facility.

            The Trustee shall not terminate the Credit Facility or release the
      money in the redemption account until the Notes have been redeemed in full
      with either a drawing on the Credit Facility or the moneys in the
      redemption account.

            (c) The deposit required by paragraph (b) above may be made with
      respect to any Series of Notes, or a portion thereof, within any
      particular maturity, in which case such maturity of Notes shall no longer
      be deemed to be Outstanding under the terms of this Indenture, and the
      Registered Owners of such defeased Notes shall be secured only by such
      trust funds and not by any other part of the Trust Estate, and this
      Indenture shall remain in full force and effect to protect the interests
      of the Registered Owners of Notes remaining Outstanding thereafter.
      Notwithstanding the foregoing and paragraph (b) above and the definition
      of "Registered Owner," the provisions of this Indenture relating to
      optional purchases with respect to Adjustable Rate Notes and to payment,
      registration, transfer and redemption of Notes shall remain in effect
      until final maturity or the Redemption Date of the Notes.

            (d) In addition to the foregoing provisions of this Section, Notes
      or interest installments for the payment of which moneys shall have been
      set aside and shall be held in trust by the Indenture Agents (through
      deposit by the Corporation of funds for such payment or otherwise) shall,
      upon maturity or upon the Redemption Date established therefor, be deemed
      to have been paid and no longer Outstanding. Should any of the Notes not
      be presented for payment when due, the Trustee shall retain from any
      moneys transferred to it for the purpose of paying said Notes so due, for
      the benefit of the Registered Owners thereof, a sum of money sufficient to
      pay such Notes when the same are presented by the Registered Owners
      thereof for payment (upon which sum the Trustee shall not be required to
      pay interest). All liability of the Corporation to the Registered Owners
      of such Notes and all rights of such Registered Owners against the
      Corporation under the Notes or under the Indenture shall thereupon be and
      become limited to amounts on deposit with the Trustee and set aside for
      such payment, and the sole right of such Registered Owners shall
      thereafter be against such deposit. The Trustee shall bear no duty or
      liability to the Registered Owners of such nonpresented Notes other than
      to disburse funds from such deposit upon presentation of the appropriate
      Note. If any Note shall not be presented for payment within the period of
      six years following its maturity, the Trustee shall, to the extent
      permitted by law, turn over the money theretofore held by it for payment
      of such Note to the Corporation, provided, however, that such amounts
      shall not be so transferred until at least one year after the final
      maturity date of the Notes of the related Series.

                                       87
<PAGE>

            (e) From and after the date of payment in full of all Notes
      Outstanding, the Corporation shall have the right to receive payments with
      respect to all Financed Student Loans.

      Section 13.02. Delegation of Duties by the Corporation. When any action is
required to be taken by the Corporation under this Indenture, the Corporation
may (a) delegate such duty to a committee of the Corporation or (b) contract for
another to perform such duty, provided in either instance that actions of those
to whom the duty is delegated or contracted are reviewed at least annually by
the Corporation. When any duty is placed upon the Servicer by contract, such
contract may permit the Servicer to delegate such duty to another, by contract,
and a copy of any such contract shall be filed with the Trustee.

      Section 13.03. Appointment of Agents, etc. The Corporation shall appoint
all employees and attorneys which it may consider necessary. The individual
members of the Corporation shall not be personally liable, neither singly nor
collectively, for any act or omission of any agent or employee.

      Section 13.04. Notices. Any notice, demand, direction, request or other
instrument authorized or required by this Indenture or by any Supplemental
Indenture to be given to or filed with the Corporation, the Trustee or any other
Indenture Agent shall be deemed to have been sufficiently given or filed for all
purposes if and when delivered or sent by facsimile transmission, promptly
confirmed by first class mail, postage prepaid:

If to the Corporation:      CFLD-I, Inc.
                            3320 Holcomb Bridge Road, NW
                            Norcross, Georgia 30092
         Attention:         President
         Phone:             (770) 449-4951
         Facsimile:         (770) 248-9307

                            with a copy to:

                            UICI
                            4001 McEwen Blvd.
                            Dallas, TX  75244
          Attention:        Glenn Reed, Esq.
          Telephone:        (972) 392-6719
          Facsimile:        (972) 392-6717

If to the Trustee:          Zions First National Bank
                            717 17th Street, Suite 301
                            Denver, CO 80202
         Attention:         Corporate Trust Department
         Phone:             (720) 947-7470
         Facsimile:         (720) 947-7480

                                       88
<PAGE>

      To any other Indenture Agent: to such facsimile number and address as such
Indenture Agent shall indicate in the acceptance of office filed by each such
Indenture Agent pursuant to Section 11.02(b) hereof.

      To any Credit Facility Provider or Liquidity Facility Provider: to the
address specified in the related Supplemental Indenture.

      The Corporation, the Trustee, any other Indenture Agent, any Credit
Facility Provider and Liquidity Facility Provider may, by like written notice to
each other such person, designate any further or different facsimile numbers and
addresses to which subsequent notices shall be sent.

      Section 13.05. Governing Law. This Indenture shall be construed pursuant
to the laws of the State.

      Section 13.06. Notices to Rating Agencies. The Corporation shall provide
written notice to each Rating Agency (and each Credit Facility Provider) then
rating some or all Notes of any Series Outstanding hereunder, to the address
specified by such Rating Agency (and each Credit Facility Provider) for such
purposes, upon the occurrence of any of the following:

            (a) substitution or replacement of any Indenture Agent;

            (b) any amendment to this Indenture and any Supplemental Indenture
      pursuant to which Notes are then outstanding or any amendment to any
      Credit Facility or Liquidity Facility pursuant to a Supplemental
      Indenture; and

            (c) mandatory tender, redemption, or defeasance of all Outstanding
      Notes of any Series.

      Section 13.07. Nonliability of Officers. It is hereby expressly made a
condition of this Indenture that any agreements, covenants or representations
herein contained or contained in the Notes do not and shall never constitute or
give rise to a personal or pecuniary liability or charge against the officers,
employees, agents or members of the Corporation, or the general credit of the
Corporation, and in the event of a breach of any such agreement, covenant or
representation, no personal or pecuniary liability or charge payable directly or
indirectly from the general revenues of the Corporation shall arise therefrom.
Nothing contained in this Section, however, shall relieve the Corporation from
the observance and performance of the several covenants and agreements on its
part herein contained.

      Section 13.08. Parties Interested Herein. Each Credit Facility Provider
and each Liquidity Facility Provider shall be deemed to be a third party
beneficiary and party in interest to this Indenture.

      Section 13.09. Counterparts. This Indenture maybe executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.

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<PAGE>

      IN WITNESS WHEREOF, the undersigned President and Secretary of the CFLD-I,
Inc. and the undersigned officer of the Trustee has hereunto executed this
General Indenture as of the date first written above.

                                        CFLD-I, INC.

                                        By:_____________________________________
                                              Glenn W. Reed, President

Attest:

By:_________________________________
         Peggy G. Simpson, Secretary

                                        ZIONS FIRST NATIONAL BANK as Trustee

                                        By:_____________________________________
                                              David W. Bata
                                              Vice President

                                       90
<PAGE>

================================================================================

                          FIRST SUPPLEMENTAL INDENTURE

                                 By and Between

                                  CFLD-I, INC.

                                       and

                           ZIONS FIRST NATIONAL BANK,
                                   as Trustee

                                   Relating To

                                  $100,000,000
                                  CFLD-I, Inc.
                         Student Loan Asset Backed Notes
                 Senior Series 2001A-1 and Senior Series 2001A-2
                           (Auction Rate Certificates)

                            Dated as of April 1, 2001

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

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                Page

                                    ARTICLE I

                     SHORT TITLE, DEFINITIONS AND AUTHORITY

<S>            <C>                                                              <C>
Section 1.01.  Short Title....................................................    3
Section 1.02.  Definitions....................................................    3
Section 1.03.  Authority......................................................    5
Section 1.04.  Definition of Investment Securities............................    5

                                   ARTICLE II

             AUTHORIZATION, TERMS AND ISSUANCE OF SERIES 2001A NOTES

Section 2.01.  Principal Amount, Designation and Series.......................    8
Section 2.02.  Purposes of Issuance...........................................    9
Section 2.03.  Dates, Maturities and Interest Rates...........................    9
Section 2.04.  Form, Denomination, Numbers and Letters........................    9
Section 2.05.  Book-Entry System; Limited Obligation of Corporation...........    9
Section 2.06.  Appointment of Paying Agent and Registrar......................   11
Section 2.07.  Appointment of Authenticating Agent............................   11
Section 2.08.  Redemption.....................................................   12
Section 2.09.  Transfer of Notes..............................................   13
Section 2.10.  Execution of Reimbursement Agreement and Custodian
               Agreements.....................................................   14

                                   ARTICLE III

     DEPOSITS INTO FUNDS AND ACCOUNTS; DISPOSITION OF PROCEEDS OF THE SALE
          OF THE SERIES 2001A NOTES; AND USE AND DISBURSEMENTS OF FUNDS

Section 3.01.  Deposits into Funds and Accounts on the Issue Date.............   14
Section 3.02.  Payment of Expenses and Costs of Issuance......................   14
Section 3.03.  Increase in Program Expenses and Maintenance and Operating
               Expenses.......................................................   15
Section 3.04.  Debt Service Reserve Fund......................................   15
Section 3.05.  Recoveries of Principal, Recycling.............................   16
Section 3.06.  Limitation on Sale of Financed Student Loans...................   16
Section 3.07.  Cash Flow Statements...........................................   17
Section 3.08.  Perfection of Financed Student Loans and Defaulted Student
               Loans..........................................................   17
Section 3.09.  Servicing of Financed Student Loans............................   17
Section 3.10.  Repurchase Obligation Under Student Loan Purchase
               Agreements.....................................................   18
Section 3.11.  Acquisition of Future Private Loans............................   18
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

                                   ARTICLE IV

                            CREDIT FACILITY PROVIDER
<S>            <C>                                                              <C>
Section 4.01.  Rights of Credit Facility Provider Controlling.................  18
Section 4.02.  Payments Under the Credit Facilities for the Series 2001
               Notes..........................................................  18
Section 4.03.  Notices, Consents, Miscellaneous...............................  20
Section 4.04.  Consents, etc. by Credit Facility Provider Limited.............  22
Section 4.05.  Rating Notifications Upon a Credit Confirmation................  22

                                    ARTICLE V

                                  MISCELLANEOUS

Section 5.01.  First Supplemental Indenture Construed with General
               Indenture......................................................  22
Section 5.02.  General Indenture as Supplemented to Remain in Effect..........  22
Section 5.03.  Severability...................................................  23
Section 5.04.  Confirmation of Actions........................................  23
Section 5.05.  Governing Law..................................................  23
Section 5.06.  Notices........................................................  23
Section 5.07.  Rights of Credit Facility Provider.............................  25
Section 5.08.  Execution in Counterparts......................................  25

EXHIBIT A      PROVISIONS RELATING TO SERIES 2001A NOTES OUTSTANDING AS
               AUCTION RATE CERTIFICATES
EXHIBIT B      FORM OF FINANCIAL GUARANTY INSURANCE POLICY
EXHIBIT C      FORM OF NOTICE OF CHANGE IN LENGTH OF ONE OR MORE
               AUCTION PERIODS
EXHIBIT D      FORM OF NOTICE ESTABLISHING CHANGE IN LENGTH
EXHIBIT E      FORM OF NOTICE OF CHANGE IN AUCTION DATE
EXHIBIT F      FORM OF SERIES 2001A NOTES
EXHIBIT G      DTC LETTER OF REPRESENTATIONS
EXHIBIT H      FORM OF INVESTMENT LETTER
EXHIBIT I      FORM OF DEBT SERVICE RESERVE SURETY BOND
</TABLE>

                                       ii
<PAGE>

      THIS FIRST SUPPLEMENTAL INDENTURE, dated as of April 1, 2001 (this "First
Supplemental Indenture"), is entered into by and between CFLD-I, INC. (the
"Corporation"), a corporation established under the laws of the State of
Delaware, and ZIONS FIRST NATIONAL BANK, a national banking association
authorized to accept trusts of the nature established herein (the "Trustee"),
and amends and supplements the General Indenture, dated as of April 1, 2001 (the
"General Indenture"), between the Corporation and the Trustee.

      WHEREAS, The MEGA Life and Health Insurance Company, an Oklahoma
corporation ("MEGA"), and Mid-West National Life Insurance Company of Tennessee,
a Tennessee corporation ("Mid-West"), offer whole life insurance policies with
student loan benefits (the "Life Insurance Policies"); and

      WHEREAS, pursuant to the College First Alternative Loan Program (the
"Student Loan Program"), a policyholder under a Life Insurance Policy may obtain
a loan (a "College First Student Loan") to fund the policyholder's children's
educational expenses at an educational institution approved under the Student
Loan Program; and

      WHEREAS, the College First Student Loans are presently originated by
Richland State Bank, a South Dakota banking institution ("Richland"), pursuant
to the terms and provision of a Loan Underwriting and Processing Agreement,
dated as of June 12, 2000 (the "Loan Underwriting Agreement"), among Richland,
MEGA and Mid-West; and

      WHEREAS, UICI Funding Corp. 2, a Delaware corporation ("UICI Funding"),
has agreed to purchase all of the College First Student Loans originated by
Richland pursuant to the terms and provisions of a Loan Origination and Purchase
Agreement, dated as of June 12, 2000 (the "Loan Origination and Purchase
Agreement"), between Richland and UICI Funding; and

      WHEREAS, the Corporation and UICI Funding have entered into a Student Loan
Purchase Agreement, dated April 27, 2001 (the "College First Student Loan
Purchase Agreement"), permitting the Corporation to purchase certain College
First Student Loans owned by UICI Funding; and

      WHEREAS, MEGA, Mid-West, UICI Funding and the Corporation are wholly-owned
subsidiaries of UICI, a Delaware corporation ("UICI"); and

      WHEREAS, certain College First Student Loans are secured, in part, by an
allocable portion of the cash surrender value of the policyholder's Life
Insurance Policy related to such College First Student Loan (the "Cash Surrender
Value"); and

      WHEREAS, a College First Student Loan made to a policyholder who receives
a credit score higher than a certain predetermined level is eligible to be
insured by The Education Resources Institute, Inc., a private non-profit
corporation organized under Chapter 180 of the Massachusetts General Laws
("TERI"), pursuant to the terms and provisions of an Amended and Restated
Guaranty Agreement, dated as of December 31, 1999, between UICI and TERI, or the
Guaranty Agreement, dated as of April 1, 2001, between the Corporation and TERI
(collectively, the "TERI Guaranty Agreement"), or by United Student Aid Funds,
Inc. ("USA Funds"), a Delaware corporation, pursuant to the terms and provisions
of an Amended and Restated
<PAGE>

Guarantee Agreement, dated as of January 1, 1996 (the "USA Funds Guarantee
Agreement"), among, MEGA, Mid-West, the Corporation and USA Funds; and

      WHEREAS, the Corporation, in the future may desire to purchase other
student loans permitted to be acquired pursuant to this Indenture, including
student loans made pursuant to the Federal Family Education Loan Program (the
"FFELP Loans") under the Higher Education Act of 1965, as amended (the "Higher
Education Act"); and

      WHEREAS, pursuant to the Corporation's Articles of Incorporation and this
Indenture, the Corporation is authorized to issue its debt obligations (the
"Notes") to obtain funds to make or purchase College First Student Loans, FFELP
Loans and other student loans permitted to be acquired pursuant to this
Indenture (collectively, the "Student Loans"); and

      WHEREAS, any series of the Notes (a "Series") may be secured by a form of
credit enhancement purchased by the Corporation, including, without limitation,
a letter of credit, bond insurance, a surety bond or a standby bond purchase
agreement (each a "Credit Facility") delivered by the provider of such Credit
Facility (the "Credit Facility Provider"); and

      WHEREAS, the Corporation desires to issue its first two Series of Notes
(collectively, the "Series 2001A Notes") in the aggregate principal amount of
$100,000,000 to, in part, acquire Student Loans from UICI Funding pursuant to
the College First Student Loan Purchase Agreement; and

      WHEREAS, the Series 2001A Notes shall be issued as Senior Notes (as
defined in the General Indenture); and

      WHEREAS, MBIA Insurance Corporation, as a Credit Facility Provider, has
agreed to guarantee the payment of the principal of and interest on the Series
2001A Notes, when due, pursuant to two separate Credit Facilities for the Series
2001A Notes to be issued simultaneously with the delivery of the Series 2001A
Notes; and

      WHEREAS, Section 8.01(g) of the General Indenture permits the Corporation
and the Trustee, with the written consent of each Credit Facility Provider, but
without the consent of the Registered Owners of any Notes issued under the
General Indenture, to enter into Supplemental Indentures which amend and
supplement the General Indenture (which Supplemental Indentures shall thereafter
form a part of the General Indenture) for the purpose of authorizing one or more
Series of Notes; and

      WHEREAS, MBIA Insurance Corporation, as the sole Credit Facility Provider,
has consented to the execution and delivery of this First Supplemental Indenture
by the Corporation and the Trustee; and

      WHEREAS, UBS PaineWebber Inc., as the initial purchaser for the Series
2001A Notes, has agreed to place the Series 2001A Notes with certain qualified
institutional buyers and institutional accredited investors; and

                                       2
<PAGE>

      WHEREAS, all things necessary to constitute the Indenture, including this
First Supplemental Indenture, a valid, binding and legal instrument for the
security of the Notes issued pursuant to the Indenture in accordance with its
terms, have been done and performed.

      NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:

                                   ARTICLE I

                     SHORT TITLE, DEFINITIONS AND AUTHORITY

      Section 1.01. Short Title. This First Supplemental Indenture shall be
known as and may be designated by the short title "First Supplemental Indenture"
(this "First Supplemental Indenture").

      Section 1.02. Definitions. All words and phrases defined in Article I of
the General Indenture or in Exhibit A hereto, respectively, shall have the same
meaning in this First Supplemental Indenture, except as otherwise appears in
this Section. In addition, the following terms shall have the following
meanings, unless the context otherwise requires:

      "ARCs" means the Series 2001A Notes bearing interest at Auction Rates.

      "Authorized Denomination" means, with respect to the Series 2001A Notes,
principal amounts of $50,000 and integral multiples thereof.

      "Cede" means Cede & Co., the nominee of DTC, and any successor nominee
thereof.

      "Credit Facility" shall include the financial guaranty insurance policy
No. 350461 and the financial guaranty insurance policy No. 350462, each issued
by MBIA Insurance Corporation, and any replacements thereof, the forms of which
are attached as Exhibit B hereto.

      "Debt Service Reserve Policy" shall include the Debt Service Reserve
Surety Bond No. 350463 to be delivered by MBIA Insurance Corporation, and any
replacement thereof, guaranteeing the payment of the principal of and interest
on the Series 2001A Notes, the form of which is attached hereto as Exhibit I.

      "Debt Service Reserve Requirement" with respect to the Series 2001A Notes,
means an amount equal 2% of the principal amount of the Series 2001A Notes
Outstanding from time to time.

      "DTC" means The Depository Trust Company, and any successor thereof.

      "Financial Guaranty Agreement" means the Financial Guaranty Agreement,
dated as of April 1, 2001, between the Corporation and the Surety Provider,
relating to the Debt Service Reserve Policy.

      "Fitch" means Fitch, Inc., its successors and assigns, and if such entity
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "Fitch" shall

                                       3
<PAGE>

be deemed to refer to any nationally recognized securities rating agency
designated by a Corporation Order, with written notice thereof to the Trustee
and Credit Facility Provider.

      "General Indenture" means the General Indenture, dated as of April 1,
2001, by and between the Trustee and the Corporation, as amended and
supplemented in accordance with the terms thereof.

      "Insurance Paying Agent" means State Street Bank or its successors under
the Credit Facilities for the Series 2001A Notes.

      "Issue Date" shall include the date of original delivery of the Series
2001A Notes; April 27, 2001.

      "Moody's" means Moody's Investors Service, Inc., its successors and
assigns, and if such entity shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "Moody's" shall be deemed
to refer to any nationally recognized securities rating agency designated by a
Corporation Order, with written notice thereof to the Trustee and Credit
Facility Provider.

      "Participants" means those broker-dealers, banks and other financial
institutions from time to time for which DTC holds Series 2001A Notes as
Securities Depository.

      "Initial Purchaser" means UBS PaineWebber Inc. and any successor thereof.

      "Qualified Surety Bond" means a surety bond issued by an insurance company
rated in the highest category by S&P and Moody's and, if rated by A.M. Best &
Company, must also be rated in the highest rating category by A.M. Best &
Company.

      "Reimbursement Agreement" shall include the Insurance Agreement, dated as
of April 1, 2001, among MBIA Insurance Corporation, UICI, the Corporation, UICI
Funding, as the seller, UICI Funding, as the master servicer, and the Trustee,
as amended and supplemented pursuant to the terms thereof.

      "Representation Letter" means the representation letter between the
Corporation, the Trustee and DTC in substantially the form attached as Exhibit G
hereto.

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

      "Series 2001A Notes" means, collectively, the Series 2001A-1 Notes and the
Series 2001A-2 Notes.

      "Series 2001A-1 Notes" means the Senior Notes authorized by Section 2.01
of this First Supplemental Indenture and titled "Student Loan Asset Backed
Notes, Senior Series 2001A-1 (Auction Rate Certificates)."

      "Series 2001A-2 Notes" means the Senior Notes authorized by Section 2.01
of this First Supplemental Indenture and titled "Student Loan Asset Backed
Notes, Senior Series 2001A-2 (Auction Rate Certificates)."

                                       4
<PAGE>

      "S&P" means Standard & Poor's Credit Market Services, a division of The
McGraw-Hill Companies, Inc., its successors and assigns, and if such entity
shall be dissolved or liquidated or shall no longer perform the functions of a
securities rating agency, "S&P" shall be deemed to refer to any nationally
recognized securities rating agency designated by a Corporation Order, with
written notice thereof to the Trustee and Credit Facility Provider.

      "Surety Provider" shall include MBIA Insurance Corporation and any
successor thereof, as the provider of a Debt Service Reserve Policy.

      Section 1.03. Authority. This Supplemental Indenture is executed pursuant
to the provisions of the General Indenture and a resolution of the Corporation.

      Section 1.04. Definition of Investment Securities. As permitted by the
definition of Investment Securities in Section 1.01 of the General Indenture,
Investment Securities means the following categories of securities:

            (a) Direct obligations of the United States of America (including
      obligations issued or held in book-entry form on the books of the
      Department of the Treasury, and CATS and TIGRS) or obligations the
      principal of and interest on which are unconditionally guaranteed by the
      United States of America.

            (b) Bonds, debentures, notes or other evidence of indebtedness
      issued or guaranteed by any of the following federal agencies and provided
      such obligations are backed by the full faith and credit of the United
      States of America (stripped securities are only permitted if they have
      been stripped by the agency itself):

                  (i) U.S. Export-Import Bank (Eximbank)

                        (A) Direct obligations or fully guaranteed certificates
                  of beneficial ownership

                  (ii) Farmers Home Administration (FmHA)

                        (A) Certificates of beneficial ownership

                  (iii) Federal Financing Bank

                  (iv) Federal Housing Administration Debentures (FHA)

                  (v) General Services Administration

                        (A) Participation certificates

                  (vi) Government National Mortgage Association (GNMA or "Ginnie
            Mae")

                        (A) GNMA - guaranteed mortgage-backed Notes

                        (B) GNMA - guaranteed pass-through obligations

                                       5
<PAGE>

                  (vii) U.S Maritime Administration

                        (A) Guaranteed Title XI financing

                  (viii) U.S. Department of Housing and Urban Development (HUD)
            Project Notes

                        (A) Local Authority Notes

                        (B) New Communities Debentures - U.S. government
                  guaranteed debentures

                        (C) U.S. Public Housing Notes and Bonds - U.S.
                  government guaranteed public housing notes and bonds

            (c) Bonds, debentures, notes, other evidence of indebtedness issued
      or guaranteed by any of the following non-full faith and credit U.S.
      government agencies (stripped securities are only permitted if they have
      been stripped by the agency itself):

                  (i) Federal Home Loan Bank System

                        (A) Senior debt obligations

                  (ii) Federal Home Loan Mortgage Corporation (FHLMC or "Freddie
            Mac")

                        (A) Participation Certificates

                        (B) Senior debt obligations

                  (iii) Federal National Mortgage Association (FNMA or "Fannie
            Mae")

                        (A) Mortgage-backed securities and senior debt
                  obligations

                  (iv) Student Loan Marketing Association (SLMA or "Sallie Mae")

                        (A) Senior debt obligations

                  (v) Resolution Funding Corp. (REFCORP) obligations

                  (vi) Farm Credit System

                        (A) Consolidated system-wide Notes and notes

            (d) Money market funds, including money market funds for which the
      Trustee or an affiliate of the Trustee acts as adviser or provides other
      services, registered under the Federal Investment Company Act of 1940,
      whose shares are registered under the Federal Securities Act of 1933, and
      having a rating by S&P of "AAAm-G"; "AAA-m"; and a Moody's rating of
      "Aaa"; and if rated by Fitch rated "AA" or higher if the money

                                       6
<PAGE>

      market fund has the ability to maintain a stable one dollar net asset
      value per share and the shares are freely transferable on a daily basis.

            (e) Certificates of deposit secured at all times by collateral
      described in (a) and/or (b) above. Such certificates must be issued by
      commercial banks, which may include the Trustee, savings and loan
      associations or mutual savings banks. The collateral must be held by a
      third party and the Registered Owners must have a perfected first security
      interest in the collateral.

            (f) Certificates of deposit, savings accounts, deposit accounts or
      money market deposits which are fully insured by FDIC, including BIF and
      SAIF, and which may be issued by the Trustee.

            (g) Investment agreements, including guaranteed investment
      contracts, forward purchase agreements and reserve fund put agreements
      acceptable to the Credit Facility Provider, and which may be issued by the
      Trustee.

            (h) Commercial paper rated, at the time of purchase, "A-1+" or
      better by S&P and "P1" by Moody's and if rated by Fitch rated "F-1+."

            (i) Bonds or notes issued by any state or municipality which are
      rated "A-1+" or "AA-" or better by S&P, "Aa2" or better by Moody's and, if
      rated by Fitch rated in one of its two highest rating categories, in one
      of the two highest rating categories.

            (j) Federal funds or bankers acceptances with a maximum term of one
      year of any bank which has an unsecured, uninsured and unguaranteed
      obligation rating of "A-1" or "A" or better by S&P, "P1" or "A2" by
      Moody's and if rated by Fitch "F-1" or "A" or better.

            (k) Repurchase agreements for 30 days or less must follow the
      following criteria.

      Repurchase agreements which exceed 30 days must be acceptable to the
Credit Facility Provider and S&P.

      Repurchase agreements are agreements which provide for the transfer of
securities from a dealer bank or securities firm (seller/borrower) to a
counterparty (buyer/lender), and the transfer of cash from the buyer/lender to
the dealer bank or securities firm with an agreement that the dealer bank or
securities firm will repay the cash plus a yield to the buyer/lender in exchange
for the securities at a specified date.

                  (i) Repurchase agreements must be between the buyer/lender and
            a dealer bank or securities firm, which include primary dealers on
            the Federal Reserve reporting dealer list which are rated "A" or
            above by S&P, "A2" or above by Moody's and if rated by Fitch "A."

                                       7
<PAGE>

                  (ii) The written repurchase agreements must include the
            following:

                        (A) Securities which are acceptable for transfer are:

                              (1) Direct U.S. governments or

                              (2) Federal agencies backed by the full faith and
                        credit of the U.S. government, FNMA and FHLMC

                        (B) The term of the repurchase agreement may be up to 30
                  days

                        (C) The collateral must be delivered to the
                  buyer/lender, trustee (if trustee is not supplying the
                  collateral) or third-party acting as agent for the trustee (if
                  the trustee is supplying the collateral) before/simultaneous
                  with payment (perfection by possession of certificated
                  securities).

                        (D) Valuation of collateral;

                              (1) The securities must be valued weekly,
                        marked-to-market at current market price plus accrued
                        interest;

                                    (a) The value of collateral must be equal
                              to 104% of the amount of cash transferred by the
                              buyer/lender to the dealer bank or security firm
                              under the repurchase contract plus accrued
                              interest. If the value of securities held as
                              collateral slips below 104% of the value of the
                              cash transferred by buyer/lender, then additional
                              cash and/or acceptable securities must be
                              transferred. If, however, the securities used as
                              collateral are FNMA or FHLMC, then the value of
                              collateral must equal 105%.

                  (iii) Legal opinion must be delivered to the buyer/lender that
            the repurchase agreement meets guidelines under state law for legal
            investment of public funds.

                                   ARTICLE II

             AUTHORIZATION, TERMS AND ISSUANCE OF SERIES 2001A NOTES

      Section 2.01. Principal Amount, Designation and Series. Pursuant to the
provisions of the General Indenture, two Series of Notes entitled to the
benefit, protection and security of the General Indenture are hereby authorized
in the aggregate principal amount of $100,000,000, consisting of a Series of
Senior Notes in the aggregate principal amount of $50,000,000 designated as and
distinguished from the Notes of all other Series by the title "Student Loan
Asset Backed Notes, Senior Series 2001A-1 (Auction Rate Certificates)" (the
"Series 2001A-1 Notes") and a second Series of Senior Notes in the aggregate
principal amount of $50,000,000 designated as and distinguished from the Notes
of all other Series by the title "Student Loan

                                       8
<PAGE>

Asset Backed Notes, Senior Series 2001A-2 (Auction Rate Certificates)" (the
"Series 2001A-2 Notes" and, collectively with the Series 2001A-1 Notes, the
"Series 2001A Notes").

      Section 2.02. Purposes of Issuance. The Series 2001A Notes are issued for
the purposes of obtaining funds to finance the acquisition of Student Loans, to
make a $500,000 deposit to the Debt Service Reserve Fund, to purchase a Debt
Service Reserve Policy, to make a deposit to the Capitalized Expense Account of
the Revenue Fund, to make a deposit to a Capitalized Interest Account of the
Note Fund established for the Series 2001A Notes and to pay certain Costs of
Issuance related to the Series 2001A Notes.

      Section 2.03. Dates, Maturities and Interest Rates. The Series 2001A-1
Notes shall consist of Senior Notes which shall be dated the date of initial
authentication and delivery thereof, shall bear interest at the Auction Rate
described in Exhibit A hereto, shall mature on July 1, 2036 (subject to
redemption prior to maturity as described herein) and shall be payable as
described in Exhibit A hereto. The Series 2001A-2 Notes shall consist of Senior
Notes which shall be dated the date of initial authentication and delivery
thereof, shall bear interest at the Auction Rate described in Exhibit A hereto,
shall mature on July 1, 2036 (subject to redemption prior to maturity as
described herein) and shall be payable as described in Exhibit A hereto. For
purposes of calculating the interest on the Series 2001A Notes to be deposited
to the corresponding Interest Account of the Note Fund pursuant to Section
5.04(b) of the General Indenture, a Series 2001A Note for which an interest rate
has not yet been determined shall be deemed to bear interest at the highest
interest rate determined for such Series 2001A Note for the then current and
preceding two Interest Periods.

      Section 2.04. Form, Denomination, Numbers and Letters. The Series 2001A
Notes shall be issued in the form of fully registered notes without coupons, in
substantially the form set forth as Exhibit F hereto. The Series 2001A Notes
shall be issued in the Authorized Denominations and each Series shall be
numbered separately from 1 upward preceded by the letter R prefixed to the
number.

      Section 2.05. Book-Entry System; Limited Obligation of Corporation.

            (a) The Series 2001A Notes shall be initially issued in the form of
      a separate single certificated fully registered Note for each Series. Upon
      initial issuance, the ownership of all Series 2001A Notes shall be
      registered in the registration books kept by the Registrar in the name of
      Cede & Co., as nominee of DTC. Except as provided in Section 2.05(d)
      hereof, all of the Outstanding Series 2001A Notes shall be registered in
      the registration books kept by the Registrar in the name of Cede, as
      nominee of DTC.

            (b) With respect to Series 2001A Notes registered in the
      registration books kept by the Registrar in the name of Cede, as nominee
      of DTC, the Corporation, the Trustee, the Registrar and the Paying Agent
      shall have no responsibility or obligation to any Participant or to any
      person on behalf of which a Participant holds an interest in the Series
      2001A Notes. Without limiting the immediately preceding sentence, the
      Corporation, the Trustee, the Registrar and the Paying Agent shall have no
      responsibility or obligation with respect to (i) the accuracy of the
      records of DTC, Cede or any Participant with respect to any ownership
      interest in the Series 2001A Notes, (ii) the

                                       9
<PAGE>

      delivery to any Participant or any other person, other than a Registered
      Owner, as shown in the registration books kept by the Registrar, of any
      notice with respect to the Series 2001A Notes, including any notice of
      redemption or (iii) the payment to any Participant or any other person,
      other than a Registered Owner, as shown in the registration books kept by
      the Registrar, of any amount with respect to principal of, premium, if
      any, or interest on the Series 2001A Notes. The Corporation, the Trustee,
      the Registrar and the Paying Agent may treat and consider the person in
      whose name each Series 2001A Note is registered in the registration books
      kept by the Registrar as the holder and absolute owner of such Series
      2001A Note, as applicable, for the purpose of payment of principal,
      premium, if any, and interest with respect to such Series 2001A Note, for
      the purpose of giving notices of redemption and other matters with respect
      to such Series 2001A Note, for the purpose of registering transfers with
      respect to such Series 2001A Note, and for all other purposes whatsoever.

            The Paying Agent shall pay all principal of, premium, if any, and
      interest on the Series 2001A Notes only to or upon the order of the
      respective Registered Owners, as shown in the registration books kept by
      the Registrar, or their respective attorneys duly authorized in writing,
      and all such payments shall be valid and effective to fully satisfy and
      discharge the Corporation's obligations with respect to payment of
      principal of, premium, if any, and interest on the Series 2001A Notes, as
      applicable, to the extent of the sum or sums so paid. No person other than
      a Registered Owner, as shown in the registration books kept by the
      Registrar, shall receive a certificated Series 2001A Note evidencing the
      obligation of the Corporation to make payments of principal, premium, if
      any, and interest of the Series 2001A Notes pursuant to the Indenture.
      Upon delivery by DTC to the Registrar of written notice to the effect that
      DTC has determined to substitute a new nominee in place of Cede, and
      subject to the provisions herein with respect to record dates, the word
      "Cede" in this First Supplemental Indenture shall refer to such new
      nominee of DTC; and upon receipt of such a notice the Registrar shall
      promptly deliver a copy of the same to the Trustee, if the Trustee is
      other than itself.

            (c) The Representation Letter in the form attached hereto as Exhibit
      G, has been executed and delivered on behalf of the Corporation and the
      Trustee. The Representation Letter and DTC's operational arrangements
      shall not in any way limit the provisions of Section 2.05(b) hereof or in
      any other way impose upon the Corporation any obligation whatsoever with
      respect to persons having interests in any Series of the Series 2001A
      Notes other than the Registered Owners, as shown on the registration books
      kept by the Registrar. The Registrar shall take all action necessary for
      all representations of the Corporation in the Representation Letter and
      DTC's operational arrangements with respect to the Paying Agents and the
      Registrar, respectively, to at all times be complied with.

            (d) (i) DTC may determine to discontinue providing its services with
      respect to the Series 2001A Notes at any time by giving reasonable notice
      to the Corporation, the Trustee and the Registrar and discharging its
      responsibilities with respect thereto under applicable law.

                                       10
<PAGE>

                  (ii) The Corporation, in its sole discretion and without the
            consent of any other person, may terminate the services of DTC with
            respect to the Series 2001A Notes if the Corporation determines
            that:

                        (A) DTC is unable to discharge its responsibilities with
                  respect to such Series of Series 2001A Notes, or

                        (B) a continuation of the requirement that all of the
                  Outstanding Series 2001A Notes of such Series be registered in
                  the registration books kept by the Registrar in the name of
                  Cede, or any other nominee of DTC, is not in the best interest
                  of the Beneficial Owners of the Series 2001A Notes of such
                  Series.

                  (iii) Upon the termination of the services of DTC with respect
            to the Series 2001A Notes pursuant to Section 2.05(d)(ii)(B) hereof,
            or upon the discontinuance or termination of the services of DTC
            with respect to the Series 2001A Notes, pursuant to Section
            2.05(d)(i) or Section 2.05(d)(ii)(A) hereof after which no
            substitute Securities Depository willing to undertake the functions
            of DTC hereunder can be found which, in the opinion of the
            Corporation, is willing and able to undertake such functions upon
            reasonable and customary terms, the Corporation is obligated to
            deliver Series 2001A Note certificates, as described in the
            Indenture and the Series 2001A Notes shall no longer be restricted
            to being registered in the registration books kept by the Registrar
            in the name of Cede as nominee of DTC, but may be registered in
            whatever name or names Registered Owners transferring or exchanging
            Series 2001A Notes of such Series shall designate, in accordance
            with the provisions of the Indenture.

            (e) Notwithstanding any other provision of the Indenture to the
      contrary, so long as any Series 2001A Note is registered in the name of
      Cede, as nominee of DTC, all payments with respect to principal of,
      premium, if any, and interest on such Series 2001A Note, as applicable and
      all notices with respect to such Series 2001A Note shall be made and
      given, respectively, in the manner provided in the Representation Letter
      and DTC's operational arrangements.

      Section 2.06. Appointment of Paying Agent and Registrar. Zions First
National Bank is hereby appointed Paying Agent and Registrar with respect to the
Series 2001A Notes. In its capacity as Paying Agent and Registrar, Zions First
National Bank hereby indicates its acceptance of the duties thereof by its
execution of this First Supplemental Indenture as Trustee.

      Section 2.07. Appointment of Authenticating Agent. The Corporation hereby
determines that the appointment of an Authenticating Agent is necessary to the
issuance of the Series 2001A Notes and hereby appoints Zions First National Bank
as Authenticating Agent with respect to the Series 2001A Notes. In its capacity
as Authenticating Agent, Zions First National Bank hereby indicates its
acceptance of the duties thereof by its execution of this First Supplemental
Indenture as Trustee.

                                       11
<PAGE>

      Section 2.08. Redemption.

            (a) General. The Series 2001A Notes shall be subject to redemption
      by or on behalf of the Corporation prior to maturity upon notice as
      provided in this Section and Article VI of the General Indenture. Except
      as otherwise provided in this Section, if less than all of the Series
      2001A Notes then Outstanding are to be redeemed, the particular Series
      2001A Notes to be redeemed shall be selected in accordance with the
      written directions of the Corporation and the provisions of Section 6.04
      of the General Indenture.

            (b) Optional Redemption of the Series 2001A Notes. Subject to
      Section 3.04(e) hereof, the Series 2001A Notes are subject to redemption
      prior to their maturity at the option of the Corporation from any source
      of funds, including funds derived from the sale of Financed Student Loans,
      in whole or in part, on any date at a redemption price equal to 100% of
      the principal amount of such Series 2001A Notes or portions thereof
      redeemed, together with accrued interest thereon (including any Carry-over
      Amount thereon and any accrued interest on such Carry-over Amount) to the
      date of redemption. The Series of the Series 2001A Notes to be redeemed
      shall be determined by the Corporation.

            (c) Mandatory Redemption of the Series 2001A Notes.

                  (i) The Series 2001A Notes are subject to mandatory redemption
            prior to their maturity on the first Interest Payment Date which is
            at least 25 days after July 1, 2004, or such later date agreed to in
            writing by the Credit Facility Provider, from moneys representing
            unexpended original proceeds of the Series 2001A Notes remaining on
            deposit in the Acquisition Fund on such date, in whole or in part,
            at a redemption price equal to 100% of the principal amount of such
            Series 2001A Notes or portions thereof redeemed, together with
            accrued interest thereon (but not including any Carry-over Amount
            thereon and any accrued interest on such Carry-over Amount) to the
            date of redemption. Unless otherwise directed by the Corporation,
            Series 2001A-1 Notes shall be redeemed prior to the redemption of
            Series 2001A-2 Notes. Any moneys representing unexpended original
            proceeds of the Series 2001A Notes remaining on deposit in the
            Acquisition Fund after the redemption described in this paragraph
            (i) (which amount must be less than an Authorized Denomination for
            the Series 2001A Notes) shall be transferred to the Revenue Fund.

                  (ii) The Series 2001A Notes are subject to mandatory
            redemption prior to their maturity on the first Interest Payment
            Date which is at least 25 days after July 1, 2004 from Recoveries of
            Principal on Financed Student Loans purchased with proceeds of the
            Series 2001A Notes (or with Recoveries of Principal derived
            therefrom) on deposit in the Acquisition Fund on such date, or such
            later date agreed to in writing by the Credit Facility Provider, in
            whole or in part, at a redemption price equal to 100% of the
            principal amount of such Series 2001A Notes or portions thereof
            redeemed, together with accrued interest thereon (but not including
            any Carry-over Amount thereon and any accrued interest on such
            Carry-over Amount) to the date of redemption. Unless otherwise
            directed by the

                                       12
<PAGE>

            Corporation, Series 2001A-1 Notes shall be redeemed prior to the
            redemption of Series 2001A-2 Notes. Any moneys representing
            Recoveries of Principal on Financed Student Loans purchased with
            proceeds of the Series 2001A Notes (or with Recoveries of Principal
            derived therefrom) remaining on deposit in the Acquisition Fund
            after the redemption described in this paragraph (i) (which amount
            must be less than an Authorized Denomination for the Series 2001A
            Notes) shall be transferred to the Revenue Fund.

                  (iii) The Series 2001A Notes shall be subject to mandatory
            redemption prior to their maturity on each Interest Payment Date
            from Recoveries of Principal on Financed Student Loans purchased
            with proceeds of the Series 2001A Notes (or with Recoveries of
            Principal derived therefrom) deposited to the Senior Principal
            Account of the Note Fund on the 25th day prior to such Interest
            Payment Date, in whole or in part, at a redemption price equal to
            100% of the principal amount of such Series 2001A Notes or portions
            thereof redeemed, together with accrued interest thereon (but not
            including any Carry-over Amount thereon and any accrued interest on
            such Carry-over Amount) to the date of redemption. Unless otherwise
            directed by the Corporation, Series 2001A-1 Notes shall be redeemed
            prior to the redemption of Series 2001A-2 Notes.

            (d) Notice. Notice of the redemption of Series 2001A Notes shall be
      given pursuant to Section 6.04 of the General Indenture.

      Section 2.09. Transfer of Notes.

            (a) Each Person who is or who becomes a Beneficial Owner of a Series
      2001A Note shall be deemed by the acceptance or acquisition of such
      beneficial ownership interest to have agreed to be bound by the provisions
      of this Section. No beneficial ownership interest in a Series 2001A Note
      may be transferred, unless the proposed transferee shall have delivered to
      the Corporation and the Trustee either (i) evidence satisfactory to them
      that such Series 2001A Note has been registered under the Securities Act
      and has been registered or qualified under all applicable state securities
      laws to the reasonable satisfaction of the Corporation or (ii) an express
      agreement substantially in the form of the Investment Letter attached as
      Exhibit H hereto by the proposed transferee to be bound by and to abide by
      the provisions of this Section and the restrictions noted in the
      Investment Letter; provided that compliance with the provisions of
      subparagraphs (i) and (ii) of this Section shall not be required if the
      proposed transferee is listed in the latest available S&P Rule 144A list
      of Qualified Institutional Buyers or other industry recognized subscriber
      services listing Qualified Institutional Buyers.

            (b) The Corporation will, upon the request of any Beneficial Owner
      of any Outstanding Series 2001A Note, which Beneficial Owner is a
      qualified institutional buyer, provide such Beneficial Owner, and any
      qualified institutional buyer designated by such Beneficial Owner, such
      financial and other information as such Beneficial Owner may reasonably
      determine to be necessary in order to permit compliance with the
      information requirements of Rule 144A under the Securities Act in
      connection with the

                                       13
<PAGE>

      resale of Series 2001A Notes, except at such times as the Corporation is
      subject to the reporting requirements of Section 13 or 15(d) of the
      Securities Exchange Act of 1934, as amended. For the purpose of this
      paragraph, the term "qualified institutional buyer" shall have the meaning
      specified in Rule 144A under the Securities Act.

      Section 2.10. Execution of Reimbursement Agreement and Custodian
Agreements. The Corporation hereby directs the Trustee to execute and deliver
the Reimbursement Agreement with MBIA Insurance Corporation and each of the
Custodian Agreements dated as of April 1, 2001, among the Corporation, the
Trustee and the respective Servicers.

                                  ARTICLE III

                DEPOSITS INTO FUNDS AND ACCOUNTS; DISPOSITION OF
               PROCEEDS OF THE SALE OF THE SERIES 2001A NOTES; AND
                         USE AND DISBURSEMENTS OF FUNDS

      Section 3.01. Deposits into Funds and Accounts on the Issue Date. The net
proceeds of the sale of the Series 2001A Notes will be distributed and applied
in accordance with the following provisions:

            (a) On the Issue Date, the Trustee shall deposit into the Series
      2001 Capitalized Expense Account of the Revenue Fund an amount equal to
      $625,000.00 from the net proceeds of the Series 2001A Notes, of which
      $208,000 shall be paid to MBIA Insurance Corporation as provider of the
      Credit Facility and the Debt Service Reserve Policy.

            (b) On the Issue Date, the Trustee shall deposit into the Series
      2001 Capitalized Interest Account of the Note Fund an amount equal to
      $9,200,000.00 from the net proceeds of the Series 2001A Notes.

            (c) On the Issue Date, the Trustee shall deposit into the Debt
      Service Reserve Fund an amount equal to $500,000 from the net proceeds of
      the Series 2001A Notes.

            (d) On the Issue Date, the Trustee shall deposit into the
      Acquisition Fund an amount equal to $89,200,000.00, representing the
      remaining net proceeds of the Series 2001A Notes.

            (e) On the Issue Date, the Corporation shall deliver to the Trustee
      the Debt Service Reserve Policy in an amount equal to the initial Debt
      Service Reserve Requirement for the Series 2001A Notes, for credit to the
      Senior Reserve Account of the Debt Service Reserve Fund to secure the
      payment of the principal of and interest on the Senior Notes. The Trustee
      is hereby directed to accept delivery of the Debt Service Reserve Policy
      and the Credit Facility.

      Section 3.02. Payment of Expenses and Costs of Issuance. The Trustee
shall, upon written direction of the Corporation, pay Program Expenses from
amounts available therefor in the Revenue Fund to the extent provided in Section
5.04 of the General Indenture. The Corporation shall pay Maintenance and
Operating Expenses from amounts available therefor in

                                       14
<PAGE>

the Operating Fund to the extent provided in Section 5.08 of the General
Indenture. Notwithstanding the foregoing, Program Expenses and Maintenance and
Operating Expenses to be paid from the Revenue Fund and the Operating Fund,
respectively, shall be limited to the amounts shown in the Closing Cash Flow
Statement relating to the Series 2001A Notes as certified to the Trustee by the
Corporation. Costs of Issuance of the Series 2001A Notes shall be paid out of
the Capitalized Expense Fund.

      Section 3.03. Increase in Program Expenses and Maintenance and Operating
Expenses. The Corporation may increase Program Expenses and Maintenance and
Operating Expenses beyond the limit set forth in Section 3.02 hereof upon
delivery to the Trustee of a subsequent Cash Flow Statement relating to the
Series 2001A Notes and a Credit Confirmation (or, for Notes not subject to a
Credit Facility, a Rating Confirmation). The Trustee shall have no duty to
examine, know or determine any information set forth in any Cash Flow Statement
and may conclusively rely on the certification of the Corporation.

      Section 3.04. Debt Service Reserve Fund.

            (a) On the Issue Date, there shall be credited to the Debt Service
      Reserve Fund (i) $500,000 from the net proceeds of the Series 2001A Notes
      and (ii) the Debt Service Reserve Policy from MBIA Insurance Corporation,
      as the Surety Provider, which shall be deemed a deposit to the Debt
      Service Reserve Fund in the amount of the Debt Service Reserve Requirement
      for the Series 2001A Notes (less the $500,000 cash deposit). Amounts on
      deposit or available in the Debt Service Reserve Fund shall be applied as
      provided in Section 5.07 and Section 5.12 of the General Indenture.

            (b) After the application of any cash on deposit in the Debt Service
      Reserve Fund, if the Trustee determines pursuant to Section 5.07 or
      Section 5.12 of the General Indenture that a further claim or draw upon
      the Debt Service Reserve Fund is required to pay the principal of or
      interest on the Notes, the Trustee shall draw on the Debt Service Reserve
      Policy. The Trustee shall make a Demand for Payment to the Surety Provider
      for any such required amount in the manner and as provided in the Debt
      Service Reserve Policy attached hereto as Exhibit I. Such Demand for
      Payment shall be given to the Surety Provider at least three Business Days
      prior to the date on which the funds are required.

            (c) In the event that the amount on deposit in the Debt Service
      Reserve Fund falls below the Debt Service Reserve Requirement, there shall
      be deposited to the Debt Service Reserve Fund from money on deposit in the
      Revenue Fund, in accordance with Section 5.04(b) of the General Indenture,
      that sum of money needed to accumulate or reaccumulate the amount therein
      so that at all times the amount of the Debt Service Reserve Fund equals
      the Debt Service Reserve Requirement; provided that so long as the Debt
      Service Reserve Policy is in effect, in lieu of such repayments to the
      Debt Service Reserve Fund, an amount necessary to reinstate the Debt
      Service Reserve Policy shall be payable to the Surety Provider to be used
      to reinstate the Debt Service Reserve Policy in accordance with the
      Financial Guaranty Agreement prior to replenishing the Debt Service
      Reserve Fund.

                                       15
<PAGE>

            (d) The Trustee shall maintain adequate records, verified with the
      Surety Provider, as to the amount available to be drawn at any time under
      the Debt Service Reserve Policy and as to the amounts paid and owing to
      the Surety Provider under the terms of the Financial Guaranty Agreement or
      any other documents relating to the Debt Service Reserve Policy.

            (e) Any provisions in the General Indenture notwithstanding, no
      money shall be remitted to the Corporation from moneys on deposit in the
      Revenue Fund, pursuant to Section 5.04(b)(xx) or Section 5.11 of the
      General Indenture and no Notes shall be optionally redeemed by the
      Corporation, unless at the time of such transfer or optional redemption
      the Debt Service Reserve Policy is fully reinstated and all amounts
      currently due and owing to the Surety Provider under the Financial
      Guaranty Agreement or any other documents relating to the Debt Service
      Reserve Policy have been paid in full.

            (f) Nothing herein shall be construed as limiting the right of the
      Corporation to deposit cash in the Debt Service Reserve Fund, to
      substitute a Debt Service Reserve Policy which constitutes a Qualified
      Surety Bond for the cash required hereunder, or to meet the Debt Service
      Reserve Requirement with a combination of cash and a Debt Service Reserve
      Policy which constitutes a Qualified Surety Bond.

      Section 3.05. Recoveries of Principal, Recycling. The Corporation may
finance additional Student Loans with amounts on deposit in the Acquisition Fund
before July 1, 2004, (or such later date approved in writing by the Credit
Facility Provider) derived from Revenues and Recoveries of Principal on Financed
Student Loans purchased with proceeds of the Series 2001A Notes (or with
Recoveries of Principal derived therefrom); provided, however, the Credit
Facility Provider may direct the Corporation in writing to not purchase any
Student Loans at any time if the Credit Provider provides the Corporation and
the Trustee with a certificate stating a reasonable basis why the financing of
additional Student Loans should not continue, and the Credit Facility Provider
may also subsequently permit Student Loans to again be purchased by giving
written notice to the Corporation and the Trustee. Prior to July 1, 2004, (or
such later date approved in writing by the Credit Facility Provider), Recoveries
of Principal on Financed Student Loans purchased with proceeds of the Series
2001A Notes (or with Recoveries of Principal derived therefrom) shall be
deposited to the Acquisition Fund. On and after July 1, 2004, (or such later
date approved in writing by the Credit Facility Provider), all Recoveries of
Principal on Financed Student Loans purchased with proceeds of the Series 2001A
Notes (or with Recoveries of Principal derived therefrom) shall be deposited to
the Senior Principal Account of the Note Fund and used to redeem Series 2001A
Notes pursuant to the mandatory redemption provisions of Section 2.08(c)(iii)
hereof.

      Section 3.06. Limitation on Sale of Financed Student Loans. In the event
that the sum of the value of (a) the Financed Student Loans (valued at par plus
accrued interest and accrued Special Allowance Payments and Interest Subsidy
Payments, if any) credited to the Acquisition Fund and (b) all cash and
Investment Securities held in the Funds and Accounts (valued as set forth in the
General Indenture or in the pertinent Supplemental Indenture, plus accrued
interest, but excluding amounts irrevocably set aside to pay particular Notes
pursuant to Section 13.01 of the General Indenture) shall be less than 100% of
the sum of principal and accrued interest on all Outstanding Notes, the
Corporation shall not direct the sale of Financed

                                       16
<PAGE>

Student Loans, unless the Corporation shall have received a Credit Confirmation
(or, for Notes not subject to a Credit Facility, a Rating Confirmation) (all as
calculated and determined by the Corporation and evidenced in a Certificate of
an Authorized Representative to the Trustee).

      Section 3.07. Cash Flow Statements. The Corporation shall, no more
frequently than once every 12 months, provide to the Credit Facility Provider,
if requested in writing, a Cash Flow Statement based upon assumptions acceptable
to the Credit Facility Provider. At the request of the Credit Facility Provider,
if any, the Corporation shall provide a Cash Flow Statement upon the occurrence
of an Event of Default or upon the Corporation's failure to pay principal or
interest on any Notes Outstanding when and as the same shall become due.

      Section 3.08. Perfection of Financed Student Loans and Defaulted Student
Loans. The Trustee shall have a first perfected security interest in all
Financed Student Loans; provided that the foregoing shall not prevent a Servicer
from releasing possession to the Corporation of the related promissory notes and
other documentation with respect to Financed Student Loans in default in
accordance with the provisions of its Servicing Agreement.

      Section 3.09. Servicing of Financed Student Loans. The Corporation will
obtain from each Servicer copies of third party audits of such Servicer at least
once each calendar year and upon the written request of the Credit Facility
Provider upon the occurrence of an Event of Default under the Indenture to
ensure that such Servicer is complying with the terms of the Servicing Agreement
and the rules and regulations of the Corporation and provide such report to the
Credit Facility Provider. Such report shall report such compliance in writing
(or otherwise describe any noncompliance in such detail as shall be reasonably
satisfactory to the Credit Facility Provider) and the Corporation shall provide
such report to the Credit Facility Provider. In the event that the Corporation
is notified (whether by such accountants or otherwise) of any material
noncompliance by a Servicer with the due diligence standards, the Corporation
shall use its best efforts to cause such Servicer to do all things necessary to
cure such noncompliance. If a required audit of a Servicer is not received
within 30 days after the time required or if a Servicer shall fail to cure
noncompliance described in the preceding sentence within 60 days after the
Corporation received notice thereof, the Corporation shall, at the written
request of the Credit Facility Provider, arrange for the prompt substitution of
such Servicer for the Financed Student Loans satisfactory to the Credit Facility
Provider and the Corporation under a Servicing Agreement granting rights
substantially identical to the rights granted under the initial Servicing
Agreement with respect to the Financed Student Loans or otherwise satisfactory
to the Credit Facility Provider. The Corporation covenants that each Servicing
Agreement shall provide that the Corporation may terminate the Servicing
Agreement and will, at the written direction of the Credit Facility Provider, if
the Servicer refuses or fails to perform in a material fashion any part of its
obligations under the Servicing Agreement, and fails or refuses to correct said
action or lack of action within 60 days after written notice, upon 60 days'
written notice to the Servicer. All written information required under this
Section shall be delivered to each Credit Facility Provider and the Trustee
within 15 days after receipt thereof by the Corporation. The Corporation
covenants that all amendments to a Servicing Agreement will be consented to in
writing by the Credit Facility Provider. The Corporation covenants that each
Servicing Agreement shall provide that the Servicer thereunder shall, upon an
Event of Default under the Indenture, service the Financed Student Loans as if
the Credit Facility Provider is the owner of the Financed Student Loans (a
third-party beneficiary) and the Credit Facility Provider pays the

                                       17
<PAGE>

fees for such accounts. The Corporation covenants that pursuant to each
Servicing Agreement or a related custody agreement, the Servicer will act as
bailee and agent of the Financed Student Loans for the Trustee. The Corporation
shall annually certify to the Trustee that each Servicer is in compliance with
its Servicing Agreement

      Section 3.10. Repurchase Obligation Under Student Loan Purchase
Agreements. The Trustee, as a third-party beneficiary under the Student Loan
Purchase Agreements entered into by the Corporation shall have the right to
request the repurchase of loans by the Seller thereunder upon the conditions and
subject to the provisions contained in the Student Loan Purchase Agreement. The
Trustee shall make such a request to the Seller thereunder to repurchase certain
specific loans pursuant to the Student Loan Purchase Agreement if: (a) the
Trustee has actual knowledge that the conditions precedent to such a repurchase
obligation with respect to such loans have not been satisfied; (b) it has
notified the Corporation in writing that such conditions have been satisfied;
and (c) the Corporation has not exercised its right to request the repurchase of
the applicable loans by the Seller within 30 days after receiving written notice
from the Trustee.

      Section 3.11. Acquisition of Future Private Loans. The characteristics of
the Private Loans acquired by the Corporation or the Trustee and deposited to
the Trust Estate subsequent to the Issue Date for the Series 2001A Notes shall
not materially differ from the portfolio of Private Loans purchase on the Issue
Date for the Series 2001A Notes (including, without limitation, school type and
borrower credit scores), unless the Corporation and the Trustee receive the
written approval of each Credit Facility Provider, if any, or if there is no
Credit Facility Provider, a Rating Confirmation.

                                   ARTICLE IV

                            CREDIT FACILITY PROVIDER

      Section 4.01. Rights of Credit Facility Provider Controlling. Anything
herein to the contrary notwithstanding, if a Credit Facility is in effect with
respect to a Series of the Series 2001A Notes and the Credit Facility Provider
is not in default of its obligation to make payments thereunder, the Credit
Facility Provider shall be deemed to be the Registered Owner of all such Series
of the Series 2001A Notes then Outstanding for all purposes (including, without
limitation, all approvals, consents, waivers, authorizations, directions,
inspections and the institution of any action), provided that nothing in this
Section shall impair the rights of the Registered Owners to receive all payments
due under the Series 2001A Notes, and the Credit Facility Provider shall have
the exclusive right to exercise or direct the exercise of remedies on behalf of
the Registered Owners of the Series 2001A Notes in accordance with the terms of
the Indenture following an Event of Default, and the principal of all such
Series 2001A Notes Outstanding may not be declared to be due and payable
immediately without the prior written consent of the Credit Facility Provider.

      Section 4.02. Payments Under the Credit Facilities for the Series 2001
Notes.

            (a) If, as of the second Business Day next preceding any Note
      Payment Date for the Series 2001A Notes is due, there are insufficient
      moneys available under the

                                       18
<PAGE>

      Indenture to pay all principal and interest coming due on the Series 2001A
      Notes on the next succeeding payment date, the Trustee shall immediately
      notify the Credit Facility Provider or its designee by telephone or
      telegraph, confirmed in writing by mail, of the amount of the deficiency.

            (b) If the deficiency is made up in whole or in part prior to or on
      the Interest Payment Date or Principal Payment Date, the Trustee shall so
      notify the Credit Facility Provider or its designee.

            (c) In addition, if the Trustee has notice that any of the
      Registered Owners have been required to disgorge payments of principal or
      interest on the Series 2001A Notes to the Corporation or to the trustee in
      bankruptcy for creditors or others pursuant to a final judgment by a court
      of competent jurisdiction that such payment constitutes a voidable
      preference to such Registered Owner within the meaning of any applicable
      bankruptcy laws, then the Trustee shall notify the Credit Facility
      Provider or its designee of such fact by telephone or telegraphic notice,
      confirmed in writing by mail.

            (d) The Trustee is hereby irrevocably designated, appointed,
      directed and authorized to act as attorney-in-fact for Registered Owners
      of the Series 2001A Notes as follows:

                  (i) if and to the extent there is a deficiency in amounts
            required to pay interest on the Series 2001A Notes, the Trustee
            shall (A) execute and deliver to the Insurance Paying Agent, in form
            satisfactory to the Insurance Paying Agent, an instrument appointing
            the Credit Facility Provider as agent for such Registered Owner in
            any legal proceedings related to the payment of such interest and an
            assignment to the Credit Facility Provider of the claims for
            interest to which such deficiency rates and which are paid by the
            Credit Facility Provider, (B) receive as designee of the respective
            Registered Owner (and not as Trustee) in accordance with the tenor
            of the corresponding Credit Facility payment from the Insurance
            Paying Agent with respect to the claims for interest so assigned and
            (C) disburse the same to such respective Registered Owners.

                  (ii) if and to the extent of a deficiency in amounts required
            to pay principal of the Series 2001A Notes, the Trustee shall (A)
            execute and deliver to the Insurance Paying Agent an instrument
            appointing the Credit Facility Provider as agent for such Registered
            Owner in any legal proceeding relating to the payment of such
            principal and assignment to the Credit Facility Provider of any of
            the Series 2001A Notes surrendered to the Insurance Paying Agent of
            so much of the principal amount thereof as has not previously been
            paid or for which moneys are not held by the Trustee and available
            for such payment (but such assignment shall be delivered only if
            payment from the Insurance Paying Agent is received), (B) receive as
            designee of the respective Registered Owners (and not as Trustee) in
            accordance with the tenor of the corresponding Credit Facility
            payment therefor from the Insurance Paying Agent and (C) disburse
            the same to such Registered Owner.

                                       19
<PAGE>

            (e) Payments with respect to claims for interest on and principal of
      Series 2001A Notes disbursed by the Trustee from proceeds of the
      corresponding Credit Facility shall not be considered to discharge the
      obligation of the Corporation with respect to such Series 2001A Notes, and
      the Credit Facility Provider shall become the Registered Owner of such
      unpaid Series 2001A Notes and claims for interest in accordance with the
      tenor of the assignment made to it under the provisions of this subsection
      or otherwise.

            (f) Irrespective of whether any such assignment is executed and
      delivered, the Corporation and the Trustee hereby agree for the benefit of
      the Credit Facility Provider that:

                  (i) they recognize that to the extent the Credit Facility
            Provider makes payments, directly or indirectly (as by paying
            through the Trustee), on account of principal of or interest on the
            Series 2001A Notes, the Credit Facility Provider will be subrogated
            to the rights of such Registered Owners to receive the amount of
            such principal and interest from the Corporation, with interest
            thereon as provided and solely from the sources stated in the
            Indenture and the Series 2001A Notes; and

                  (ii) they will accordingly pay to the Credit Facility Provider
            the amount of such principal and interest (including principal and
            interest recovered under subparagraph (ii) of the first paragraph of
            the corresponding Credit Facility, which principal and interest
            shall be deemed past due and not to have been paid), with interest
            thereof as provided in this First Supplemental Indenture and the
            Series 2001A Notes, but only from the sources and in the manner
            provided herein for the payment of principal of and interest on the
            Series 2001A Notes to Registered Owners and will otherwise treat the
            Credit Facility Provider as the owner of such rights to the amount
            of such principal and interest.

      Section 4.03. Notices, Consents, Miscellaneous.

            (a) In connection with the issuance of additional Notes, if any,
      under the General Indenture, the Corporation shall deliver to the Credit
      Facility Provider a copy of the disclosure document, if any, circulated
      with respect to such additional Notes.

            (b) No amendment or supplement shall be made to the General
      Indenture, this First Supplemental Indenture, the Auction Agency
      Agreement, the Broker-Dealer Agreement, any Student Loan Purchase
      Agreement, any Servicing Agreement, any Liquidity Facility or any
      Reimbursement Agreement of any Liquidity Facility Provider without prior
      written consent of the Credit Facility Provider. Copies of any amendments
      or supplements made to the documents executed in connection with the
      issuance of the Series 2001A Notes which are consented to in writing by
      the Credit Facility Provider shall be sent to the Rating Agencies by the
      Corporation.

            (c) The Credit Facility Provider shall receive written notice of the
      resignation or removal of the Trustee and any successor trustee must be
      approved by the Credit Facility Provider. The Credit Facility Provider
      shall receive written notice of the

                                       20
<PAGE>

      resignation or removal of any Paying Agent and any successor paying agent
      must be approved in writing by the Credit Facility Provider.

            (d) The Credit Facility Provider shall receive from the Corporation
      copies of all notices required to be delivered to Registered Owners or to
      the Trustee. The Credit Facility Provider shall receive copies, on an
      annual basis, of the Corporation's audited financial statements and annual
      budget and, on a quarterly basis, copies of the Corporation's unaudited
      financial statements.

            (e) While any Series 2001A Notes are Outstanding, the Credit
      Facility Provider shall approve in writing any Liquidity Facility Provider
      and the terms of any Liquidity Facility.

            (f) While the Credit Facility is in effect, the Trustee will furnish
      the Credit Facility Provider with such information as it may reasonably
      request regarding the Series 2001A Notes, as appears from the books and
      records under its custody and control, or as otherwise known to it. The
      Trustee will permit the Credit Facility Provider to have access to and
      make copies at the Credit Facility Provider's own expense of all such
      books and records at any reasonable time.

            (g) While the Credit Facility is in effect, the Corporation agrees
      to permit the Credit Facility Provider to examine, visit and inspect, at
      any reasonable time, upon reasonable notice, the Financed Student Loans
      acquired, originated or refinanced with the net proceeds of the Notes, and
      its facilities, and any accounts, books and records, including their
      receipts, disbursements, contracts, investments and any other matters
      relating thereto and to their financial standing, and to supply such
      reports and information as the Credit Facility Provider may reasonably
      require. An Authorized Representative of the Corporation shall, at the
      reasonable written request of the Credit Facility Provider, discuss its
      financial matters with the Credit Facility Provider or a designee and
      provide the Credit Facility Provider with copies of any documents that are
      reasonably requested by the Credit Facility Provider or a designee and
      have a material financial affect on it.

            (h) The Credit Facility Provider shall be notified by the Trustee
      (i) immediately upon its actual knowledge of the occurrence of an Event of
      Default or of any event that with notice and/or with the lapse of time
      could become an Event of Default and (ii) of any redemption of Series
      2001A Notes at the same time that the Registered Owners of the Series
      2001A Notes to be redeemed are notified. All notices, reports, statements,
      schedules, and certificates to be delivered to or by the Trustee, or to a
      Registered Owner of a Series 2001A Note or available at the request of the
      Registered Owners shall also be provided to the Credit Facility Provider.
      In addition, all opinions to be delivered to or by the Trustee, or to a
      Registered Owner of a Series 2001A Note shall also be addressed to the
      Credit Facility Provider. All notices required to be given to the Credit
      Facility Provider under this First Supplemental Indenture shall be in
      writing and shall be sent by registered or certified mail addressed to
      MBIA Insurance Corporation, 113 King Street, Armonk, New York, 10504,
      Attention: Insured Portfolio Management--PCF.

                                       21
<PAGE>

            (i) Notwithstanding any other provision to the contrary in this
      First Supplemental Indenture, the Credit Facility Provider is an express
      third-party beneficiary of and may enforce this First Supplemental
      Indenture as if a party thereto.

      Section 4.04. Consents, etc. by Credit Facility Provider Limited.
Notwithstanding any other provision of this First Supplemental Indenture or the
General Indenture to the contrary, no consent of or notice to the Credit
Facility Provider shall be required under any provision of this First
Supplemental Indenture or the General Indenture nor shall the Credit Facility
Provider have any right to receive notice of, consent to, direct or control any
actions, restrictions, rights, remedies, waivers or accelerations pursuant to
any provision of this First Supplemental Indenture or the General Indenture
after each Credit Facility has expired or during any time which:

            (a) the Credit Facility Provider is in default in its obligation
      under a Credit Facility;

            (b) either Credit Facility for any reason ceases to be valid and
      binding on the Credit Facility Provider or is declared to be null and
      void, or the validity or enforceability of any material provision of
      either Credit Facility is denied by the Credit Facility Provider or any
      governmental agency or authority, or the Credit Facility Provider is
      denying further liability or obligation under either Credit Facility,
      contrary to the terms of either Credit Facility;

            (c) a petition has been filed and is pending against the Credit
      Facility Provider under any bankruptcy, reorganization, arrangement,
      insolvency, readjustment of debt, dissolution or liquidation law of any
      jurisdiction, whether now or hereafter in effect, and has not been
      dismissed within 30 days after such filing; or

            (d) the Credit Facility Provider has filed a petition, which is
      pending, under any bankruptcy, reorganization, arrangement, insolvency,
      readjustment of debt, dissolution or liquidation law of any jurisdiction,
      whether now or hereafter in effect, or has consented to the filing of any
      petition against it under such law.

      Section 4.05. Rating Notifications Upon a Credit Confirmation. Each Rating
Agency shall receive a Rating Notification any time a Credit Facility Provider
has been requested to provide, or has actually provided to, the Corporation or
the Trustee a Credit Confirmation.

                                   ARTICLE V

                                  MISCELLANEOUS

      Section 5.01. First Supplemental Indenture Construed with General
Indenture. All of the provisions of this First Supplemental Indenture shall be
deemed to be and construed as part of the General Indenture to the same extent
as if fully set forth therein.

      Section 5.02. General Indenture as Supplemented to Remain in Effect. Save
and except as herein supplemented by this First Supplemental Indenture, the
General Indenture shall remain in full force and effect.

                                       22
<PAGE>

      Section 5.03. Severability. In any section, paragraph, clause or provision
of this First Supplemental Indenture shall for any reason be held to be invalid
or unenforceable, the invalidity or unenforceability of such section, paragraph,
clause or provision shall not affect any of the remaining provisions of this
First Supplemental Indenture.

      Section 5.04. Confirmation of Actions. All action (not inconsistent with
the provisions of this First Supplemental Indenture) heretofore taken by the
Corporation, directed toward the issuance and sale of the Series 2001A Notes is
hereby ratified, approved and confirmed.

      Section 5.05. Governing Law. This First Supplemental Indenture shall be
construed in accordance with the laws of the State.

      Section 5.06. Notices. Any notice, demand, direction, request or other
instrument authorized or required by this First Supplemental Indenture to be
given to or filed with the Corporation shall be deemed to have been sufficiently
given or filed for all purposes, if any, when delivered or sent by facsimile
transmission, confirmed by first class mail, postage prepaid, and shall be
deemed given when transmitted (answer back confirmed) to the addresses given in
Section 13.04 of the General Indenture and as follows:

          If to the Corporation:           CFLD-I, Inc.
                                           3320 Holcomb Bridge Road, NW
                                           Norcross, Georgia 30092
                                           Attention: President
                                           Fax: (770) 248-9307

                                           with a copy to:

                                           UICI
                                           4001 McEwen Blvd.
                                           Dallas, TX 75244
                                           Attention: Glenn Reed, Esq.
                                           Facsimile: (972) 392-6717

          If to the Trustee,
          Tender Agent,
          Paying Agent,
          Registrar, and
          Authenticating Agent:            Zions First National Bank
                                           717 Seventeenth Street, Suite 301
                                           Denver, Colorado 80202
                                           Attention: Corporate Trust Department
                                           Fax: (720) 947-7480

          If to the Auction Agent:         Bankers Trust Company
                                           4 Albany Street
                                           New York, New York 10006
                                           Attention: Assistant Vice President
                                           Fax: (212) 250-6215

                                       23
<PAGE>

          If to the Broker-Dealer:       UBS PaineWebber Inc.
                                         1285 Avenue of the Americas, 15th Floor
                                         New York, New York 10019
                                         Attention: Manager, Short Term Desk
                                         Fax: (212) 713-3797

          If to Moody's:                 Moody's Investors Service, Inc.
                                         99 Church Street
                                         New York, New York 10047
                                         Attention: ABS Monitoring Department
                                         Fax: (212) 298-7139

          If to Fitch:                   Fitch, Inc.
                                         One State Street Plaza, 31st Floor
                                         New York, NY 10004
                                         Attention: ABS Group
                                         Fax: (212) 635-0466

          If to Credit Facility          MBIA Insurance Corporation
          Provider:                      113 King Street
                                         Armonk, NY 10504
                                         Attention: IPM-SF
                                         Fax: (914) 765-3184

          If to Surety Provider:         MBIA Insurance Corporation
                                         113 King Street
                                         Armonk, NY 10504
                                         Attention: IPM-SF
                                         Fax: (914) 765-3184

      To any other Indenture Agent: to such facsimile number and address as such
Indenture Agent shall indicate in the acceptance of office filed by each such
Indenture Agent pursuant to Section 13.04 of the General Indenture.

      The Corporation, the Trustee, the Credit Facility Provider, the Surety
Provider, any other Indenture Agent and a Rating Agency, may, by like notice to
each other such person, designate any further or different facsimile numbers and
addresses to which subsequent notices shall be sent.

      The parties, by like notice to each other person, may designate any
further or different addressed to which subsequent notices shall be sent.

      The Corporation shall give written notice to the Rating Agencies and any
Credit Facility Provider of each of the following events, promptly following the
occurrence thereof:

            (a) any change in the identity of the Trustee;

            (b) any change in the identity of the Surety Provider;

                                       24
<PAGE>

            (c) any material amendments in or supplements to the General
Indenture or this First Supplemental Indenture; or

            (d) the redemption or defeasance of all the Outstanding Series 2001A
Notes.

      Section 5.07. Rights of Credit Facility Provider. The Credit Facility
Provider may not exercise its rights and remedies under this First Supplemental
Indenture and the General Indenture if the Credit Facility Provider is then in
default under the Credit Facility or bankrupt or insolvent.

      Section 5.08. Execution in Counterparts. This First Supplemental Indenture
may be executed in any number of counterparts, each of which, when so executed
and delivered, shall be an original; but such counterparts shall together
constitute but one and the same instrument.

                                       25
<PAGE>

          IN WITNESS WHEREOF, the undersigned President and Secretary of the
Corporation and an authorized officer of the Trustee have hereunto executed this
First Supplemental Indenture as of the date first written above.

                                        CFLD-I, INC.

                                        By:_____________________________________
                                           Glenn W. Reed, President

Attest:

By:_________________________________
   Peggy G. Simpson, Secretary

                                        ZIONS FIRST NATIONAL BANK, as Trustee

                                        By:_____________________________________
                                           David W. Bata, Vice President

                                       26
<PAGE>

      The undersigned representative of MBIA Insurance Corporation, as the sole
Credit Facility Provider, hereby consents to the execution and delivery of this
First Supplemental Indenture and to the issuance and delivery of the Series
2001A Notes thereunder.

                                        MBIA INSURANCE CORPORATION

                                        By _____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                       27<PAGE>
                                                                   EXHIBIT 10.67

OFFERING MEMORANDUM                                        STRICTLY CONFIDENTIAL

                                  $335,000,000
         $84,000,000 AUCTION RATE STUDENT LOAN-BACKED NOTES, CLASS A-1
         $84,000,000 AUCTION RATE STUDENT LOAN-BACKED NOTES, CLASS A-2
         $84,000,000 AUCTION RATE STUDENT LOAN-BACKED NOTES, CLASS A-3
         $83,000,000 AUCTION RATE STUDENT LOAN-BACKED NOTES, CLASS A-4

                       [ACADEMIC MANAGEMENT SERVICES LOGO]

                                 AMS-1 2002, LP
                                     Issuer

ACADEMIC MANAGEMENT SERVICES CORP.          ACADEMIC MANAGEMENT SERVICES CORP.
           Seller                                      Servicer

         AMS-1 2002, LP (the "Issuer") will issue four classes of Auction Rate
Student Loan-Backed Notes (each, a "Class") consisting of $84,000,000 aggregate
principal amount of Auction Rate Student Loan-Backed Notes, Class A-1 (the
"Class A-1 Notes,"), $84,000,000 aggregate principal amount of Auction Rate
Student Loan-Backed Notes, Class A-2 (the "Class A-2 Notes,"), $84,000,000
aggregate principal amount of Auction Rate Student Loan-Backed Notes, Class A-3
(the "Class A-3 Notes"), and $83,000,000 aggregate principal amount of Auction
Rate Student Loan-Backed Notes, Class A-4 (the "Class A-4 Notes" and,
collectively with the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes, the
"Notes"). The Notes will be collateralized by a pool of education loans to
students and parents of students which are either (i) guaranteed by a Federal
Guarantor and reinsured by the federal government acting through the Secretary
of Education pursuant to the Federal Family Education Loan Program ("FFELP")
under the Higher Education Act of 1965 (the "Higher Education Act"), or (ii)
privately guaranteed or insured by certain institutions described herein, such
pool having been or being sold and/or contributed as capital by Academic
Management Services Corp. ("AMS" or the "Seller") to the Issuer (such loans, the
"Financed Student Loans"), collections and other payments with respect to the
Financed Student Loans, and monies on deposit in the Collection Account, the
Funding Account, the Note Distribution Accounts and the Reserve Account.
Capitalized terms used herein are defined on the pages indicated in the "Index
of Terms" in this Offering Memorandum.

         The Notes will be unconditionally and irrevocably guaranteed as to
timely payment of interest (excluding any Noteholders' Interest Basis Carryover)
on each Payment Date, as applicable and as to the ultimate payment of principal
on the Final Scheduled Payment Date pursuant to a financial guaranty insurance
policy (the "Insurance Policy") issued by MBIA Insurance Corporation (the
"Insurer").

                                   [MBIA LOGO]
                                                  (Cover continued on next page)
                                 ---------------

         PROSPECTIVE INVESTORS SHOULD CONSIDER THE FACTORS SET FORTH UNDER "RISK
FACTORS" HEREIN AT PAGE 17.
                                 ---------------

         THE NOTES REPRESENT OBLIGATIONS OF THE ISSUER ONLY AND DO NOT REPRESENT
INTERESTS IN OR OBLIGATIONS OF THE SELLER, THE SERVICER OR ANY AFFILIATE
THEREOF. THE NOTES ARE NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.

         THE NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS. THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY
AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE
MERITS OF THIS OFFERING OR THE ACCURACY OR ADEQUACY OF THIS OFFERING MEMORANDUM.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE HOLDER OF ANY NOTE, BY SUCH
PURCHASE, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH NOTE IS BEING ACQUIRED
FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD,
PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF), (2) IN
AN AUCTION OR (3) TO OR THROUGH A BROKER-DEALER, AND, IN EACH CASE IN COMPLIANCE
WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF NOTES WILL BE REQUIRED TO
EXECUTE A PURCHASER'S LETTER IN THE FORM OF EXHIBIT A HERETO CERTIFYING, AMONG
OTHER THINGS, THAT SUCH PURCHASER IS AN INSTITUTIONAL "ACCREDITED INVESTOR"
WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT.

The date of this Offering Memorandum is [January 17, 2002.]

<PAGE>

(Cover continued from previous page)

         The Notes are offered by the Issuer through Banc of America Securities
LLC, as Placement Agent (the "Placement Agent"), pursuant to a Private Placement
Agreement, subject to the rights of the Issuer and the Placement Agent to reject
orders in whole or in part. It is expected that delivery of the Notes will be
made in book-entry form through the facilities of The Depository Trust Company
on or about January 30, 2002, against payment therefor in immediately available
funds.

                         BANC OF AMERICA SECURITIES LLC

         The per annum rate of interest for each Class of Notes for each
Interest Period will, subject to certain limitations, equal the rate determined
from time to time at an Auction conducted pursuant to the Auction Procedures
described in Annex I of this Offering Memorandum (which also contains
definitions of certain terms used in this Offering Memorandum with respect to
the Auction Procedures).

         Interest on and principal (to the extent payable as described herein)
of the Notes will be payable every thirty-five (35) days (or such longer period
as described below) on the dates described below (with respect to any and all
Classes of Notes, as applicable, a "Payment Date"). Interest on and principal
(to the extent payable as described herein) of each Class of Notes will be
allocated to the applicable Note Distribution Account monthly on each Fee
Remittance Date and will be payable on the first Business Day after each Auction
Date for such Class. The initial Auction Date for the Class A-1 Notes will be
March 11, 2002, or if such day is not a Business Day, the next succeeding
Business Day. After the initial Auction Date for the Class A-1 Notes, an Auction
Date for the Class A-1 Notes will occur every fifth succeeding Monday thereafter
(each, a "Class A-1 Auction Date"), provided that if any fifth succeeding Monday
thereafter is not a Business Day, such Class A-1 Auction Date shall occur on the
next succeeding Business Day. The initial Auction Date for the Class A-2 Notes
will be March 13, 2002, or if such day is not a Business Day, the next
succeeding Business Day. After the initial Auction Date for the Class A-2 Notes,
an Auction Date for the Class A-2 Notes will occur every fifth succeeding
Wednesday thereafter (each, a "Class A-2 Auction Date"), provided that if any
fifth succeeding Wednesday thereafter is not a Business Day, such Class A-2
Auction Date shall occur on the next succeeding Business Day. The initial
Auction Date for the Class A-3 Notes will be March 18, 2002, or if such day is
not a Business Day, the next succeeding Business Day. After the initial Auction
Date for the Class A-3 Notes, an Auction Date for the Class A-3 Notes will occur
every fifth succeeding Monday thereafter (each, a "Class A-3 Auction Date"),
provided that if any fifth succeeding Monday thereafter is not a Business Day,
such Class A-3 Auction Date shall occur on the next succeeding Business Day. The
initial Auction Date for the Class A-4 Notes will be March 20, 2002, or if such
day is not a Business Day, the next succeeding Business Day. After the initial
Auction Date for the Class A-4 Notes, an Auction Date for the Class A-4 Notes
will occur every fifth succeeding Wednesday thereafter (each, a "Class A-4
Auction Date"), provided that if any fifth succeeding Wednesday thereafter is
not a Business Day, such Class A-4 Auction Date shall occur on the next
succeeding Business Day. The resulting Payment Date for the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes is referred to as the
"Class A-1 Payment Date," "Class A-2 Payment Date," "Class A-3 Payment Date" and
"Class A-4 Payment Date," respectively. Auctions will be conducted for the Class
A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes on their
respective Auction Dates. The Issuer may with respect to any Auction Date, at
its discretion and if the necessary consents are obtained, change the length of
the period. The longest period that the Issuer may designate between

                                       ii
<PAGE>
Auctions for any Class of Notes is the period from the then current Auction Date
for such Class of Notes to the Auction Date for such Class of Notes occurring in
the sixth month following the month of such then current Auction Date. The
period set between Auctions (whether it is thirty-five (35) days or longer as
described above) will cause a commensurate period to occur between Payment
Dates.

         The maturity date for the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes will be March 1, 2038 (with respect to each Class, the
"Final Scheduled Payment Date"). However, payment in full of the Notes could
occur other than on such date as described herein. In addition, the outstanding
Notes may be redeemed at the option of the Issuer, in whole or in part, on each
Class' respective Payment Date, at an aggregate price equal to the outstanding
principal amount of the Notes so redeemed, plus accrued interest thereon to the
respective dates of redemption and any unpaid Noteholders' Interest Basis
Carryover relating to the Notes so redeemed, in each case so long as all amounts
owed to the Insurer have been paid.

         Except in a circumstance where an Event of Default has occurred and is
continuing, principal payments will first be made by lot at random only to the
holders of the Class A-1 Notes until such Class A-1 Notes have been paid in
full. Principal payments will then be made by lot at random only to the holders
of the Class A-2 Notes until such Class A-2 Notes have been paid in full.
Principal payments will then be made by lot at random only to the holders of the
Class A-3 Notes until such Class A-3 Notes have been paid in full. Principal
payments will then be made by lot at random only to the holders of the Class A-4
Notes until such Class A-4 Notes have been paid in full.

         Academic Management Services Corp. ("AMS"), a Delaware corporation,
will act as Servicer with respect to the Financed Student Loans (in such
capacity, the "Servicer"), pursuant to a Servicing Agreement, dated as of the
Closing Date, among the Issuer, the Servicer, the Eligible Lender Trustee and
the Indenture Trustee. The Servicer has retained Sallie Mae Servicing LP (the
"Subservicer") to perform the actual servicing functions on the Financed Student
Loans. Pursuant to the Servicing Agreement, the Servicer will monitor and
supervise the performance by the Subservicer of its servicing activities and
will be responsible for the servicing of the Financed Student Loans to the same
extent as if it were servicing them directly. The FFELP Loans will be guaranteed
by the Federal Guarantors described herein and reinsured by the United States
Department of Education (the "Department") under the Federal Family Education
Loan Program ("FFELP"). The Alternative Loans will be guaranteed by various
guarantors under the TuitionGard Program as described herein.

         The secondary market for the Notes is limited to institutional
"accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act, who are purchasing Notes pursuant to an Auction or
through a Broker-Dealer, and there can be no assurance that a secondary market
in the Notes will develop, or, if it does develop, that it will offer sufficient
liquidity of investment or that it will continue. Prospective investors in the
Notes should consider the factors set forth under "RISK FACTORS" herein.

         This offering memorandum (this "Offering Memorandum") is strictly
confidential and has been prepared by the Issuer solely for use in connection
with the proposed private placement of the Notes described herein. The Issuer
and the Placement Agent reserve the right to reject any

                                       iii
<PAGE>
offer to purchase the Notes, in whole or part, for any reason. This Offering
Memorandum is personal to each offeree and does not constitute an offer to any
other person or to the public generally to subscribe for or otherwise acquire
the Notes. Distribution of this Offering Memorandum to any person other than the
offeree and those persons, if any, retained to advise such offeree with respect
thereto is unauthorized, and any disclosure of any of its contents without the
prior written consent of the Issuer is prohibited. Each prospective purchaser,
by accepting delivery of this Offering Memorandum, agrees to the foregoing and
to make no copies of this Offering Memorandum.

         Each person receiving this Offering Memorandum acknowledges that no
person has been authorized to give any information or to make any representation
concerning the Issuer, the Seller, the Servicer, the Insurer, the Placement
Agent or the Notes other than as contained herein, and, if given or made, any
such information or representation should not be relied upon as having been
authorized by the Issuer, the Seller, the Servicer, the Insurer or the Placement
Agent.

         This Offering Memorandum does not constitute an offer to sell, or a
solicitation of an offer to buy, any of the Notes offered hereby by any person
in any jurisdiction in which it is unlawful for such person to make such an
offer or solicitation. Neither the delivery of this Offering Memorandum nor any
sale made hereunder will under any circumstances imply that the information
herein is correct as of any date subsequent to the date hereof. This Offering
Memorandum contains summaries of certain documents. The summaries do not purport
to be complete and are qualified in their entirety by reference to such
documents, copies of which will be made available to prospective investors upon
request.

         This Offering Memorandum is not intended to furnish legal, regulatory,
tax, accounting, investment or other advice to any prospective purchaser of the
Notes. This Offering Memorandum and the tables set forth herein should be
reviewed by each prospective purchaser and its legal, regulatory, tax,
accounting, investment and other advisors.

         INVESTORS WHOSE INVESTMENT AUTHORITY IS SUBJECT TO LEGAL RESTRICTIONS
SHOULD CONSULT THEIR OWN LEGAL ADVISORS TO DETERMINE WHETHER AND TO WHAT EXTENT
THE NOTES CONSTITUTE LEGAL INVESTMENTS FOR THEM.

         IN ADDITION, BY RECEIPT OF THIS OFFERING MEMORANDUM, THE RECIPIENT
ACKNOWLEDGES THAT IT IS AWARE THAT THE UNITED STATES SECURITIES LAWS RESTRICT
PERSONS WITH MATERIAL NON-PUBLIC INFORMATION ABOUT A COMPANY OBTAINED DIRECTLY
OR INDIRECTLY FROM THAT COMPANY FROM PURCHASING OR SELLING SECURITIES OF SUCH
COMPANY, OR COMMUNICATING SUCH INFORMATION TO ANY OTHER PERSON UNDER
CIRCUMSTANCES IN WHICH IT IS REASONABLY FORESEEABLE THAT SUCH PERSON IS LIKELY
TO PURCHASE OR SELL SUCH SECURITIES.

         No representation or warranty, express or implied, is made by the
Placement Agent as to the accuracy or completeness of the information set forth
herein, and nothing contained herein is, or shall be relied upon as, a promise
of representation as to the past or the future. The Placement

                                       iv
<PAGE>
Agent has not independently verified any such information and assumes no
responsibility for its accuracy or completeness.

         IN MAKING ANY INVESTMENT DECISION, INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF THE NOTES AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND
RISKS INVOLVED. THE NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY ANY FEDERAL
OR STATE SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY. FURTHERMORE,
THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE
ADEQUACY OF THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

         NO NOTES MAY BE SOLD WITHOUT DELIVERY OF AN OFFERING MEMORANDUM. IN
ADDITION, PROSPECTIVE INVESTORS IN THE NOTES WILL BE REQUIRED TO HAVE DELIVERED
A PURCHASER'S LETTER SUBSTANTIALLY IN THE FORM OF EXHIBIT A HERETO TO THE
BROKER-DEALER, IN WHICH EACH SUCH PROSPECTIVE PURCHASER WILL BE REQUIRED TO MAKE
CERTAIN REPRESENTATIONS WITH RESPECT TO ITS ABILITY TO INVEST IN THE NOTES.

                                       v
<PAGE>
FOR NEW HAMPSHIRE RESIDENTS

         NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER THE NEW HAMPSHIRE REVISED STATUTES ANNOTATED,
CHAPTER 421-B ("RSA 421-B"), WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A
SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW
HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE OF NEW HAMPSHIRE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER
ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A
SECURITY OR TRANSACTION MEANS THAT THE SECRETARY OF STATE OF NEW HAMPSHIRE HAS
PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN
APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR
CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY
REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.

FOR FLORIDA RESIDENTS

         THE NOTES ARE OFFERED PURSUANT TO A CLAIM OF EXEMPTION UNDER SECTION
517.061 OF THE FLORIDA SECURITIES ACT AND HAVE NOT BEEN REGISTERED UNDER SAID
ACT IN THE STATE OF FLORIDA. ALL FLORIDA RESIDENTS (OTHER THAN EXEMPT
INSTITUTIONAL INVESTORS) HAVE THE RIGHT TO VOID THE PURCHASE OF THE OFFERED
NOTES WITHOUT PENALTY WITHIN THREE DAYS OF MAKING SUCH PURCHASE.

                                       vi
<PAGE>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
<S>                                                                       <C>
REPORTS TO NOTEHOLDERS.....................................................xii

SUMMARY OF TERMS.............................................................1

RISK FACTORS................................................................17

Risk that Failure to Comply with Origination and Servicing Procedures
         for Financed Student Loans May Adversely Affect the Issuer's
         Ability to Pay Principal of and Interest on the Notes..............17

Risk that Third-Party Servicer Regulations Could Impair the Servicer or
         the Subservicer....................................................18

Variability of Actual Cash Flows; Risk of Shortfalls to the Holders of
         Notes Resulting from the Inability of the Indenture Trustee to
         Liquidate Financed Student Loans...................................18

Unsecured Nature of the Financed Student Loans; Risk That Financial Status
         of a Federal Guarantor Will Affect Its Ability to Make Guarantee
         Payments...........................................................19

Default Risk on Certain FFELP Loans.........................................20

Risk That Change in Law Will Adversely Affect Financed Student Loans,
         Federal Guarantors, AMS, the Issuer, FFELP the Servicer or the
         Subservicer........................................................20

Impact of Direct Lending....................................................21

Reserves ...................................................................22

Consolidation of Federal Benefit Billings and Receipts Under One Eligible
         Lender Number......................................................22

Fees Payable on Certain FFELP Loans May Reduce Funds Available to Pay
         Principal and Interest on the Notes................................23

Maturity and Prepayment Considerations......................................24

Incentive Programs..........................................................25

Insolvency Risks............................................................27

Consumer Protection Laws....................................................27

Book-Entry Registration.....................................................28

Limited Liquidity...........................................................28

Risks Resulting From Excess of Principal Balance of Notes over Pool
         Balance............................................................28

Basis Risk..................................................................29

Ratings of the Notes........................................................30

Notes Rating Based Primarily on Financial Strength of the Insurer...........30

Tax Consequences of Noteholders' Interest Basis Carryover...................30

Payments by Swap Counterparties Under Swap Agreements.......................30
</Table>

                                      vii
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
<S>                                                                       <C>
Risk That Master  Promissory Notes May Compromise The Indenture Trustee's
         Security Interest In The Student Loans.............................30

Risks Resulting From the Purchase of Additional Financed Student Loans......31

Risk That the Seller May Be Unable to Originate Enough Loans to Utilize All
         Funds on Deposit in the Funding Account and Therefore Investors in
         the Notes May Be Exposed to Reinvestment Risk......................31

THE ISSUER..................................................................31

THE SELLER..................................................................32

Consolidation/Repayment Programs............................................33

Incentive Programs..........................................................34

THE SERVICER................................................................35

THE ELIGIBLE LENDER TRUSTEE.................................................35

FEDERAL FAMILY EDUCATION LOAN PROGRAM.......................................36

General ....................................................................36

Legislative and Administrative Matters......................................37

Eligible Lenders, Students and Educational Institutions.....................41

Financial Need Analysis.....................................................42

Special Allowance Payments..................................................43

Federal Stafford Loans......................................................44

Federal Unsubsidized Stafford Loans.........................................47

Federal PLUS and Federal SLS Loan Programs..................................47

Federal Consolidation Loan Program..........................................49

Federal Guarantors..........................................................51

Federal Insurance and Reinsurance of Federal Guarantors.....................52

THE ALTERNATIVE LOAN PROGRAM................................................54

General ....................................................................54

Landmark American Insurance Company.........................................54

American and Foreign Insurance Company......................................55

THE FINANCED STUDENT LOAN POOL..............................................56

General ....................................................................56

Origination and Marketing Process...........................................57
</Table>

                                      viii
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
<S>                                                                       <C>
Servicing and Collections Process...........................................57

Financed Student Loan Pool..................................................58

COMPOSITION OF THE INITIAL FINANCED STUDENT LOANS AS OF THE STATISTICAL
         CALCULATION DATE...................................................59

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY LOAN TYPE AS OF THE
         STATISTICAL CALCULATION DATE ......................................60

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY BORROWER INTEREST RATE
         AS OF THE STATISTICAL CALCULATION DATE.............................60

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY SCHOOL TYPE AS OF THE
         STATISTICAL CALCULATION DATE.......................................60

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY REMAINING TERM AS OF
         THE STATISTICAL CALCULATION DATE...................................61

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY  BORROWER LOAN STATUS
         AS OF THE STATISTICAL CALCULATION DATE.............................61

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY DISBURSEMENT DATE AS
         OF THE STATISTICAL CALCULATION DATE................................62

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY NUMBER OF DAYS
         DELINQUENT AS OF THE STATISTICAL CALCULATION DATE..................62

Guarantee of Financed Student Loans.........................................63

DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY GUARANTOR AS OF THE
         STATISTICAL CALCULATION DATE.......................................64

DESCRIPTION OF THE NOTES....................................................64

General ....................................................................64

Payments of Interest........................................................66

Distributions of Principal..................................................67

Determination of the Auction Rates..........................................68

Book-Entry Registration.....................................................68

Definitive Notes............................................................69

Reports to Noteholders......................................................70

The Indenture...............................................................70

Interest Rate Swap Agreements...............................................74

CERTAIN INFORMATION REGARDING THE INSURANCE POLICY AND THE INSURER..........74
</Table>

                                       ix
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
<S>                                                                       <C>
The Insurer.................................................................77

Financial Information About the Insurer.....................................78

Financial Strength Ratings of the Insurer...................................80

THE TRANSFER AND SERVICING AGREEMENTS.......................................80

General ....................................................................80

Sale of Financed Student Loans; Representations and Warranties..............80

Accounts ...................................................................82

Servicing Procedures........................................................83

Payments on Financed Student Loans..........................................84

Servicer Covenants..........................................................84

Servicing Compensation......................................................85

Evidence as to Compliance...................................................85

Certain Matters Regarding the Servicer......................................86

Servicer Default............................................................86

Rights Upon Servicer Default................................................87

Waiver of Past Servicer Defaults............................................87

Distributions...............................................................87

Credit Enhancement..........................................................96

Statements To Indenture Trustee and Issuer..................................97

Amendment...................................................................97

Termination.................................................................98

Optional Redemption.........................................................98

CERTAIN LEGAL ASPECTS OF THE FINANCED STUDENT LOANS.........................98

Transfer of Financed Student Loans..........................................98

Consumer Protection Laws....................................................99

Loan Origination and Servicing Procedures Applicable to FFELP Loans
         Comprising Part of the Financed Student Loans.....................100

Loan Origination And Servicing Procedures Applicable to the Alternative
         Loans.............................................................101

FFELP Loans Generally Not Subject to Discharge in Bankruptcy...............101

Alternative Loans Generally Subject to Discharge in Bankruptcy.............101

CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES......................102
</Table>

                                        x
<PAGE>

                                TABLE OF CONTENTS
                                   (CONTINUED)

<Table>
<Caption>
                                                                           PAGE
                                                                           ----
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Tax Characterization of the Issuer as a Partnership........................102

Tax Consequences to Holders of the Notes...................................103

Taxation of Non-U.S. Holders...............................................104

Information Reporting and Backup Withholding...............................105

Possible Alternative Treatments of the Notes...............................106

STATE, LOCAL AND FOREIGN TAXES.............................................106

ERISA CONSIDERATIONS.......................................................106

General ...................................................................106

Exempt Plans...............................................................107

Plan Assets................................................................107

Purchase of Notes..........................................................108

General Considerations.....................................................109

TRANSFER RESTRICTIONS......................................................109

SETTLEMENT AND CLEARING....................................................111

Restricted Global Notes....................................................111

PRIVATE PLACEMENT..........................................................112

LEGAL MATTERS..............................................................114

INDEX OF TERMS.............................................................115

ANNEX I .................................................................A-I-1

Definitions..............................................................A-I-1

Existing Noteholders and Potential Noteholders...........................A-I-7

Auction Procedures.......................................................A-I-9

Indenture Trustee Not Responsible for Auction Agent, Market Agent and
         Broker-Dealers.................................................A-I-17

Changes in Auction Terms................................................A-I-18

EXHIBIT A:  Form of Purchaser's Letter.....................................A-1
</Table>

                                       xi
<PAGE>

                             REPORTS TO NOTEHOLDERS

         Unless and until Definitive Notes are issued, periodic unaudited
reports containing information concerning the Financed Student Loans will be
prepared by the Servicer and sent on behalf of the Issuer only to a nominee of
DTC as registered holder of the Notes, and will not be sent to the beneficial
owners of the Notes. Beneficial owners of Notes will, however, be able to obtain
such reports by requesting them from the Indenture Trustee. Such reports will
contain the information described under "THE TRANSFER AND SERVICING
AGREEMENTS--Statements to Indenture Trustee and Issuer" in this Offering
Memorandum. Such reports will not constitute financial statements prepared in
accordance with generally accepted accounting principles. See "DESCRIPTION OF
THE NOTES--Book-Entry Registration" and "--Reports to Noteholders" herein.

                                       xii
<PAGE>

                                SUMMARY OF TERMS

         The following summary is qualified in its entirety by reference to the
detailed information appearing elsewhere in this Offering Memorandum. Certain
capitalized terms used herein are defined elsewhere in this Offering Memorandum
on the pages indicated in the "INDEX OF TERMS."

<Table>
<S>                                     <C>
Issuer................................. AMS-1, 2002 LP, a limited partnership
                                        established under the laws of the State
                                        of Delaware. The Issuer's limited
                                        partner is Academic Management Services
                                        Corp. and its general partner is AMS-1
                                        SPC-1, Inc., a Delaware corporation.

Notes Offered.......................... $84,000,000 aggregate principal amount
                                        of Auction Rate Student Loan-Backed
                                        Notes, Class A-1 (the "Class A-1
                                        Notes"), $84,000,000 aggregate principal
                                        amount of Auction Rate Student
                                        Loan-Backed Notes, Class A-2 (the "Class
                                        A-2 Notes"), $84,000,000 aggregate
                                        principal amount of Auction Rate Student
                                        Loan-Backed Notes, Class A-3 (the "Class
                                        A-3 Notes") and $83,000,000 aggregate
                                        principal amount of Auction Rate Student
                                        Loan-Backed Notes, Class A-4 (the "Class
                                        A-4 Notes" and collectively with the
                                        Class A-1 Notes, the Class A-2 Notes and
                                        the Class A-3 Notes, the "Notes").

Servicer............................... Academic Management Services Corp.
                                        ("AMS"), a Delaware corporation (the
                                        "Servicer"), under a Servicing
                                        Agreement, dated as of the Closing Date,
                                        (as amended and supplemented from time
                                        to time, the "Servicing Agreement")
                                        among the Issuer, the Servicer, the
                                        Eligible Lender Trustee and the
                                        Indenture Trustee.

Eligible Lender
Trustee................................ For the purpose of holding legal title
                                        to the FFELP Loans on behalf of the
                                        Issuer and other beneficiaries, Bank
                                        One, National Association, a national
                                        banking association organized under the
                                        laws of the United States, as successor
                                        to The First National Bank of Chicago,
                                        as trustee (the "Eligible Lender
                                        Trustee") has entered into a trust
                                        agreement (the "Eligible Lender Trust
                                        Agreement") by and between EFG-I, LP and
                                        the Eligible Lender Trustee. See "THE
                                        ELIGIBLE LENDER TRUSTEE." The Financed
                                        Student Loans will consist of education
                                        loans to students and parents of
                                        students which are either (i) reinsured
                                        by the federal government acting through
                                        the Secretary of Education pursuant to
                                        FFELP under the Higher Education Act
                                        (the "FFELP Loans") or (ii) privately
                                        guaranteed or insured by certain
                                        institutions described herein (the
                                        "Alternative Loans"). As neither the
                                        Issuer nor its general partner is an
                                        institution eligible to hold legal title
                                        to FFELP Loans, the Eligible Lender
                                        Trustee will hold legal title to FFELP
</Table>

<PAGE>

<Table>
<S>                                     <C>
                                        Loans on behalf of the Issuer pursuant
                                        to the Eligible Lender Trust Agreement.
                                        References herein to the Issuer shall
                                        mean the Eligible Lender Trustee for all
                                        purposes, where the context so requires,
                                        involving holding or transferring legal
                                        title to FFELP Loans beneficially owned
                                        by the Issuer.

The Seller............................. Academic Management Services Corp.
                                        (together with any successors or assigns
                                        thereto, "AMS"), a Delaware corporation
                                        (the "Seller"). The Seller will sell
                                        and/or contribute the Financed Student
                                        Loans to the Issuer pursuant to the
                                        Purchase and Contribution Agreement.

Indenture Trustee...................... Bank One, National Association ("Bank
                                        One"), a national banking association
                                        organized under the laws of the United
                                        States, as trustee under the Indenture
                                        (the "Indenture Trustee"). Bank One will
                                        also act as Eligible Lender Trustee for
                                        the Issuer and AMS Eligible Lender
                                        Trustee for AMS.

Auction Agent.......................... The Bank of New York, and its successors
                                        or assigns.

Insurer................................ MBIA Insurance Corporation.

Closing Date........................... On or about January 30, 2002.

Cutoff Date ........................... Means the Business Day immediately
                                        preceding the Closing Date (the "Initial
                                        Cutoff Date") as to the Initial Financed
                                        Student Loans and the Business Day
                                        immediately preceding the date of
                                        purchase by the Issuer as to the
                                        Additional Financed Student Loans.

Statistical Calculation Date........... November 30, 2001. This is the date used
                                        in preparing statistical information
                                        with respect to the Initial Financed
                                        Student Loans that is included in this
                                        Offering Memorandum.

Assets of the Issuer................... The assets of the Issuer will include
                                        the following:

A.  Financed Student Loans ............ The assets of the Issuer will consist of
                                        (i) FFELP Loans and (ii) Alternative
                                        Loans (together with the FFELP Loans,
                                        "Financed Student Loans") all of which
                                        have been, or in the case of the
                                        Additional Financed Student Loans will
                                        be, acquired by the Issuer from the
                                        Seller pursuant to the Purchase and
                                        Contribution Agreement, and will include
                                        rights to receive payments made with
                                        respect to such Financed Student Loans
                                        and the proceeds thereof. On or prior to
                                        the Closing Date, the Seller will sell
                                        and/or contribute to the Issuer, FFELP
                                        Loans and Alternative Loans (the
                                        "Initial Financed Student Loans")
                                        pursuant to the Purchase and
                                        Contribution Agreement. During
</Table>

                                       2
<PAGE>

<Table>
<S>                                     <C>
                                        the Funding Period and the Acquisition
                                        Period, the Seller intends to sell
                                        and/or contribute to the Issuer
                                        additional FFELP Loans and Alternative
                                        Loans (such loans, the "Additional
                                        Financed Student Loans" and, together
                                        with the Initial Financed Student Loans,
                                        the "Financed Student Loans").

                                        As of the Statistical Calculation Date:
                                        the aggregate principal balance plus
                                        accrued interest thereon of the Initial
                                        Financed Student Loans was equal to
                                        $280,807,119; the aggregate principal
                                        balance plus accrued interest thereon of
                                        the FFELP Loans was equal to
                                        $244,964,629 which includes principal
                                        balance due from Obligors, plus accrued
                                        interest thereon estimated to be
                                        $3,309,690 as of the Statistical
                                        Calculation Date; the aggregate
                                        principal balance plus accrued interest
                                        thereon of the Alternative Loans was
                                        equal to $35,842,490 which includes
                                        principal balance due from Obligors,
                                        plus accrued interest thereon estimated
                                        to be $3,112,585 as of the Statistical
                                        Calculation Date.

                                        The Financed Student Loans were, or in
                                        the case of Additional Financed Student
                                        Loans will be, originally acquired or
                                        originated by AMS in the course of its
                                        student loan financing business. Subject
                                        to certain limitations, as described
                                        below, the FFELP Loans are guaranteed as
                                        to the payment of principal and interest
                                        by the Federal Guarantors described
                                        herein and are reinsured by the United
                                        States Department of Education (the
                                        "Department"). Amounts paid by a Federal
                                        Guarantor pursuant to its guarantee are
                                        herein referred to as "Guarantee
                                        Payments". The Alternative Loans are
                                        guaranteed by various guarantors as to
                                        the payment of principal and interest
                                        under the TuitionGard Program as
                                        described herein.

B.  Collection
    Account ........................... The Servicer and the Issuer will be
                                        required to remit all collections
                                        received with respect to the Financed
                                        Student Loans, and the Eligible Lender
                                        Trustee will be required to remit
                                        Interest Subsidy Payments and Special
                                        Allowance Payments it receives with
                                        respect to the Financed Student Loans,
                                        in each case within two business days of
                                        receipt to one or more accounts in the
                                        name of the Indenture Trustee
                                        (collectively, the "Collection
                                        Account").

                                        The Indenture Trustee is obligated to
                                        withdraw Available Funds on deposit in
                                        the Collection Account and to apply such
                                        funds on each Fee Remittance Date in
                                        accordance with the priority of payments
                                        described herein under "THE
</Table>

                                       3
<PAGE>

<Table>
<S>                                     <C>
                                        TRANSFER AND SERVICING
                                        AGREEMENTS--Distributions."

                                        As further described under such heading,
                                        amounts on deposit in the Collection
                                        Account representing Available Funds for
                                        the related Collection Period will be
                                        allocated on each Fee Remittance Date
                                        among amounts to be distributed with
                                        respect to certain fees payable by the
                                        Issuer on such Fee Remittance Date and
                                        amounts to be paid on the Notes on all
                                        applicable Payment Dates. The "Fee
                                        Remittance Date" will be the tenth
                                        Business Day of each month, commencing
                                        in February 2002. Amounts allocated to
                                        the Class A-1 Notes, Class A-2 Notes,
                                        Class A-3 Notes and Class A-4 Notes will
                                        not be distributed on a Fee Remittance
                                        Date but instead, with respect to the
                                        Class A-1 Notes, will be deposited on
                                        the Fee Remittance Date into an account
                                        in the name of the Indenture Trustee
                                        which will be held solely for the
                                        benefit of the Class A-1 Noteholders
                                        (the "Class A-1 Distribution Account"),
                                        with respect to the Class A-2 Notes will
                                        be deposited on the Fee Remittance Date
                                        into an account in the name of the
                                        Indenture Trustee which will be held
                                        solely for the benefit of the Class A-2
                                        Noteholders (the "Class A-2 Distribution
                                        Account"), with respect to the Class A-3
                                        Notes will be deposited on the Fee
                                        Remittance Date into an account in the
                                        name of the Indenture Trustee which will
                                        be held solely for the benefit of the
                                        Class A-3 Noteholders (the "Class A-3
                                        Distribution Account"), and with respect
                                        to the Class A-4 Notes will be deposited
                                        on the Fee Remittance Date into an
                                        account in the name of the Indenture
                                        Trustee which will be held solely for
                                        the benefit of the Class A-4 Noteholders
                                        (the "Class A-4 Distribution Account"
                                        and each of the Class A-1 Distribution
                                        Account, Class A-2 Distribution Account,
                                        Class A-3 Distribution Account and the
                                        Class A-4 Distribution Account, a "Note
                                        Distribution Account"). Such amounts
                                        will then be held in the Class A-1
                                        Distribution Account, Class A-2
                                        Distribution Account, Class A-3
                                        Distribution Account and Class A-4
                                        Distribution Account until the
                                        corresponding Class A-1 Payment Date,
                                        Class A-2 Payment Date, Class A-3
                                        Payment Date and Class A-4 Payment Date,
                                        as applicable, when they will be
                                        distributed to the Class A-1
                                        Noteholders, Class A-2 Noteholders,
                                        Class A-3 Noteholders and Class A-4
                                        Noteholders, as the case may be.

C.  Reserve Account.................... Pursuant to the Indenture, an account in
                                        the name of the Indenture Trustee (the
                                        "Reserve Account") will be established
                                        and maintained by the Issuer with the
                                        Indenture Trustee. Amounts on deposit in
                                        the Reserve Account will be applied (a)
                                        on each Fee Remittance Date to cover any
                                        shortfalls (in the
</Table>

                                       4
<PAGE>

<Table>
<S>                                     <C>
                                        priority indicated) in payments of (i)
                                        Policy Premiums and any overdue Policy
                                        Premiums and (ii) the Servicing Fee, the
                                        Trustee Fees, the Broker-Dealer Fees,
                                        the Auction Agent Fee and any such
                                        amounts that are overdue Servicing Fees,
                                        Trustee Fees, Auction Agent Fees or
                                        Broker-Dealer Fees (such fees to be paid
                                        pari passu), in each case for which
                                        Available Funds allocable on such Fee
                                        Remittance Date are insufficient to make
                                        such payments, (b) to the Noteholders'
                                        Interest Distribution Amount, for which
                                        funds on deposit in the applicable Note
                                        Distribution Account for such Fee
                                        Remittance Date are insufficient to make
                                        such payments and (c) only on the
                                        Payment Date on which either the Final
                                        Scheduled Payment Date (whether as
                                        scheduled or if accelerated after an
                                        Event of Default) occurs or on which,
                                        after allocating all Available Funds and
                                        making any withdrawals required under
                                        clause (a) and (b) above, the remaining
                                        balance on deposit in the Reserve
                                        Account exceeds the remaining principal
                                        balance of the Notes, to pay the
                                        remaining principal balance of the
                                        Notes.

                                        The Issuer will make an initial deposit
                                        into the Reserve Account on the Closing
                                        Date equal to $1,675,000, representing
                                        0.50% of the aggregate principal amount
                                        of the Notes (the "Reserve Account
                                        Initial Deposit").

                                        On each Fee Remittance Date, any
                                        Available Funds remaining as described
                                        under "THE TRANSFER AND SERVICING
                                        AGREEMENTS--Distributions" herein, after
                                        the payment of Policy Premiums, the
                                        Servicing Fee, the Trustee Fees, the
                                        Broker-Dealer Fees, the Auction Agent
                                        Fee, and required deposits to the Note
                                        Distribution Accounts in respect of
                                        interest on the Notes will be deposited
                                        into the Reserve Account to the extent
                                        necessary to cause the amount on deposit
                                        therein to equal the Specified Reserve
                                        Account Balance for such Fee Remittance
                                        Date. The "Specified Reserve Account
                                        Balance" with respect to any Fee
                                        Remittance Date generally will be equal
                                        to the greater of (i) 0.50% of the sum
                                        of the aggregate principal balance of
                                        the Notes minus all aggregate amounts
                                        being on deposit in all Note
                                        Distribution Accounts for payment in
                                        respect of principal on the Notes on all
                                        applicable Payment Dates and (ii)
                                        $500,000. See "THE TRANSFER AND
                                        SERVICING AGREEMENTS--Credit
                                        Enhancement--Reserve Account" herein.

                                        In addition, on each Fee Remittance
                                        Date, any amounts on deposit in the
                                        Reserve Account, after any other
                                        required withdrawals therefrom have been
                                        made, that are in excess of the
                                        Specified Reserve Account Balance will
                                        be withdrawn
</Table>

                                       5
<PAGE>

<Table>
<S>                                     <C>
                                        from the Reserve Account and will be
                                        deposited into the Collection Account.
                                        In certain circumstances, the Reserve
                                        Account could be depleted and, in the
                                        absence of payments under the Insurance
                                        Policy, shortfalls in interest
                                        distributions and resulting losses to
                                        the Noteholders could occur. In no event
                                        will amounts on deposit in the Reserve
                                        Account be available to pay any
                                        Noteholders' Interest Basis Carryover.

D.  The Purchase and
    Contribution Agreement
    And Servicing
    Agreement.......................... Pursuant to a purchase and contribution
                                        agreement, dated as of the Closing Date
                                        (as amended and supplemented from time
                                        to time, the "Purchase and Contribution
                                        Agreement"), among the AMS Eligible
                                        Lender Trustee, the Seller, the Eligible
                                        Lender Trustee and the Issuer, the
                                        Seller will sell and/or contribute the
                                        Financed Student Loans to the Issuer.

                                        The Seller will be obligated under the
                                        Purchase and Contribution Agreement to
                                        repurchase a Financed Student Loan or,
                                        in the alternative, substitute an
                                        eligible FFELP Loan, or Alternative
                                        Loan, as the case may be, if the
                                        interests of the Noteholders therein are
                                        materially and adversely affected by a
                                        breach of any representation, warranty
                                        or covenant made by the Seller with
                                        respect to such Financed Student Loan,
                                        if the breach has not been cured within
                                        30 days (or, at the sole discretion of
                                        the Insurer, 60 days) following the
                                        discovery by or notice to the Seller of
                                        the breach (it being understood that any
                                        such breach that does not affect either
                                        (i) a Federal Guarantor's obligation
                                        with respect to a FFELP Loan or (ii) the
                                        obligations of the applicable guarantors
                                        under the TuitionGard Program with
                                        respect to an Alternative Loan, to
                                        guarantee payment of such Financed
                                        Student Loan will not be considered to
                                        have a material adverse effect for this
                                        purpose). In addition, the Seller will
                                        be obligated to reimburse the Issuer
                                        with respect to a Financed Student Loan
                                        for any accrued interest amounts not
                                        guaranteed by a Federal Guarantor due
                                        to, or any lost Interest Subsidy
                                        Payments or Special Allowance Payments
                                        as a result of, a breach of the Seller's
                                        representations and warranties with
                                        respect to such Financed Student Loan.

                                        Pursuant to the Servicing Agreement, the
                                        Servicer will agree with the Issuer to
                                        be responsible for servicing, managing,
                                        maintaining custody of and making
                                        collections on the Financed Student
                                        Loans. All of the Issuer's rights under
                                        the Servicing Agreement will be assigned
                                        to the Indenture Trustee pursuant to the
                                        Indenture.
</Table>

                                       6
<PAGE>

<Table>
<S>                                     <C>
                                        Pursuant to the Indenture and the
                                        Servicing Agreement, the Servicer will
                                        receive a monthly fee (the "Servicing
                                        Fee") with respect to each Financed
                                        Student Loan calculated as described
                                        under "THE TRANSFER AND SERVICING
                                        AGREEMENTS--Servicing Compensation." The
                                        Servicing Fee will be payable from
                                        Available Funds on deposit in the
                                        Collection Account.

                                        The Issuer or the Eligible Lender
                                        Trustee on behalf of the Issuer will be
                                        responsible for, among other things,
                                        preparing and filing with the Department
                                        all appropriate claims forms and other
                                        documents and filings on behalf of the
                                        Eligible Lender Trustee in order to
                                        claim the Interest Subsidy Payments and
                                        Special Allowance Payments from the
                                        Department in respect of the Financed
                                        Student Loans entitled thereto and the
                                        Servicer will be responsible for
                                        preparing and providing periodic
                                        statements to the Indenture Trustee with
                                        respect to distributions to Noteholders.

E.  The Funding Period................. During the period from the Closing Date
                                        through June 30, 2002, (the "Funding
                                        Period"), the Issuer can use funds on
                                        deposit in an account (the "Funding
                                        Account") to purchase Additional
                                        Financed Student Loans from the Seller
                                        (or to accept contributions of
                                        Additional Financed Student Loans from
                                        the Seller) pursuant to the Purchase and
                                        Contribution Agreement. The purchase
                                        price for Additional Financed Student
                                        Loans purchased by the Issuer from the
                                        Seller shall be withdrawn from the
                                        Funding Account. It is expected that on
                                        the Closing Date the Issuer will deposit
                                        approximately $50,000,000 from the
                                        proceeds of the issuance of the Notes
                                        into the Funding Account. To the extent
                                        the amount remaining on deposit in the
                                        Funding Account at the end of the
                                        Funding Period exceeds $1,000,000 (after
                                        giving effect to any purchases of
                                        Additional Financed Student Loans on
                                        such date), such amount shall be used by
                                        the Issuer to repay principal on the
                                        Notes as further described herein. To
                                        the extent the amount remaining on
                                        deposit in the Funding Account at the
                                        end of the Funding Period is less than
                                        $1,000,000 (after giving effect to any
                                        purchases of Additional Financed Student
                                        Loans on such date), such amount shall
                                        be deposited into the Collection Account
                                        and applied as further described herein.

F. The Acquisition Account............. During the period from the Closing Date
                                        through and including December 31, 2003
                                        (the "Acquisition Period"), amounts
                                        received by the Issuer in respect of
                                        Collections remaining after the payment
                                        and/or allocation of certain amounts
                                        described herein on each Fee Remittance
                                        Date shall be deposited into an
</Table>

                                       7
<PAGE>

<Table>
<S>                                     <C>
                                        account (the "Acquisition Account"), and
                                        be available to the Issuer for the
                                        purchase of Additional Financed Student
                                        Loans. Amounts remaining on deposit in
                                        the Acquisition Account at the end of
                                        the Acquisition Period shall be
                                        deposited into the Collection Account.
                                        "Parity" means, as of any Determination
                                        Date, any time when the Pool Balance is
                                        equal to at least 103% of the Note
                                        Balance as of such date (after giving
                                        effect to all distributions in respect
                                        of principal) plus $150,000. The
                                        Acquisition Period is subject to early
                                        termination upon the occurrence of an
                                        Event of Default or certain other events
                                        agreed to by the Issuer and the Insurer.
                                        See "THE TRANSFER AND SERVICING
                                        AGREEMENTS--Distributions" herein.

G.   Insurer; The Insurance
     Policy............................ MBIA Insurance Corporation. On the
                                        Closing Date, MBIA Insurance Corporation
                                        (the "Insurer") will issue a financial
                                        guaranty insurance policy for the Notes,
                                        (the "Insurance Policy") pursuant to
                                        which it will irrevocably and
                                        unconditionally guarantee payment of the
                                        Insured Payments, as described herein.
                                        SEE "CERTAIN INFORMATION REGARDING THE
                                        INSURANCE POLICY AND THE INSURER--The
                                        Policy."

                                        The Insurer will be subrogated to the
                                        rights of the Noteholders to receive any
                                        payments on the Notes to the extent
                                        there are payments under the Insurance
                                        Policy that remain unreimbursed. In
                                        addition, under the Indenture, absent
                                        the existence and continuation of an
                                        Insurer Default, the Insurer will be
                                        entitled to exercise certain rights of
                                        the Noteholders without their consent,
                                        and Noteholders may exercise other
                                        rights under the Indenture only with the
                                        prior written consent of the Insurer. In
                                        addition, the Insurer, rather than the
                                        Indenture Trustee or the Noteholders,
                                        will have the right to direct all
                                        matters relating to the Notes with
                                        respect to any Event of Default under
                                        the Indenture. See "CERTAIN INFORMATION
                                        REGARDING THE INSURANCE POLICY AND THE
                                        INSURER."

The Notes.............................. The Issuer will issue the Notes pursuant
                                        to an indenture, dated as of the Closing
                                        Date, (as amended and supplemented from
                                        time to time, the "Indenture"), among
                                        the Issuer, the Eligible Lender Trustee
                                        and the Indenture Trustee. The Notes
                                        will be secured by the assets of the
                                        Issuer, as described herein. The Notes
                                        will be available for purchase in
                                        denominations of $100,000 and will be
                                        available in book-entry form only.
</Table>

                                       8
<PAGE>

<Table>
<S>                                     <C>
A.   Interest.......................... Each Class of Notes will bear interest
                                        during each Interest Period at the
                                        respective rate per annum (the "Class
                                        A-1 Note Rate," the "Class A-2 Note
                                        Rate," the "Class A-3 Note Rate" and the
                                        "Class A-4 Note Rate," respectively,
                                        and, collectively the "Note Rates")
                                        equal, except as described below, to the
                                        Auction Rate established for such Class
                                        of Notes for each Payment Date. The
                                        "Auction Rate" means each per annum rate
                                        of interest that results from the
                                        implementation of the Auction Procedures
                                        described in Annex I hereto with respect
                                        to each Class of Notes.

                                        Interest on the outstanding principal
                                        amount of each Class of Notes will
                                        accrue during each Interest Period and
                                        will be payable with respect to the
                                        Class A-1 Notes, the Class A-2 Notes,
                                        Class A-3 Notes and Class A-4 Notes on
                                        each applicable Payment Date, to holders
                                        of record of such Notes on the related
                                        Record Date (the "Class A-1
                                        Noteholders," "Class A-2 Noteholders,"
                                        the "Class A-3 Noteholders" and the
                                        "Class A-4 Noteholders," respectively).
                                        "Interest Period" means with respect to
                                        the Class A-1 Notes, Class A-2 Notes,
                                        Class A-3 Notes and Class A-4 Notes and
                                        each Class' respective Payment Date, the
                                        period commencing on and including the
                                        preceding Payment Date for each Class
                                        (or in the case of the first Payment
                                        Date, commencing on the Closing Date)
                                        and ending on and not including such
                                        Payment Date for each Class. Interest on
                                        the Notes will be calculated on the
                                        basis of the actual number of days
                                        elapsed in each Interest Period divided
                                        by 360.

                                        "Record Date" means, with respect to any
                                        Payment Date for a Class of Notes, so
                                        long as the Notes are in book-entry
                                        form, the Business Day prior to such
                                        Payment Date. "Business Day" means a day
                                        other than (i) a Saturday or Sunday, or
                                        (ii) a day on which the New York Stock
                                        Exchange, Indenture Trustee or banks
                                        located in Chicago, Illinois, New York
                                        City or the Commonwealth of
                                        Massachusetts, are authorized or
                                        obligated by law or executive order to
                                        be closed for business.

                                        Notwithstanding the foregoing, if any
                                        Auction Rate for any Interest Period
                                        (after the first Interest Period) is
                                        greater than the Student Loan Rate for
                                        the related Collection Period, then the
                                        Note Rate for the applicable Class of
                                        Notes for the applicable Payment Date
                                        will be the Student Loan Rate. The
                                        "Student Loan Rate" for any Collection
                                        Period will equal the interest rate
                                        equivalent to the product of (a) the
                                        quotient obtained by dividing (i) 360 by
                                        (ii) the actual number of days elapsed
                                        in such Collection Period and (b) the
                                        percentage equivalent of a
</Table>

                                       9
<PAGE>

<Table>
<S>                                     <C>
                                        fraction, (i) the numerator of which is
                                        equal to the Expected Interest
                                        Collections for such Collection Period
                                        less the sum of the Servicing Fee, the
                                        Trustee Fees, the Auction Agent Fee, the
                                        Broker-Dealer Fees and the Policy
                                        Premium with respect to such Collection
                                        Period and (ii) the denominator of which
                                        is the aggregate principal balance of
                                        the Notes as of the last day of such
                                        Collection Period. "Collection Period"
                                        means, initially the period beginning on
                                        the Initial Cutoff Date and ending
                                        February 28, 2002, and thereafter with
                                        respect to any Fee Remittance Date or
                                        Auction Date, the preceding calendar
                                        month.

                                        "Expected Interest Collections" means,
                                        with respect to any Collection Period,
                                        the positive difference, if any, between
                                        (i) the sum of (a) the amount of
                                        interest accrued, net of any amounts
                                        required by the Higher Education Act to
                                        be paid to the Department, with respect
                                        to the Financed Student Loans during
                                        that Collection Period, whether or not
                                        such interest is actually paid, (b) all
                                        Interest Subsidy Payments and Special
                                        Allowance Payments estimated to have
                                        accrued for that Collection Period
                                        whether or not actually received, (c)
                                        Investment Earnings on amounts on
                                        deposit in all of the accounts during
                                        such Collection Period and (d) all gross
                                        amounts that have accrued under any Swap
                                        Agreement with respect to such
                                        Collection Period that are payable by
                                        all Swap Counterparties thereunder and
                                        (ii) all gross amounts that have accrued
                                        under such Swap Agreement with respect
                                        to such Collection Period and that are
                                        payable by the Issuer.

                                        If any Note Rate for any Payment Date is
                                        based on the Student Loan Rate, the
                                        excess of (a) the amount of interest on
                                        the related Class of Notes that would
                                        have accrued in respect of the related
                                        Interest Period had interest been
                                        calculated based on the applicable
                                        Auction Rate, over (b) the amount of
                                        interest on the related Class of Notes
                                        actually accrued in respect of such
                                        Interest Period based on the Student
                                        Loan Rate, together with the unpaid
                                        portion of any such excess from prior
                                        Payment Dates is referred to as the
                                        "Class A-1 Noteholders' Interest Basis
                                        Carryover," if accrued on the Class A-1
                                        Notes, is referred to as the "Class A-2
                                        Noteholders' Interest Basis Carryover,"
                                        if accrued on the Class A-2 Notes, is
                                        referred to as the "Class A-3
                                        Noteholders' Interest Basis Carryover,"
                                        if accrued on the Class A-3 Notes, is
                                        referred to as the "Class A-4
                                        Noteholders Interest Basis Carryover,"
                                        if accrued on the Class A-4 Notes, and,
                                        collectively for all the Notes, is
                                        referred to as the "Noteholders'
                                        Interest Basis Carryover." Any
                                        Noteholders' Interest Basis Carryover
                                        (together with interest thereon) will be
                                        payable on
</Table>

                                       10
<PAGE>

<Table>
<S>                                     <C>
                                        that or subsequent Payment Dates for the
                                        related Class of Notes to the extent the
                                        remaining Available Funds, if any, as
                                        described under "THE TRANSFER AND
                                        SERVICING AGREEMENTS--Distributions"
                                        herein, after all other required
                                        allocations therefrom are sufficient. To
                                        the extent that Noteholders' Interest
                                        Basis Carryover has accrued, any such
                                        remaining Available Funds, as described
                                        above, will be allocated on the
                                        applicable Fee Remittance Date between
                                        any unpaid Class A-1 Noteholders'
                                        Interest Basis Carryover, Class A-2
                                        Noteholders' Interest Basis Carryover,
                                        Class A-3 Noteholders' Interest Basis
                                        Carryover and Class A-4 Noteholders'
                                        Interest Basis Carryover pro rata (based
                                        on the ratio of each such amount to the
                                        aggregate Noteholders' Interest Basis
                                        Carryover for all Classes). See "THE
                                        TRANSFER AND SERVICING
                                        AGREEMENTS--Distributions" herein.

                                        Neither amounts on deposit in the
                                        Reserve Account nor the Insurance Policy
                                        will be available under any
                                        circumstances to pay any Noteholders'
                                        Interest Basis Carryover (or any
                                        interest thereon).

                                        As of the Closing Date, the aggregate
                                        principal balance of the Notes will
                                        equal approximately 100.59% of the
                                        Initial Pool Balance. See "RISK
                                        FACTORS--Risks Resulting From Excess of
                                        Principal Balance of Notes over Pool
                                        Balance" herein. The "Parity Date" is
                                        the first Fee Remittance Date on which
                                        the aggregate principal balance of the
                                        Notes (less all amounts on deposit in
                                        all Note Distribution Accounts in
                                        respect of the principal on all the
                                        Notes), after giving effect to (i) all
                                        distributions to the Note Distribution
                                        Accounts, and (ii) any purchase of
                                        Additional Financed Student Loans on
                                        such date times 103% plus $150,000, is
                                        no longer in excess of the Pool Balance
                                        as of the last day of the related
                                        Collection Period.

B.   Principal......................... Principal of the Notes will generally be
                                        payable in installments on each
                                        applicable Payment Date commencing after
                                        the end of the Acquisition Period, in an
                                        amount generally equal to the Principal
                                        Distribution Amount for such Payment
                                        Date, as described more fully below. The
                                        "Principal Distribution Amount" means
                                        (A) to the extent the Class A Note
                                        Principal Amount (less all amounts on
                                        deposit in all Note Distribution
                                        Accounts in respect of the principal on
                                        all the Notes) as of such Fee Remittance
                                        Date, (i) prior to giving effect to all
                                        distributions to the Note Distribution
                                        Accounts, and (ii) after giving effect
                                        to any purchase of Additional Financed
                                        Student Loans on such date times 103%
                                        plus $150,000, is equal to or
</Table>

                                       11
<PAGE>

<Table>
<S>                                     <C>
                                        less than the Pool Balance as of the
                                        last day of the related Collection
                                        Period, the amount of principal paid and
                                        collected (plus any realized losses
                                        thereon) during the related Collection
                                        Period less any accrued and unpaid
                                        interest on the Financed Student Loans
                                        for such Collection Period to the extent
                                        such interest will be capitalized and
                                        added to the principal balance of such
                                        Student Loans, upon the commencement of
                                        repayment of such Student Loans, as
                                        described herein, or (B) to the extent
                                        the Class A Note Principal Amount (less
                                        all amounts on deposit in all Note
                                        Distribution Accounts in respect of the
                                        principal on all the Notes) as of such
                                        Fee Remittance Date, (i) prior to giving
                                        effect to all distributions to the Note
                                        Distribution Accounts and (ii) after
                                        giving effect to any purchase of
                                        Additional Financed Student Loans on
                                        such date times 103% plus $150,000, is
                                        greater than the Pool Balance as of the
                                        last day of the related Collection
                                        Period, all Available Funds remaining
                                        after the payment of the Policy Premium,
                                        Servicing Fee, Eligible Lender Trustee
                                        Fees, Indenture Trustee Fees, Auction
                                        Agent Fees, Broker-Dealer Fees, the
                                        deposit into the applicable Note
                                        Distribution Account of the Class A-1
                                        Noteholders' Interest Distribution
                                        Amount, Class A-2 Noteholders' Interest
                                        Distribution Amount, Class A-3
                                        Noteholders' Interest Distribution
                                        Amount and Class A-4 Noteholders'
                                        Interest Distribution Amount, the
                                        payment of any net amounts accrued and
                                        unpaid to a Swap Counterparty (other
                                        than any termination payments under the
                                        related Swap Agreement) and making any
                                        required deposits to the Reserve Account
                                        up to such amount which would cause the
                                        Class A Note Principal Amount plus all
                                        amounts on deposit in all Note
                                        Distribution Accounts in respect of
                                        principal of the Notes as of such Fee
                                        Remittance Date, after giving effect to
                                        (i) all distributions to the Note
                                        Distribution Accounts and (ii) any
                                        purchase of Additional Financed Student
                                        Loans on such date times 103% plus
                                        $150,000, to equal the Pool Balance as
                                        of the last day of the related
                                        Collection Period. See "THE TRANSFER AND
                                        SERVICING AGREEMENTS--Distributions."

                                        The aggregate amount distributable as
                                        principal to the Notes shall be
                                        allocated first by lot at random to the
                                        Class A-1 Notes until the aggregate
                                        principal balance thereof has been
                                        reduced to zero, then by lot at random
                                        to the Class A-2 Notes until the
                                        aggregate principal balance thereof has
                                        been reduced to zero, then by lot at
                                        random to the Class A-3 Notes until the
                                        aggregate principal balance thereof has
                                        been reduced to zero, and then by lot at
                                        random to the Class A-4 Notes until the
                                        aggregate principal balance thereof has
                                        been reduced to zero.
</Table>

                                       12
<PAGE>

<Table>
<S>                                     <C>
                                        Principal payments will be made on each
                                        Class of Notes only in amounts equal to
                                        whole multiples of $100,000.

                                        No failure to make principal payments on
                                        the Notes will result in an Event of
                                        Default prior to the Final Scheduled
                                        Payment Date so long as the portion of
                                        Available Funds allocable to principal
                                        payments on the Notes is in fact so
                                        allocated and paid in accordance with
                                        the terms of the Indenture. In addition,
                                        prior to the Final Scheduled Payment
                                        Date (whether as scheduled or if
                                        accelerated after an Event of Default),
                                        draws may be made under the Insurance
                                        Policy to pay principal on the Notes
                                        only after the Parity Date and only if a
                                        Subordination Deficit exists. See
                                        "CERTAIN INFORMATION REGARDING THE
                                        INSURER AND THE INSURANCE POLICY--The
                                        Policy."

                                        The outstanding principal amount, if
                                        any, of the Notes will be payable in
                                        full on the related Final Scheduled
                                        Payment Date. However, the actual
                                        maturity of the Notes could occur other
                                        than on such date as a result of a
                                        variety of factors including the
                                        exercise of the Issuer of its option to
                                        redeem the Notes with respect to a Class
                                        on each Class' respective Payment Date
                                        and prepayments of the Financed Student
                                        Loans.

                                        The "Pool Balance" at any time
                                        represents the sum of (i) the aggregate
                                        principal balance of the Financed
                                        Student Loans at the end of the
                                        preceding Collection Period (including
                                        accrued interest thereon through the end
                                        of such Collection Period to the extent
                                        such interest will be capitalized upon
                                        commencement of repayment), after giving
                                        effect to the following, without
                                        duplication: (a) all payments received
                                        by the Issuer and/or the Indenture
                                        Trustee during such Collection Period
                                        from or on behalf of borrowers, the
                                        Federal Guarantors, the applicable
                                        guarantors under the TuitionGard Program
                                        and, with respect to certain payments on
                                        certain Financed Student Loans, the
                                        Department (collectively, "Obligors"),
                                        (b) all Purchase Amounts received by the
                                        Issuer and/or the Indenture Trustee for
                                        such Collection Period from the Seller,
                                        the Issuer or the Servicer in respect of
                                        any Financed Student Loans that have
                                        been repurchased by the Seller or
                                        reassigned to the Issuer due to a breach
                                        of a representation or warranty made by
                                        the Seller or Issuer as to the Financed
                                        Student Loans in the Indenture or the
                                        Purchase and Contribution Agreement,
                                        respectively, or that have been
                                        purchased by the Servicer due to a
                                        breach of certain servicing covenants by
                                        the Servicer, and (c) all losses
                                        realized on Financed Student Loans
                                        liquidated during such Collection
                                        Period, (ii) funds on deposit in the
                                        Funding Account, (iii) funds
</Table>

                                       13
<PAGE>

<Table>
<S>                                     <C>
                                        on deposit in the Acquisition Account,
                                        (iv) funds on deposit in the Reserve
                                        Account, (v) funds on deposit in the
                                        Collection Account and (vi) funds on
                                        deposit in the Note Distribution
                                        Accounts. The "Initial Pool Balance"
                                        will equal the Pool Balance as of the
                                        Initial Cutoff Date.

Optional Redemption.................... On each Class' respective Payment Date,
                                        the Issuer may, at its option, redeem
                                        the applicable Class of Notes, in whole
                                        or in part, at an aggregate price equal
                                        to the outstanding principal amount of
                                        the Notes so redeemed plus accrued
                                        interest thereon to the respective dates
                                        of redemption and any unpaid
                                        Noteholders' Interest Basis Carryover
                                        relating to the Notes so redeemed, in
                                        each case so long as all amounts owed to
                                        the Insurer have been paid.

Form, Registration
and Transfer of the
Notes.................................. The secondary market for the Notes is
                                        limited to institutional "accredited
                                        investors" within the meaning of Rule
                                        501(a)(1), (2), (3) or (7) under the
                                        Securities Act who are purchasing Notes
                                        pursuant to an Auction or through a
                                        Broker-Dealer, and there can be no
                                        assurance that a secondary market in the
                                        Notes will develop, or, if it does
                                        develop, that it will offer sufficient
                                        liquidity of investment or that it will
                                        continue.

                                        Except in the limited circumstances
                                        described herein, the Notes may be held
                                        only in book-entry form through The
                                        Depository Trust Company ("DTC"). The
                                        Notes of each Class will be represented
                                        by one or more global securities in
                                        fully-registered form without coupons
                                        (each, a "Restricted Global Note")
                                        deposited with the Indenture Trustee as
                                        custodian for, and registered in the
                                        name of, a nominee of DTC. Beneficial
                                        interests in Notes will be shown on, and
                                        their transfers will be effected only
                                        through, records maintained by DTC and
                                        its direct and indirect participants.

                                        Each purchaser of a Note in making its
                                        purchase will be required to make or be
                                        deemed to have made certain
                                        acknowledgments, representations and
                                        agreements consistent with the
                                        foregoing. See "TRANSFER RESTRICTIONS."
</Table>

                                       14
<PAGE>

<Table>
<S>                                     <C>
Tax Considerations..................... Upon the issuance of the Notes, Weil,
                                        Gotshal & Manges LLP special federal tax
                                        counsel to the Issuer ("Special Federal
                                        Tax Counsel"), will deliver, subject to
                                        the assumptions set forth therein, its
                                        opinion that, although there is no
                                        specific authority with respect to the
                                        characterization for federal income tax
                                        purposes of securities having the same
                                        terms as the Notes or to entities with
                                        capital structures similar to the
                                        Issuer, for federal income tax purposes
                                        (i) each Class of Notes will be
                                        characterized as debt and (ii) the
                                        Issuer will not be characterized as an
                                        association (or publicly traded
                                        partnership) taxable as a corporation.

                                        Noteholders may be required to accrue
                                        interest, including any Noteholders'
                                        Interest Basis Carryover in income in
                                        advance of the receipt of cash with
                                        respect to such amounts regardless of
                                        whether such Noteholders are on the cash
                                        or accrual methods of accounting.

                                        See "CERTAIN UNITED STATES FEDERAL
                                        INCOME TAX CONSEQUENCES" herein for
                                        additional information concerning the
                                        application of federal and state tax
                                        laws with respect to the Notes.

ERISA Considerations................... Subject to the considerations discussed
                                        under "ERISA CONSIDERATIONS" herein, the
                                        Notes are eligible for purchase by
                                        employee benefit plans.

Rating of the Securities............... It is a condition to the issuance and
                                        sale of the Notes that the Notes be
                                        rated in the highest investment rating
                                        category by Moody's Investors Service,
                                        Inc. ("Moody's") and Fitch, Inc.
                                        ("Fitch"). The ratings of the Notes will
                                        depend in part on an assessment by such
                                        rating agencies of the financial
                                        strength of the Insurer. Any reduction
                                        in the rating assigned to the
                                        claims-paying ability of the Insurer
                                        would likely result in a reduction of
                                        the ratings on the Notes. A rating is
                                        not a recommendation to buy, sell or
                                        hold securities and may be subject to
                                        revision or withdrawal at any time by
                                        the assigning rating agency. The rating
                                        agencies do not evaluate, the ratings of
                                        the Notes do not address and the
                                        Insurance Policy does not insure, the
                                        payment of the Noteholders' Interest
                                        Basis Carryover. There can be no
                                        assurance as to whether any additional
                                        rating agency will rate the Notes, or if
                                        one does, what rating would be assigned
                                        by such other rating agency.
</Table>

                                       15
<PAGE>

<Table>
<S>                                     <C>
CUSIP Numbers.......................... Class A-1 Notes:  0017 8T AA 0
                                        Class A-2 Notes:  0017 8T AB 8
                                        Class A-3 Notes:  0017 8T AC 6
                                        Class A-4 Notes:  0017 8T AD 4
</Table>

                                       16
<PAGE>

                                  RISK FACTORS

         The payment of, and the timing of the payment of, the principal of and
interest on the Notes are subject to certain risks. Particular attention should
be given to the factors described below which, among others, could materially
and adversely affect the payment of, and the timing of the payment of, the
Notes, and which could also materially and adversely affect the market price of
the Notes to an extent that cannot be determined. The items listed below do not
include all risks to which such payment is subject. Prospective purchasers of
the Notes should consider, among other things, the following factors in
connection with an investment therein:

RISK THAT FAILURE TO COMPLY WITH ORIGINATION AND SERVICING PROCEDURES FOR
FINANCED STUDENT LOANS MAY ADVERSELY AFFECT THE ISSUER'S ABILITY TO PAY
PRINCIPAL OF AND INTEREST ON THE NOTES

         Title IV of the Higher Education Act of 1965, as amended (such Act,
together with all rules and regulations promulgated thereunder by the Department
and/or the Federal Guarantors, the "Higher Education Act" or the "Act")
including the implementing regulations thereunder, requires lenders making and
servicing FFELP Loans and guarantors guaranteeing FFELP Loans to follow
specified procedures, including due diligence procedures, to ensure that the
FFELP Loans are properly made and disbursed to, and repaid on a timely basis by
or on behalf of, borrowers. Certain of those procedures, which are specifically
set forth in the Act, are summarized herein. See "FEDERAL FAMILY EDUCATION LOAN
PROGRAM" and "THE TRANSFER AND SERVICING AGREEMENTS." Generally, those
procedures require that completed loan applications be processed, a
determination of whether an applicant is an eligible borrower under the Act be
made, the borrower's responsibilities under the loan be explained to him or her,
the promissory note evidencing the loan be executed by the borrower and then
that the loan proceeds be disbursed in a specified manner by the lender. After
the loan is made, the lender must establish repayment terms with the borrower,
properly administer deferrals and forbearances and credit the borrower for
payments made thereon. If a borrower becomes delinquent in repaying a loan, the
lender must perform certain collection procedures (primarily telephone calls and
demand letters) which vary depending upon the length of time a loan is
delinquent.

         With respect to the Notes, the Servicer will agree pursuant to the
Servicing Agreement to perform servicing and collection procedures on behalf of
the Issuer and the Indenture Trustee, and will utilize the Subservicer to
perform such procedures. However, failure by the Servicer or the Subservicer on
its behalf to follow these procedures or failure of the originator of the loan
to follow procedures relating to the origination of any FFELP Loans may result
in the Department's refusal to make reinsurance payments to the Federal
Guarantor or to make Interest Subsidy Payments and Special Allowance Payments to
the Eligible Lender Trustee with respect to such Financed Student Loans or in
the Federal Guarantor's refusal to honor its Guarantee Agreements with the
Eligible Lender Trustee with respect to such Financed Student Loans. Failure of
the Federal Guarantor to receive reinsurance payments from the Department would
adversely affect the Federal Guarantor's ability or legal obligation to make
Guarantee Payments to the related Eligible Lender Trustee. Loss of any such
Guarantee Payments, Interest Subsidy Payments or Special Allowance Payments
would adversely affect the amount of Available Funds for any Collection Period.

                                       17
<PAGE>

RISK THAT THIRD-PARTY SERVICER REGULATIONS COULD IMPAIR THE SERVICER OR THE
SUBSERVICER

         Effective July 1, 1995, the Department adopted FFELP regulations which,
among other things, established (i) requirements governing contracts between
holders of FFELP Loans and third-party servicers, (ii) standards of
administrative and financial responsibility for third-party servicers that
administer any aspect of a guarantee agency's or lender's participation in the
FFELP and (iii) sanctions and liabilities for third-party servicers.

         Under these regulations, a third-party servicer (such as the Servicer
or the Subservicer) is jointly and severally liable with its client lenders for
liabilities to the Department arising from the servicer's violation of
applicable requirements. In addition, if the servicer fails to meet standards of
financial responsibility or administrative capability included in the new
regulations, or violates other FFELP requirements, the regulations authorize the
Department to fine the servicer and/or limit, suspend or terminate the
servicer's eligibility to contract to service FFELP Loans. The effect of such a
limitation or termination on the Subservicer's or the Servicer's eligibility to
service loans already on its system, or to accept new loans for servicing under
existing contracts, is unclear, although the financial, operational and
regulatory well being of the Subservicer and the Servicer is a material
consideration for all Noteholders. If the Subservicer or the Servicer were fined
or held liable by the Department for liabilities arising out of its FFELP
activities for the Issuer or other client lenders, or its eligibility were
limited, suspended or terminated, its ability to properly service the Financed
Student Loans could be adversely affected. Such adverse effects could have the
result of diminishing Available Funds for any Collection Period and, therefore,
the Issuer's ability to pay principal of and interest on the Notes. The Servicer
will be responsible for the performance of the Subservicer to be in conformity
with the servicing standards set forth in the Servicing Agreement. In the event
of a termination of eligibility of the Subservicer, the Servicer will be
required to replace the Subservicer or service the applicable Financed Student
Loans directly. The Servicer will also agree to hold the Issuer and Noteholders
harmless for liabilities of the Issuer to the Department arising from any
violation by itself or any Subservicer of applicable requirements. In addition,
the Servicer will agree to purchase Financed Student Loans as to which there has
been a material and uncured breach (whether by the Servicer or the Subservicer)
of the servicing covenants set forth in the Servicing Agreement (it being
understood in the Servicing Agreement that any such breach that does not affect
either (i) any Federal Guarantor's obligation to make Guarantee Payments with
respect to any FFELP Loan or (ii) the obligations of the applicable guarantors
under the TuitionGard Program to make guarantee payments with respect to any
Alternative Loan will not be considered to have a material adverse effect for
this purpose).

VARIABILITY OF ACTUAL CASH FLOWS; RISK OF SHORTFALLS TO THE HOLDERS OF NOTES
RESULTING FROM THE INABILITY OF THE INDENTURE TRUSTEE TO LIQUIDATE FINANCED
STUDENT LOANS

         Amounts received with respect to the Financed Student Loans for a
particular Collection Period may vary greatly in both timing and amount from the
payments actually due on the Financed Student Loans as of such Collection Period
for a variety of economic, social and other factors, including both individual
factors, such as additional periods of deferral or forbearance prior to or after
a borrower's commencement of repayment, and general factors, such as a general
economic downturn which could increase the amount of defaulted Financed Student
Loans. Failures by borrowers to make timely payments of the principal of and
interest on the

                                       18
<PAGE>
Financed Student Loans will diminish the amount of Available Funds, which may
reduce the amount of principal and interest paid to the Noteholders. Moreover,
failures by student loan borrowers generally to make timely payments of the
principal and interest due on their Financed Student Loans could obligate the
Federal Guarantor of the FFELP Loan to make payments thereon, which could
adversely affect the solvency of the Federal Guarantor and its ability to meet
its guarantee obligations (including with respect to the FFELP Loans). The
inability of any Federal Guarantor to meet its guarantee obligations could
diminish the amount of Available Funds on a Payment Date. The effect of such
factors, including the effect on a Federal Guarantor's ability to meet its
guarantee obligations with respect to the FFELP Loans, or the Issuer's ability
to pay principal and interest with respect to the Notes, is impossible to
predict. Pursuant to the 1992 Amendments, under Section 432(o) of the Act, if
the Department has determined that a Federal Guarantor is unable to meet its
insurance obligations, the loan holder may submit claims directly to the
Department and the Department is required to pay the full Guarantee Payment due
with respect thereto in accordance with guarantee claim processing standards no
more stringent than those of such Federal Guarantor. However, the Department's
obligation to pay guarantee claims directly in this fashion is contingent upon
the Department making the determination referred to above. There can be no
assurance that the Department would ever make such a determination with respect
to a Federal Guarantor or, if such a determination was made, whether such
determination or the ultimate payment of such guarantee claims would be made in
a timely manner.

         If an Event of Default occurs under the Indenture, subject to certain
conditions, the Indenture Trustee will, if so directed by the Insurer and
without the consent of the Noteholders, sell the Financed Student Loans pledged
thereunder. There can be no assurance, however, that the Indenture Trustee will
be able to find a purchaser for the Financed Student Loans in a timely manner or
that the market value of such Financed Student Loans will be equal to the
aggregate outstanding principal amount of the Notes and accrued interest
thereon. If the proceeds of any such sale do not exceed the aggregate
outstanding principal amount of the Notes and accrued interest thereon, the
Noteholders will be reliant on payments under the Insurance Policy in order to
avert a loss.

UNSECURED NATURE OF THE FINANCED STUDENT LOANS; RISK THAT FINANCIAL STATUS OF A
FEDERAL GUARANTOR WILL AFFECT ITS ABILITY TO MAKE GUARANTEE PAYMENTS

         The Act requires all FFELP Loans to be unsecured. As a result, the only
security for payment of the FFELP Loans are the Guarantee Agreements between the
Eligible Lender Trustee and the Federal Guarantors. A deterioration in the
financial status of the Federal Guarantors and their ability to honor guarantee
claims with respect to the FFELP Loans could result in a failure by the Federal
Guarantor to make Guarantee Payments to the Eligible Lender Trustee. One of the
primary causes of a possible deterioration in a Federal Guarantor's financial
status is the amount and percentage of defaulting FFELP Loans guaranteed by a
Federal Guarantor. Moreover, to the extent that default reimbursement claims
submitted by a Federal Guarantor for any fiscal year exceed certain specified
levels, the Department's obligation to reimburse the Federal Guarantor for
default claim losses is reduced on a sliding scale from 100% to a minimum of 80%
(98% to 78%, respectively, for default claim losses for FFELP Loans made on or
after October 1, 1993; 95% to 75%, respectively, for default claim losses for
FFELP Loans made on or after October 1, 1998). Death, disability, bankruptcy,
closed school and false

                                       19
<PAGE>
certification claims are reimbursed 100% by the Department. Additionally, the
Balanced Budget Act of 1997 mandated the recall of approximately $1 billion in
reserves from guarantors by September 1, 2002 under specified criteria.
Additional recall of reserve funds by the Department amounting to $85 million in
fiscal year 2002, $82.5 million in fiscal year 2006, and $82.5 million in fiscal
year 2007, was mandated by the 1998 amendments to the Higher Education Act.
There can be no assurance that these reductions will not adversely affect the
financial status of a Federal Guarantor, or that future legislation to reduce
spending in the FFELP will not be enacted. No assurance exists that any Federal
Guarantor will have the financial resources to make all Guarantee Payments to
the Issuer in respect of the FFELP Loans that may arise from time to time.
Failure by Federal Guarantors to make Guarantee Payments on defaulted FFELP
Loans will diminish the amount of Available Funds on a Payment Date, which may
reduce the amount of principal and interest paid to Noteholders. See "FEDERAL
FAMILY EDUCATION LOAN PROGRAM--Federal Insurance and Reinsurance of Federal
Guarantors."

DEFAULT RISK ON CERTAIN FFELP LOANS

         Under the Omnibus Budget Reconciliation Act of 1993 (the "1993 Act"),
FFELP Loans first disbursed on or after October 1, 1993, are 98% insured by the
applicable Federal Guarantor. As a result, to the extent a borrower of such a
FFELP Loan defaults, the Issuer will experience a loss of 2% of outstanding
principal of and accrued interest on each such FFELP Loan. A defaulted loan will
be fully assigned to the applicable Federal Guarantor in exchange for a
guarantee payment on the 98% guaranteed portion and the Issuer may have no right
thereafter to pursue the borrower for the 2% unguaranteed portion. Such 2% loss
would diminish the amount of Available Funds, which would, in turn, adversely
affect the ability of the Issuer to pay interest on and principal of the Notes
on each Payment Date. FFELP Loans continue to be 100% guaranteed in the event of
death, disability or bankruptcy of the borrower and a closing of or false
certification by the borrower's school regardless of disbursement date.

RISK THAT CHANGE IN LAW WILL ADVERSELY AFFECT FINANCED STUDENT LOANS, FEDERAL
GUARANTORS, AMS, THE ISSUER, FFELP THE SERVICER OR THE SUBSERVICER

         No assurance can be made that the Act or other relevant federal or
state laws, rules and regulations and the programs implemented thereunder will
not be amended or modified in the future in a manner that will adversely impact
the programs described in this Offering Memorandum, the FFELP Loans or the
Alternative Loans made thereunder (including the Financed Student Loans), the
Federal Guarantors, the applicable guarantors under the TuitionGard Program,
AMS, the Issuer, the Servicer or the Subservicer. In addition, existing
legislation and future measures to reduce the federal spending or for other
purposes may adversely affect the amount and nature of federal financial
assistance available with respect to these programs. In recent years, federal
budget legislation has provided for the recovery of certain funds held by the
Federal Guarantors in order to achieve reductions in federal spending. No
assurance can be made that future federal budget legislation or administrative
actions will not adversely affect expenditures by the Department or the
financial condition of the Federal Guarantors, AMS, the Issuer, the Servicer or
the Subservicer. See "FEDERAL FAMILY EDUCATION LOAN PROGRAM--Legislative and
Administrative Matters" herein.

                                       20
<PAGE>

         For example, as described more fully under "FEDERAL FAMILY EDUCATION
LOAN PROGRAM--Legislative and Administrative Matters," (i) the Emergency Student
Loan Consolidation Act of 1997 changed, among other things, fixed interest rates
to variable interest rates and reduced the interest rate cap in the Federal
Consolidation Loan program, (ii) the 1997 Budget Reconciliation Act caused,
among other things, Federal Guarantors to return $1 billion of reserves to the
U.S. Treasury, and (iii) the 1998 Reauthorization Bill (a) caused, among other
things, the recall of additional Federal Guarantor reserves and the reduction of
federal reinsurance from 98% to 95% for Financed Student Loans first disbursed
on or after October 1, 1998, and (b) made permanent reductions in borrower
interest rates and Special Allowance Payments for Stafford Loans that were
introduced to FFELP by the 1998 Amendments. Changes in law such as those
described above generally reduce the amounts earned on FFELP Loans as well as
the resources of Federal Guarantors and therefore may adversely affect the
financial condition of Federal Guarantors, AMS, the Issuer, the Servicer or the
Subservicer which may, in turn, adversely affect holders of Notes by potentially
reducing any such party's ability to meet its obligations under the Guarantee
Agreements, Purchase and Contribution Agreement, Servicing Agreement or
Subservicing Agreements, as the case may be, with the result that there may be a
related reduction in the amounts paid to holders under the Notes. See "FEDERAL
FAMILY EDUCATION LOAN PROGRAM" herein.

IMPACT OF DIRECT LENDING

         The 1993 Act also made a number of changes to the Federal Student Loan
programs, including imposing on lenders or holders of FFELP Loans certain fees
and affecting the Department's financial assistance to Federal Guarantors,
including reducing the percentage of claim payments the Department will
reimburse to Federal Guarantors, reducing more substantially the premiums and
default collections that Federal Guarantors are entitled to receive and/or
retain and permitting the Department to reduce administrative fees it pays to
Federal Guarantors. These changes could affect a Federal Guarantor's ability to
make Guarantee Payments which in turn, could adversely affect the Issuer's
ability to pay principal of and interest on the Notes.

         The 1993 Act provided for the implementation of a direct student loan
program ("DSLP") pursuant to which the Department makes loans directly to
students and parents, which the statute contemplated would replace at least 60%
of the FFELP by the 1998-1999 academic year. The expansion of DSLP may involve
increasing reductions in the volume of loans made under the existing programs.
The volume of new FFELP Loans serviced by a servicer may decrease due to DSLP.
Such entities have not experienced a significant reduction to date and any such
reduction will not necessarily be equal to the percentage by which existing
student loan programs are replaced by DSLP. As these reductions occur, a
servicer could experience increased costs due to reduced economies of scale to
the extent the volume of loans held and serviced by such servicer is reduced.
The expansion of DSLP could therefore have an adverse effect on the Subservicer
and on the ability of the Servicer to perform its obligations under the
Servicing Agreement. Such volume reductions could also reduce revenues received
by the Federal Guarantors that are available to pay claims on defaulted FFELP
Loans which in turn, could adversely affect the Issuer's ability to pay
principal of and interest on the Notes. Finally, the level of competition in
existence in the secondary market for loans made under the existing

                                       21
<PAGE>
programs could be reduced, resulting in fewer potential buyers of the Financed
Student Loans and lower prices available in the secondary market for those
loans.

RESERVES

         The Department possesses broad powers over Federal Guarantors and their
reserves. These powers include the authority to require a Federal Guarantor to
return all reserve funds to the Department if the Department determines such
action is necessary to ensure an orderly termination of the Federal Guarantor,
to serve the best interests of the student loan programs or to ensure the proper
maintenance of such Federal Guarantor's funds or assets. The Department is also
now authorized to direct a Federal Guarantor to return a portion of its reserve
funds which the Department determines is unnecessary to pay the program expenses
and contingent liabilities of the Federal Guarantor and/or to cease any
activities involving the use of the Federal Guarantor's reserve funds or assets
which the Department determines is a misapplication or otherwise improper. The
Department may also terminate a Federal Guarantor's reinsurance agreement if the
Department determines that such action is necessary to protect the federal
fiscal interest or to ensure an orderly transition to full implementation of
direct federal lending. These various changes create a significant risk that the
resources available to the Federal Guarantors to meet their guarantee
obligations will be significantly reduced. If a Federal Guarantor is unable to
make Guarantee Payments, the Issuer's ability to make timely payments of
interest and principal to the Noteholders may be adversely affected.

CONSOLIDATION OF FEDERAL BENEFIT BILLINGS AND RECEIPTS UNDER ONE ELIGIBLE LENDER
NUMBER

         The Department limits the granting of new lender identification
numbers. The Eligible Lender Trustee will hold and use a single Department
lender identification number under the Eligible Lender Trust Agreement on behalf
of all of the beneficiaries thereof, i.e., the Issuer and any other special
purpose entities in addition to the Issuer formed by the Seller in connection
with its student loan business, each of which is not qualified as an eligible
lender under FFELP, as well as their permitted assigns. The billings submitted
to the Department for Interest Subsidy and Special Allowance Payments on FFELP
Loans beneficially owned by the Issuer will be consolidated with the billings
for such payments for FFELP Loans beneficially owned by the Issuer, the other
special purpose entities that are beneficiaries, or such assigns, and payments
on such billings will be made by the Department in lump sum form. Such lump sum
payments will then be allocated by the Eligible Lender Trustee to the Issuer and
the other special purpose entities that are beneficiaries, and such assigns.

         In addition, sharing a common eligible lender identification number
among the beneficiaries of the Eligible Lender Trust Agreement, i.e., the Issuer
and the other special purpose entities that are beneficiaries and their
permitted assigns, may result in the receipt of claim payments from Federal
Guarantors in lump sum form. In that event, such payments will be allocated
among the Noteholders and other beneficiaries in a manner similar to the
allocation process for Interest Subsidy and Special Allowance Payments.

         The Department regards the Eligible Lender Trustee as the party
primarily responsible to the Department for any liabilities owed to the
Department or Federal Guarantors resulting from the Eligible Lender Trustee's
activities in the FFELP. As a result, if the Department or a Federal

                                       22
<PAGE>
Guarantor were to determine that the Eligible Lender Trustee owed a liability to
the Department or a Federal Guarantor on any FFELP Loan legally owned by the
Eligible Lender Trustee, for example, the Department or Federal Guarantor may
seek to collect that liability by offset against payments due to the Eligible
Lender Trustee with respect to any FFELP Loans legally owned by the Eligible
Lender Trustee (including the Financed Student Loans) without regard to their
beneficial ownership. Such an action by the Department could adversely affect
the amount of Available Funds for any Collection Period.

         In addition, beneficiaries under the Eligible Lender Trust Agreement
may in a given quarter incur Federal Origination Fees that exceed the Interest
Subsidy and Special Allowance Payments payable by the Department on the loans
beneficially owned by such beneficiaries, resulting in the consolidated payment
from the Department received by the Eligible Lender Trustee under such lender
identification number for that quarter to equal an amount that is less than the
amount owed by the Department on all of the FFELP Loans held under the Eligible
Lender Trust Agreement (including the Financed Student Loans) for that quarter.
Such an action by the Department could adversely affect the amount of Available
Funds for any Collection Period.

FEES PAYABLE ON CERTAIN FFELP LOANS MAY REDUCE FUNDS AVAILABLE TO PAY PRINCIPAL
AND INTEREST ON THE NOTES

         Under the Federal Consolidation Program, the Issuer will be obligated
to pay to the Department a monthly rebate fee (the "Monthly Rebate Fee") at an
annualized rate of 1.05% (0.62% for applications received between October 1,
1998 and January 31, 1999) of the outstanding principal balance on the last day
of each month plus accrued interest thereon of each Federal Consolidation Loan
which is held on behalf of the Issuer, which rebate will be payable prior to
distributions to the Noteholders and which rebate will reduce the amount of
funds which would otherwise be available to make distributions on the Notes and
will reduce the Student Loan Rate.

         In addition, an originator must pay to the Department a 0.50%
origination fee (the "Federal Origination Fee") on the initial principal balance
of each FFELP Loan which is originated by it or on its behalf. The Federal
Origination Fee is paid by an originator by the Department deducting it out of
Interest Subsidy and Special Allowance Payments due to such originator. If
sufficient Interest Subsidy and Special Allowance Payments are not due to an
originator to cover the amount of the Federal Origination Fee, the balance of
such Federal Origination Fee will be deferred by the Department until sufficient
Interest Subsidy and Special Allowance Payments accrue to cover such fee. If
such amounts never accrue, which may occur as a result of changes in the
relevant interest rate indices on which such payments are based or premature
termination of a loan on account of default or otherwise, the originator would
be obligated to pay any remaining fee from other assets of the originator. While
the Issuer and the Eligible Lender Trustee on its behalf will not originate
loans, the Department could seek to collect liabilities owed to it by any of the
beneficiaries from any assets held under the Eligible Lender Trust Agreement as
described above under "--Consolidation of Federal Benefit Billings and Receipt
Under One Eligible Lender Number." Thus, any incurring of Federal Origination
Fees under the Eligible Lender Trust Agreement creates a risk that collections
of amounts due from the Department with respect to the Financed Student Loans
could be adversely affected.

                                       23
<PAGE>
         Also, the Student Loan Rate will be reduced by any offset of Interest
Subsidy and Special Allowance Payments. The effect of any such reduction in the
Student Loan Rate would be to reduce the minimum rate at which the Notes could
bear interest. See "DESCRIPTION OF THE NOTES--Payments of Interest" herein.

MATURITY AND PREPAYMENT CONSIDERATIONS

         The rate of payment of principal of the Notes will be affected by
prepayments of the Financed Student Loans that may occur as described below. All
the Financed Student Loans are prepayable in whole or in part by the borrowers
at any time (including by means of Federal Consolidation Loans as discussed
below) or as a result of a borrower default, death, disability or bankruptcy and
subsequent liquidation or collection of Guarantee Payments with respect thereto.
The rate of such prepayments cannot be predicted and may be influenced by a
variety of economic, social and other factors, including those described below.
In general, the rate of prepayments may tend to increase to the extent that
alternative financing becomes available at prevailing interest rates which fall
significantly below the interest rates applicable to the Financed Student Loans.
However, because a portion of the Financed Student Loans bear interest at a rate
that either actually or effectively is floating to the borrower, it is
impossible to determine whether changes in prevailing interest rates will be
similar to or vary from changes in the interest rates on the Financed Student
Loans. In addition, to the extent that Noteholders are reliant on a portion of
the interest collections on the Financed Student Loans to pay the portion of the
initial principal balance of the Notes that is in excess of the Pool Balance,
Noteholders could be adversely affected by increased rates of prepayment on the
Financed Student Loans, since upon any such prepayment no further interest would
be collected on the loan so prepaid. To the extent borrowers of Financed Student
Loans elect to borrow Federal Consolidation Loans, such Financed Student Loans
will be prepaid. See "FEDERAL FAMILY EDUCATION LOAN PROGRAM--Federal
Consolidation Loan Program" herein. The Department in administering the Federal
Direct Consolidation Loan Program (See "FEDERAL FAMILY EDUCATION LOAN
PROGRAM--Legislative and Administrative Matters" herein) permits borrowers with
FFELP Loans to consolidate their outstanding Financed Student Loans at interest
rates as much as 0.8% below those which would apply if they consolidated their
outstanding Financed Student Loans by means of a Federal Consolidation Loan
under the Federal Consolidation Loan Program. The availability of such
lower-rate consolidation loans may increase the likelihood that a Financed
Student Loan will be prepaid.

         On the other hand, scheduled payments with respect to, and maturities
of, the Financed Student Loans may be extended pursuant to Grace Periods,
Deferral Periods and Forbearance Periods. In that event, the fact that such
Financed Student Loans will have varying maturities may lengthen the remaining
term of the Financed Student Loans and the average life of the Notes. The
application of amounts which would otherwise have been distributable in respect
of the Principal Distribution Amount for a related Payment Date to make interest
distributions to Noteholders and in lieu of collections of interest on certain
Financed Student Loans on which interest is not currently required to be paid
will also have the effect of lengthening the average life of the Notes over what
it would have been had such amounts been applied to amortize the Notes.

                                       24
<PAGE>

         The rate of payment of principal of the Notes and the yield on the
Notes may also be affected by the rate of defaults resulting in losses on
Liquidated Financed Student Loans, by the severity of those losses and by the
timing of those losses, which may affect the ability of the Federal Guarantors
to make Guarantee Payments with respect thereto. The rate of prepayment on the
Financed Student Loans cannot be predicted, and any reinvestment risks resulting
from a faster or slower incidence of prepayment of Financed Student Loans will
be borne entirely by the Noteholders. Such reinvestment risks may include the
risk that interest rates and the relevant spreads above particular interest rate
bases are lower at the time Noteholders receive payments from the Issuer than
such interest rates and such spreads would otherwise have been had such
prepayments not been made or had such prepayments been made at a different time.

         In addition, the Issuer will have the right to redeem the Notes with
respect to a Class, in whole or in part, on each Class' respective Payment Date,
as described under "THE TRANSFER AND SERVICING AGREEMENTS--Optional Redemption."

         Because of the factors discussed above, and because of the number and
variability of the determinants affecting the rate of principal payments on the
Financed Student Loans, no assurances can be given as to the timing of payments
of principal to Noteholders.

INCENTIVE PROGRAMS

         AMS has offered, and intends to continue to offer, incentive programs
to borrowers of certain Financed Student Loans. There are two such programs
that, although they are no longer offered by AMS, may apply to FFELP Loans
comprising part of the Financed Student Loans owned by the Issuer. The "Grad
Advantage Program" was made available for certain Federal Stafford Loans
disbursed during the period beginning December 1, 1996 and ending April 30,
1999. If a borrower makes 36 consecutive scheduled payments in a timely fashion,
the effective interest rate charged to the borrower will be permanently reduced
by 2% per annum thereafter. Pursuant to the Grad Advantage Program, a borrower
who graduates may be entitled to a reduction in the principal of the borrower's
student loan equal to the amount of the borrower's origination and guarantee fee
on subsidized Federal Stafford Loans (not to exceed 4% of the principal), and an
amount equal to the guarantee fee on unsubsidized Federal Stafford Loans (not to
exceed 1% of the principal amount of the loan). Pursuant to the "direct repay
plan" or "Auto Advantage Repayment Plan," borrowers who make student loan
payments on Federal Stafford Loans electronically through automatic monthly
deductions from a savings or checking account receive a 0.25% effective interest
rate reduction as long as they continue the Auto Advantage repayment plan. The
effect of such principal and interest rate reductions will be to reduce the
amount of Available Funds held by the Issuer to pay principal and interest on
the Notes. AMS has held loans for its own account only since 1998 and thus has
only very recent experience with incentive programs for such loans. Moreover,
the nature of both the Grad Advantage Program and the Auto Advantage Repayment
Plan requires that a student graduate from school and enter repayment before he
or she will be eligible for participation in one of these incentive programs if
it applies to his or her loan. These incentive programs apply only to certain
Federal Stafford Loans and not all FFELP Loans. As a result of these facts, the
Seller does not have at this time any statistically meaningful participation
experience with borrower incentive programs and, therefore, cannot predict with
certainty the extent to which borrowers will decide to participate in these
programs.

                                       25
<PAGE>

         AMS currently offers incentives through the "Dividends Borrower
Benefits" program which includes "Dividends I" and "Dividends II". The Dividends
I program is made available for all Stafford loans disbursed during the period
beginning May 1, 1999 and ending April 30, 2001. The Dividends II program is
made available for all Stafford loans disbursed on or after May 1, 2001 through
the date of this Offering Memorandum. Qualifications to the program mandate that
the school be a four-year degree granting undergraduate, graduate or medical
school. AMS may approve on a limited basis two year and/or proprietary schools.
In addition, the borrower must complete and return the "Rewards Letter" with a
copy of their diploma and/or transcript.

         0% INTEREST BENEFIT. At repayment, a first-time AMS borrower who
graduates may be credited for the amount of accrued interest during the first
twelve months after disbursement on the first unsubsidized Stafford Loan the
borrower receives from AMS.

         INTEREST RATE REDUCTION. Borrowers that remain less than thirty days
delinquent in repayment will have an automatic 0.50% interest rate reduction
(except that for the period beginning May 1, 1999 and ending April 30, 2000,
this benefit only applies to unsubsidized Stafford Loans). If the borrower is
more than thirty days delinquent, the interest rate reverts back to the
statutory rate. As a one-time benefit, the borrower is given the opportunity to
make their account current and can have the interest rate reduction reinstated.
If the borrower is more than thirty days delinquent again, the borrower loses
the benefit forever and the interest rate reverts back to the statutory rate. In
the Dividends II program, borrowers that remain less than thirty days delinquent
in repayment and have made their first thirty-six payments on time will have an
automatic 0.50% interest rate reduction.

         An additional interest rate reduction incentive is offered in the
Dividends II program only. Borrowers that remain less than thirty days
delinquent in repayment and have an automatic withdrawal from a checking or
savings account will have an automatic 0.25% interest rate reduction. If the
borrower is more than thirty days delinquent, the interest rate reverts back to
the statutory rate. As a one-time benefit, the borrower is given the opportunity
to make their account current and can have the interest rate reduction
reinstated. If the borrower is more than thirty days delinquent again, the
borrower loses the benefit forever and the interest rate reverts back to the
statutory rate.

         The effect of all of these reductions will be to reduce the amount of
Available Funds held by the Issuer to pay principal and interest on the Notes.

         PERSONAL INVESTMENT ACCOUNT. Loans that remain with AMS (i.e., that
have not been consolidated or sold to another lender) and are less than thirty
days delinquent may be eligible for an origination fee rebate. AMS will deposit
the Stafford origination fee (3%) amount paid by the borrower (at the time of
disbursement) into a Personal Investment Account (each, a "PIA"). Each PIA is
established by the borrower through AmeriTrade and 1% is deposited at
graduation, 1% is deposited at repayment, and the final 1% is deposited twelve
months after repayment begins. The PIA must remain open at the time deposits are
scheduled to be made. This rebate does not affect the loan balance at the
Servicer. For the period beginning May 1, 1999 and ending April 30, 2000, this
benefit is only available on unsubsidized Stafford Loans. In the Dividends II
program, this benefit is available for all Stafford Loans.

                                       26
<PAGE>
INSOLVENCY RISKS

         The Issuer has taken steps in structuring the transactions contemplated
hereby that are intended to ensure that the voluntary or involuntary application
for relief by AMS under the United States Bankruptcy Code or other insolvency
laws ("Insolvency Laws") will not result in consolidation of the assets and
liabilities of the Issuer with those of AMS. These steps include the creation of
the Issuer as a separate limited-purpose entity with certain limitations
(including restrictions on the nature of the Issuer's business and a restriction
on the Issuer's ability to commence a voluntary case or proceeding under any
Insolvency Law without the prior affirmative vote of all of the Issuer's
partners, including the independent directors of its general partner). However,
there can be no assurance that the activities of the Issuer would not result in
a court concluding that the assets and liabilities of the Issuer should be
consolidated with those of AMS in a proceeding under any Insolvency Law. If a
court were to reach such a conclusion or a filing were made under any Insolvency
Law by or against the Issuer, or if an attempt were made to litigate any of the
foregoing issues, then delays in distributions on the Notes could occur or
reductions in the amounts of Available Funds could result. See "THE ISSUER."

         It is intended by the Seller and the Issuer that the transfer of the
Financed Student Loans by the Seller to the Issuer constitute a "true sale or
contribution" of the Financed Student Loans to the Issuer. The Seller and the
Issuer expect to receive advice of counsel substantially to this effect. If the
transfer constitutes such a true sale or contribution, the Financed Student
Loans and the proceeds thereof would not be property of the Seller should it
become the subject of any Insolvency Law subsequent to the transfer of the
Financed Student Loans to the Issuer. In addition, the Seller will warrant to
the Issuer in the Purchase and Contribution Agreement that the sale and/or
contribution of the Financed Student Loans by the Seller to the Issuer is a
valid sale and/or complete assignment of the Financed Student Loans by the
Seller to the Issuer. Notwithstanding the foregoing, if the Seller were to
become subject to an Insolvency Law and a creditor or trustee-in-bankruptcy of
the Seller or the Seller itself were to take the position that the sale and/or
contribution of Financed Student Loans by the Seller to the Issuer should
instead be treated as a pledge of such Financed Student Loans to secure a
borrowing of the Seller, delays in payments of collections of Financed Student
Loans to the Noteholders could occur or (should the court rule in favor of the
Seller or such trustee or creditor) reductions in the amounts of such payments
could result. If the transfer of Financed Student Loans by the Seller to the
Issuer is treated as a pledge instead of a true sale and/or contribution, a tax
or government lien on the property of the Seller arising before the transfer of
such Financed Student Loans to the Issuer may have priority over the Issuer's
interest in such Financed Student Loans.

CONSUMER PROTECTION LAWS

         Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. Also, some state laws impose finance charge ceilings and
other restrictions on certain consumer transactions and require contract
disclosures in addition to those required under federal law. To the extent these
requirements may be applicable to the Financed Student Loans, these requirements
impose specific statutory liability that could affect an assignee's ability to
enforce consumer finance contracts. In addition, the remedies available to the
Indenture Trustee or the Noteholders upon

                                       27
<PAGE>
an Event of Default under the Indenture may not be readily available or may be
limited by applicable state and federal laws.

BOOK-ENTRY REGISTRATION

         The Notes will be initially represented by one or more certificates
registered in the name of a nominee of DTC and will not be registered in the
names of the holders of the Notes or their nominees. Because of this, unless and
until Definitive Notes are issued, holders of the Notes will not be recognized
by the Indenture Trustee as "Noteholders." Hence, unless and until Definitive
Notes are issued, holders of the Notes will only be able to exercise the rights
of Noteholders indirectly through DTC and its participating organizations. See
"DESCRIPTION OF THE NOTES--Book-Entry Registration" and "--Definitive Notes."

LIMITED LIQUIDITY

         The Notes have not been registered under the Securities Act of 1933
(the "Securities Act"). The Notes may not be transferred except in compliance
with the Securities Act and applicable state securities or "Blue Sky" laws.
Transfers of Notes must be made pursuant to an exemption from the registration
requirements of the Securities Act to institutional "accredited investors"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
and pursuant to any applicable state securities or "Blue Sky" laws. The Notes
will bear a legend referring to such restrictions. In addition, each purchaser
of Notes will be deemed to have made various representations with respect to
these and related matters. See "TRANSFER RESTRICTIONS" herein. The Notes are not
otherwise freely transferable and there is no obligation on the part of the
Issuer to register any offering of the Notes under the Securities Act or such
other laws referred to herein.

         The Notes will not be listed on any exchange.

         Other factors may also limit the liquidity of the Notes. For example,
if any Noteholders' Interest Basis Carryover accrues on the Notes prior to the
Parity Date, no funds will be available to pay such amounts until on or after
the Parity Date. In addition, in no event will any Noteholders' Interest Basis
Carryover be covered by the Insurance Policy or amounts on deposit in the
Reserve Account. Thus any accrued Noteholders' Interest Basis Carryover could
adversely affect the ability of a Noteholder to sell its Notes.

RISKS RESULTING FROM EXCESS OF PRINCIPAL BALANCE OF NOTES OVER POOL BALANCE

         As of the Closing Date, the aggregate principal balance of the Notes
will be equal to approximately 100.59% of the Initial Pool Balance. As a result,
Noteholders will generally be reliant on the availability of excess amounts in
respect of Collections on the Financed Student Loans to bring the aggregate
principal balance of the Notes into Parity with the Pool Balance by the
application thereof to acquire Additional Financed Student Loans until the
Parity Date, or if Parity is not reached by the end of the Acquisition Period to
repay principal on the Notes until Parity is reached. The availability of such
amounts will in turn partially be dependent on the interest component of
Available Funds for any Fee Remittance Date being in excess of the amount
necessary to pay (i) the Servicing Fee, the Trustee Fees, the Auction Agent Fee,
the Broker-Dealer Fees, Policy Premiums and any such amounts that are overdue
and (ii) the

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<PAGE>
Noteholders' Interest Distribution Amount and deposits to the Reserve Account
for such Fee Remittance Date. See "THE TRANSFER AND SERVICING
AGREEMENTS--Distributions" herein. To the extent that Noteholders are reliant on
such excess Collections on the Financed Student Loans to acquire Additional
Financed Student Loans, Noteholders could be adversely affected by an increase
in the rate of prepayments on the Financed Student Loans or an increase in the
Note Rate for any Class of Notes, since either such increase would diminish the
amount of excess interest that would subsequently be available to acquire
Additional Financed Student Loans. In addition, payments on the Notes may be
more sensitive to rates of default on the Financed Student Loans than would be
the case were the principal balance of the Notes not issued in an amount in
excess of the Pool Balance as of the Closing Date, particularly with respect to
FFELP Loans first disbursed after October 1, 1993, which are 98% insured by a
Federal Guarantor (rather than 100% so insured as is the case for such loans
first disbursed prior to such date). In addition, in no event will any
Noteholders' Interest Basis Carryover be covered by the Insurance Policy or
amounts on deposit in the Reserve Account.

BASIS RISK

         FFELP Loans generally bear interest at an effective rate (taking into
account any Special Allowance Payments) equal to the average bond equivalent
rates of 91-day Treasury Bills auctioned for each quarter (or, in certain
circumstances, 52-week Treasury bills) plus margins specified for such loans
described under "FEDERAL FAMILY EDUCATION LOAN PROGRAM" calculated on the basis
of the actual number of days since the last day through which interest on such
loan was paid in full and the actual number of days in the year. Additionally,
Special Allowance Payments on student loans disbursed on or after January 1,
2000 and before July 1, 2003, are computed based on 90-day commercial paper
(financial) rates in effect for each of the days in such quarter as reported by
the Federal Reserve in Publication H-15 plus specified margins. The Note Rates
for each of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes will be generally determined pursuant to the Auction Procedures described
in Annex I of this Offering Memorandum, and it is therefore possible that for a
particular Interest Period for any or all Classes of Notes there may not exist a
positive spread between (a) the Student Loan Rate and (b) the Auction Rate, as
applicable. In such case, the applicable Note Rate for such Interest Period will
be the Student Loan Rate. See "THE TRANSFER AND SERVICING
AGREEMENTS--Distributions" herein. Any Noteholders' Interest Basis Carryover
arising as a result of the Note Rate being determined on the basis of the
Student Loan Rate will be payable only from Available Funds remaining, as
described under "THE TRANSFER AND SERVICING AGREEMENTS--Distributions" herein,
after all other required allocations therefrom have been made. Due to the method
by which the amount payable as principal of the Notes on each Payment Date is
determined as described under such heading, no Available Funds will be available
to pay any Noteholders' Interest Basis Carryover on any Payment Date occurring
prior to the Parity Date. Thus, any Noteholders' Interest Basis Carryover
accrued prior to the Parity Date will in no event be paid until after the Parity
Date. No assurance can be provided as to when the Parity Date will occur. The
Insurance Policy and the Reserve Account will not be available under any
circumstances to pay any Noteholders' Interest Basis Carryover.

                                       29
<PAGE>
RATINGS OF THE NOTES

         It is a condition to the issuance and sale of the Notes that the Notes
be rated in the highest investment rating category by each of Moody's, and Fitch
(collectively, the "Rating Agencies"). A rating is not a recommendation to
purchase, hold or sell securities, inasmuch as such rating does not comment as
to market price or suitability for a particular investor. The ratings of the
Notes address the likelihood of the ultimate payment of principal of and timely
payments of interest on the Notes pursuant to their terms. However, the Rating
Agencies do not evaluate, the ratings of the Notes do not address and the
Insurance Policy does not insure, the payment of the Noteholders' Interest Basis
Carryover. There can be no assurance that a rating will remain for any given
period of time or that a rating will not be lowered or withdrawn entirely by a
Rating Agency if in its judgment circumstances in the future so warrant. There
can be no assurance as to whether any additional rating agency will rate the
Notes, or if one does, what rating would be assigned by such other rating
agency.

NOTES RATING BASED PRIMARILY ON FINANCIAL STRENGTH OF THE INSURER

         The rating on the Notes depends in part on an assessment by the Rating
Agencies of the Financed Student Loans and upon the financial strength of the
Insurer. Any reduction of the rating assigned to the financial strength of the
Insurer may cause a corresponding reduction in the ratings assigned to the
Notes. A reduction in the rating assigned to the Notes will reduce the market
value of the Notes and may affect the ability to sell them.

TAX CONSEQUENCES OF NOTEHOLDERS' INTEREST BASIS CARRYOVER

         Although the Issuer does not intend to take the position that the
Noteholders' Interest Basis Carryover is required to be accrued currently, the
IRS may disagree. In such event the Noteholders would be required to accrue
Noteholders' Interest Basis Carryover as ordinary income currently and would
realize a capital loss if the Noteholders did not ultimately collect such
previously accrued Noteholders' Interest Basis Carryover.

PAYMENTS BY SWAP COUNTERPARTIES UNDER SWAP AGREEMENTS

         With the consent of the Insurer, which consent shall not be
unreasonably withheld, the Issuer has the ability to enter into Swap Agreements
with respect to any series of Notes. In the event that a Swap Counterparty is
unable to make payments to the Issuer as required by a Swap Agreement, the
ability to make payments on the Notes may be impaired.

RISK THAT MASTER PROMISSORY NOTES MAY COMPROMISE THE INDENTURE TRUSTEE'S
SECURITY INTEREST IN THE STUDENT LOANS

         A master promissory note may evidence a student loan made to a borrower
under FFELP. If a master promissory note is used, a borrower executes only one
promissory note with each lender. Subsequent student loans from that lender are
evidenced by a confirmation sent to the student. Therefore, if a lender
originates multiple student loans to the same student, all the student loans are
evidenced by a single promissory note.

                                       30
<PAGE>

         Under the Higher Education Act, each student loan made under a master
promissory note may be sold independently of any other student loan made under
that same master promissory note. Each student loan is separately enforceable on
the basis of an original or copy of the master promissory note. Also, a security
interest in these student loans may be perfected either through the secured
party taking possession of the original or a copy of the master promissory note,
or the filing of a financing statement. Prior to the advent of the master
promissory note, each student loan made under FFELP was evidenced by a separate
note. Assignment of the original note was required to effect a transfer and
possession of a copy did not perfect a security interest in the loan.

         It is possible that some or all of the FFELP Loans may be originated
under a master promissory note. If the Servicer or Subservicer, as the case may
be, were to deliver a copy of the master promissory note, in exchange for value
to a third party that did not have knowledge of the Indenture Trustee's lien,
that third party may also claim an interest in the applicable FFELP Loan. It is
possible that the third party's interest could be prior to or on a Parity with
the interest of the Indenture Trustee.

RISKS RESULTING FROM THE PURCHASE OF ADDITIONAL FINANCED STUDENT LOANS

         Following the purchase of Additional Financed Student Loans, the
characteristics of the Financed Student Loans may differ significantly from the
information as of the Statistical Calculation Date presented herein. The
characteristics that may differ include, but are not limited to, the composition
of the loans, changes in the relative concentration of guarantors, the
distribution by loan type, the distribution by interest rate, the distribution
by principal balance and the distribution by remaining term. Potential variances
in these and other aspects should be considered by potential purchasers of the
Notes.

RISK THAT THE SELLER MAY BE UNABLE TO ORIGINATE ENOUGH LOANS TO UTILIZE ALL
FUNDS ON DEPOSIT IN THE FUNDING ACCOUNT AND THEREFORE INVESTORS IN THE NOTES MAY
BE EXPOSED TO REINVESTMENT RISK

         The ability of the Seller to originate sufficient additional student
loans may be affected by a variety of factors, including interest rates,
unemployment levels, the rate of inflation and consumer perception of economic
conditions generally. If the Seller does not originate sufficient additional
student loans to utilize all funds on deposit in the Funding Account during the
Funding Period, amounts remaining on deposit in the Funding Account at the end
of the Funding Period will be used by the Issuer to repay principal on the Notes
as described herein.

                                   THE ISSUER

         AMS-1 2002, LP (the "Issuer") is a limited partnership formed under the
laws of the State of Delaware with AMS as its limited partner and AMS-1 SPC-1,
Inc., a Delaware corporation as its general partner. The Issuer was formed on or
about the Closing Date.

         Pursuant to its limited partnership agreement, the Issuer may not
engage in any activity other than (i) acquiring, holding and managing the
Financed Student Loans, the other assets of the Issuer which form the collateral
for the Notes, (ii) issuing the Notes, (iii) making payments thereon, and (iv)
engaging in other activities that are necessary, suitable or convenient to

                                       31
<PAGE>
accomplish the foregoing or are incidental thereto or connected therewith,
including, without limitation, entering into swap transactions.

         The proceeds from the sale of the Notes will be used by the Eligible
Lender Trustee to (i) pay certain expenses in connection with the transaction,
(ii) to purchase on behalf of the Issuer the Financed Student Loans sold by the
Seller to the Issuer pursuant to the Purchase and Contribution Agreement, (iii)
to fund the Reserve Account and (iv) to fund the Funding Account, with the
remainder of such proceeds deposited into the Collection Account. Upon the
consummation of such transactions, the property of the Issuer will consist of
(a) a pool of student loans (consisting of the Financed Student Loans), legal
title to the FFELP Loans, which is to be held by the Eligible Lender Trustee on
behalf of the Issuer, legal title to the Alternative Loans and (b) certain other
assets held under the Indenture. With respect to the Indenture and the Notes
offered hereunder such other assets will include (i) all funds collected in
respect of the Financed Student Loans on or after the Initial Cutoff Date, (ii)
all moneys and investments on deposit in the Collection Account, Reserve
Account, Funding Account, Acquisition Account, Class A-1 Distribution Account,
Class A-2 Distribution Account, Class A-3 Distribution Account and Class A-4
Distribution Account and (iii) the rights of the Indenture Trustee on behalf of
the Noteholders under the Insurance Policy. The Collection Account, Reserve
Account, Funding Account, Acquisition Account, Class A-1 Distribution Account,
Class A-2 Distribution Account, Class A-3 Distribution Account and Class A-4
Distribution Account will be maintained in the name of the Indenture Trustee for
the benefit of the Noteholders. To facilitate servicing and to minimize
administrative burden and expense, the Subservicer, acting on behalf of the
Servicer, will be appointed custodian of the promissory notes representing the
Financed Student Loans.

                                   THE SELLER

         Academic Management Services Corp. (formerly Educational Finance Group,
Inc.) ("AMS") markets, originates, funds and services primarily federally
guaranteed Student Loans and is a provider of student tuition installment
payment plans. AMS (a Delaware corporation based in Swansea, Massachusetts)
seeks to provide financing solutions for college and graduate school students,
their parents and the educational institutions they attend. At September 30,
2001, AMS held approximately $1.2 billion aggregate principal amount of Student
Loans, of which approximately 89% were federally guaranteed. AMS is a wholly
owned subsidiary of UICI (NYSE: UCI), which offers insurance (primarily health
and life) and selected financial services to niche, consumer, educational and
institutional markets.

         Through a nationwide campus-directed sales force, AMS originates
primarily FFELP Loans and makes such loans available to students at over 1,000
colleges and universities. During the year ended December 31, 2000 and the nine
months ended September 30, 2001, AMS originated $743 million and $517 million,
respectively, of FFELP Loans. In addition to the various federally guaranteed
loan programs, AMS offers alternative student loans guaranteed by private
insurers (which during 2000 and the nine months ended September 30, 2001
aggregated approximately 9% and 10%, respectively, of AMS' loan originations)
and uninsured alternative loans (which during 2000 and the nine months ended
September 30, 2001 aggregated approximately 1% and 1%, respectively, of loan
originations).

                                       32
<PAGE>

         AMS is a provider of tuition installment payment plans for
undergraduate students, serving as the designated provider of tuition
installment plans at over 1,200 colleges, universities and independent schools.
At September 30, 2001, AMS had over 250,000 tuition installment payment
accounts.

         Through EFG Technologies, Inc., a subsidiary based in Winston-Salem,
North Carolina, AMS also provides loan servicing and administrative services for
federal Perkins loans and some privately insured loans. At September 30, 2001,
EFG Technologies, Inc. was a loan servicer for approximately 515 colleges,
universities and private lenders, with approximately 970,000 active accounts and
loan balances aggregating approximately $2.4 billion (but EFG Technologies, Inc.
does not provide servicing and administrative services for any of the Initial
Financed Student Loans, and as of the date of this Offering Memorandum and
although matters are of course subject to change, it is not contemplated by the
Issuer that EFG Technologies, Inc. will provide servicing and administrative
services for any of the Additional Financed Student Loans).

         AMS is not an institution eligible to hold legal title to FFELP Loans;
therefore, Bank One, National Association, as eligible lender trustee (the "AMS
Eligible Lender Trustee") under a trust agreement, dated as of February 24,
1998, between the Educational Finance Group, Inc. (as predecessor to AMS) and
the AMS Eligible Lender Trustee, holds legal title to the FFELP Loans
beneficially owned by AMS. References to AMS or the Seller shall mean the AMS
Eligible Lender Trustee for all purposes, where the context so requires,
involving holding or transferring legal title to the FFELP Loans beneficially
owned by AMS.

CONSOLIDATION/REPAYMENT PROGRAMS

         Consolidation and repayment programs are generally made available by
AMS to Student Loan borrowers. AMS has elected to participate through the AMS
Eligible Lender Trustee in the Federal Consolidation Loan Program, but maintains
the right to alter or cease such participation in the future if conditions
dictate exiting the market.

         AMS offers the following repayment options via its "DebtMinder" Federal
Consolidation Loan Program. Through the "Graduated Repayment" feature, certain
Financed Student Loans provide for an "Interest Only" period. During such
period, the borrower is required to make payment of accrued interest only; no
payment of the principal of the loan is required during such a period. At the
conclusion of the "Interest Only" period, such loan is required to be amortized
through level or graduated payments over the remaining term of the loan. Based
on FFELP requirements, no single payment amount in a graduated or
income-sensitive repayment plan may be more than three times greater than any
other payment amount.

         In other cases, AMS offers certain borrowers a "Graduated Phased In"
amortization of the principal of the loans. For such loans, a greater portion of
the principal amortization of the loan is required in the later stages of the
loan than would be the case if amortization were on a level payment basis.

         AMS also offers an income sensitive repayment plan, pursuant to which
repayments are based on the borrower's income. Under the plan, ultimate
repayment may be delayed for up to five years.

                                       33
<PAGE>

         It cannot be predicted with certainty to what extent borrowers will
decide to participate in the programs described above.

INCENTIVE PROGRAMS

         AMS has offered, and intends to continue to offer, incentive programs
to borrowers of certain Financed Student Loans. There are two such programs
that, although they are no longer offered by AMS, may apply to Financed Student
Loans owned by the Issuer. The "Grad Advantage Program" was made available for
certain Federal Stafford Loans disbursed during the period beginning December 1,
1996 and ending April 30, 1999. If a borrower makes 36 consecutive scheduled
payments in a timely fashion, the effective interest rate charged to the
borrower will be permanently reduced by 2% per annum thereafter. Pursuant to the
Grad Advantage program, a borrower who graduates may be entitled to a reduction
in the principal of the borrower's student loan equal to the amount of the
borrower's origination and guarantee fee on subsidized Federal Stafford Loans
(not to exceed 4% of the principal), and an amount equal to the guarantee fee on
unsubsidized Federal Stafford Loans (not to exceed 1% of the principal amount of
the loan). Pursuant to the "direct repay plan" or "Auto Advantage Repayment
Plan," borrowers who make student loan payments on Federal Stafford Loans
electronically through automatic monthly deductions from a savings or checking
account receive a 0.25% effective interest rate reduction as long as they
continue the Auto Advantage Repayment Plan. These incentive programs apply only
to certain Federal Stafford Loans and not all FFELP Loans.

         AMS currently offers incentives through the "Dividends Borrower
Benefits" program which includes "Dividends I" and "Dividends II". The Dividends
I program is made available for all Stafford loans disbursed during the period
beginning May 1, 1999 and ending April 30, 2001. The Dividends II program is
made available for all Stafford loans disbursed on or after May 1, 2001 through
the date of this Offering Memorandum. Qualifications to the program mandate that
the school be a four-year degree granting undergraduate, graduate or medical
school. AMS may approve on a limited basis two year and/or proprietary schools.
In addition, the borrower must complete and return the "Rewards Letter" with a
copy of their diploma and/or transcript.

         0% INTEREST BENEFIT. At repayment, a first-time AMS borrower who
graduates may be credited for the amount of accrued interest during the first
twelve months after disbursement on the first unsubsidized Stafford Loan the
borrower receives from AMS.

         INTEREST RATE REDUCTION. Borrowers that remain less than thirty days
delinquent in repayment will have an automatic 0.50% interest rate reduction
(except that for the period beginning May 1, 1999 and ending April 30, 2000,
this benefit only applies to unsubsidized Stafford Loans). If the borrower is
more than thirty days delinquent, the interest rate reverts back to the
statutory rate. As a one-time benefit, the borrower is given the opportunity to
make their account current and can have the interest rate reduction reinstated.
If the borrower is more than thirty days delinquent again, the borrower loses
the benefit forever and the interest rate reverts back to the statutory rate. In
the Dividends II program, borrowers that remain less than thirty days delinquent
in repayment and have made their first thirty-six payments on time will have an
automatic 0.50% interest rate reduction.

                                       34
<PAGE>

         An additional interest rate reduction incentive is offered in the
Dividends II program only. Borrowers that remain less than thirty days
delinquent in repayment and have an automatic withdrawal from a checking or
savings account will have an automatic 0.25% interest rate reduction. If the
borrower is more than thirty days delinquent, the interest rate reverts back to
the statutory rate. As a one-time benefit, the borrower is given the opportunity
to make their account current and can have the interest rate reduction
reinstated. If the borrower is more than thirty days delinquent again, the
borrower loses the benefit forever and the interest rate reverts back to the
statutory rate.

         PERSONAL INVESTMENT ACCOUNT. Loans that remain with AMS (i.e., that
have not been consolidated or sold to another lender) and are less than thirty
days delinquent may be eligible for an origination fee rebate. AMS will deposit
the Stafford origination fee (3%) amount paid by the borrower (at the time of
disbursement) into a Personal Investment Account (each, a "PIA"). Each PIA is
established by the borrower through AmeriTrade and 1% is deposited at
graduation, 1% is deposited at repayment, and the final 1% is deposited twelve
months after repayment begins. The PIA must remain open at the time deposits are
scheduled to be made. This rebate does not affect the loan balance at the
Servicer. For the period beginning May 1, 1999 and ending April 30, 2000, this
benefit is only available on unsubsidized Stafford Loans. In the Dividends II
program, this benefit is available for all Stafford Loans.

                                  THE SERVICER

         AMS is also acting as the Servicer.

                           THE ELIGIBLE LENDER TRUSTEE

         Bank One, National Association, successor to The First National Bank of
Chicago, as trustee (the "Eligible Lender Trustee") has entered into a trust
agreement, dated as of December 7, 1998, as amended by the First Amendment
thereto, dated as of June 1, 1999 (as further amended and supplemented from time
to time to provide for the addition of other beneficiaries (the "Eligible Lender
Trust Agreement") by and between EFG-I LP (a wholly-owned subsidiary of AMS) and
the Eligible Lender Trustee. Bank One, National Association is the AMS Eligible
Lender Trustee for the Seller under the AMS Eligible Lender Trust Agreement and
will be the Eligible Lender Trustee for the Issuer and other special purpose
affiliates of the Seller under the Eligible Lender Trust Agreement. Bank One,
National Association is a national banking association organized under the laws
of the United States whose principal offices are located at One Bank One Plaza,
Suite IL 1-0126, Chicago, Illinois 60670 and whose New York offices are located
at Bank One, National Association, 14 Wall Street, New York, NY 10005. The
Eligible Lender Trustee will acquire on behalf of the Issuer legal title to all
the FFELP Loans acquired pursuant to the Purchase and Contribution Agreement.
The Eligible Lender Trust Agreement provides that the Eligible Lender Trustee
may act in such capacity on behalf of multiple beneficiaries. As of the date of
this Offering Memorandum there are four beneficiaries thereunder in addition to
the Issuer, EFG-I, LP, EFG-II LP, EFG-III, LP and EFG-IV, LP, each a Delaware
limited partnership. Each such beneficiary is, and any other beneficiaries in
addition to the Issuer under the Eligible Lender Trust Agreement will be, a
special purpose affiliate of AMS. The Eligible Lender Trustee has entered into a
Guarantee Agreement on behalf of EFG-I, LP, EFG-II, LP, EFG-III, LP, EFG-IV, LP,
the Issuer and any future beneficiaries under the

                                       35
<PAGE>
Eligible Lender Trust Agreement with each of the Federal Guarantors with respect
to such Financed Student Loans. The Eligible Lender Trustee qualifies as an
eligible lender and owner of FFELP Loans for all purposes under the Higher
Education Act and the Guarantee Agreements. Failure of legal title to the
Financed Student Loans to be owned by an eligible lender would result in the
loss of any Guarantee Payments from any Federal Guarantor and any federal
assistance with respect to such Financed Student Loans. See "THE FINANCED
STUDENT LOAN POOL" herein. The Eligible Lender Trustee's liability in connection
with the issuance and sale of the Notes is limited solely to the express
obligations of the Eligible Lender Trustee set forth in the Eligible Lender
Trust Agreement. See "DESCRIPTION OF THE NOTES" and "THE TRANSFER AND SERVICING
AGREEMENTS" herein. The Seller and its affiliates may maintain normal commercial
banking relations with the Eligible Lender Trustee.

                      FEDERAL FAMILY EDUCATION LOAN PROGRAM

GENERAL

         The Federal Family Education Loan Program ("FFELP") under Title IV of
the Higher Education Act of 1965, as amended (such Act, together with all rules
and regulations promulgated thereunder by the Department and/or the Federal
Guarantors, the "Higher Education Act" or the "Act"), provides for loans to be
made to students or parents of students enrolled in eligible institutions to
finance a portion of the costs of attending school. As described herein, payment
of principal and interest with respect to the FFELP Loans is guaranteed by the
applicable Federal Guarantor against default, death, bankruptcy or disability of
the applicable borrower and a closing of or a false certification by such
borrower's school. The Federal Guarantors are entitled, subject to certain
conditions, to be reimbursed by the Department for from 100% to 75% of the
amount of each Guarantee Payment made pursuant to a program of federal
reinsurance under the Act. In addition, the Eligible Lender Trustee, as a holder
of legal title to the FFELP Loans on behalf of the Issuer, is entitled to
receive from the Department certain interest subsidy payments and special
allowance payments with respect to certain of such FFELP Loans as described
herein.

         FFELP provides for loans to students and parents of students which are
(i) guaranteed by a Federal Guarantor and reinsured by the federal government or
(ii) directly insured by the federal government. Several types of FFELP Loans
are currently authorized under the Act: (i) loans to students who demonstrate
need ("Federal Stafford Loans"); (ii) loans to students who do not demonstrate
need or who need additional loans to supplement their Federal Stafford Loans
("Federal Unsubsidized Stafford Loans"); (iii) loans to parents of students
("Federal PLUS Loans") who are dependents and whose estimated costs of
attendance exceed the available Federal Unsubsidized Stafford Loans, Federal
Stafford Loans and other financial aid; and (iv) loans to consolidate the
borrower's obligations under various federally authorized student loan programs
into a single loan (each, a "Federal Consolidation Loan"). Prior to July 1,
1994, the Act also authorized loans to graduate and professional students,
independent undergraduate students and, under certain circumstances, dependent
undergraduate students, to supplement their Federal Stafford Loans ("Federal
Supplemental Loans to Students" or "Federal SLS Loans"). The description and
summaries of the Act, FFELP, the Guarantee Agreements and the other statutes,
regulations and amendments referred to in this Offering Memorandum describe or

                                       36
<PAGE>

summarize the material provisions of such statutes, regulations and agreements
but do not purport to be comprehensive and are qualified in their entirety by
reference to each such statute, regulation or document. There can be no
assurance that future amendments or modifications will not materially change any
of the terms or provisions of the programs described in this Offering Memorandum
or of the statutes and regulations implementing these programs. See "RISK
FACTORS--Risk that Change in Law Will Adversely Affect Financed Student Loans,
Federal Guarantors, AMS, the Issuer, the Servicer or the Subservicer."

LEGISLATIVE AND ADMINISTRATIVE MATTERS

         Both the Act and the regulations promulgated thereunder have been the
subject of extensive amendments in recent years and there can be no assurance
that further amendment will not materially change the provisions described
herein or the effect thereof. The 1992 Amendments to the Act (the "1992
Amendments") extended the principal provisions of FFELP to September 30, 1998
(or, in the case of borrowers who have received loans prior to that date,
September 30, 2002, except that authority to make Federal Consolidation Loans
expired on September 30, 1998). The Higher Education Amendments of 1998 (the
"1998 Reauthorization Bill") further extended the principal provisions of FFELP
through June 30, 2003.

         The 1993 Act made a number of changes to the Federal Student Loan
programs, including imposing on lenders or holders of FFELP Loans certain fees
and affecting the Department's financial assistance to Federal Guarantors by
reducing the percentage of claim payments the Department will reimburse to
Federal Guarantors, reducing more substantially the insurance premiums and
default collections that Federal Guarantors are entitled to receive and/or
retain and allowing the Department to reduce the administrative fees it pays to
Federal Guarantors. In addition, such legislation contemplated replacement of a
minimum of approximately 60% of the Federal Student Loan programs with direct
lending by the Department by 1998. The expansion of the new program may involve
increasing reductions in the volume of loans made under the existing programs,
which could result in increased costs for the Servicer and any Subservicer due
to reduced economies of scale. It is expected that the volume of new loans held
and serviced by the Servicer and the Subservicer will decrease due to the new
program, although such entities have not experienced a significant reduction to
date and any such reduction will not necessarily be equal to the percentage by
which existing Federal Student Loan programs are replaced by the new program. As
these reductions occur, the Servicer and the Subservicer could experience
increased costs due to reduced economies of scale to the extent that the volume
of loans serviced by the Servicer and the Subservicer is reduced. Such cost
increases could affect the ability of the Servicer (and of the Subservicer) to
satisfy its obligations to service the Financed Student Loans or the obligations
of the Seller and the Servicer to repurchase or purchase Financed Student Loans
in the event of certain breaches of their respective representations and
warranties or covenants. See "THE TRANSFER AND SERVICING AGREEMENTS--Sale of
Financed Student Loans; Representations and Warranties" and "--Servicer
Covenants." Such volume reductions could also reduce revenues received by
Federal Guarantors that are available to pay claims on defaulted Financed
Student Loans. Finally, the level of competition in existence in the secondary
market for loans made under the existing programs could be reduced, resulting in
fewer potential buyers of the FFELP Loans and lower prices available in the
secondary market for those loans. Further, the Department is implementing a
direct Federal Consolidation Loan program, which may further reduce the

                                       37
<PAGE>
volume of FFELP Loans and increase the prepayment of existing FFELP Loans. The
volume of existing loans that may be prepaid in this fashion is not determinable
at this time.

         EMERGENCY STUDENT LOAN CONSOLIDATION ACT OF 1997. On November 13, 1997,
President Clinton signed into law the Emergency Student Loan Consolidation Act
of 1997, which made significant changes to the Federal Consolidation Loan
Program. These changes include: (1) providing that federal direct Financed
Student Loans are eligible to be included in a Federal Consolidation Loan; (2)
changing the borrower interest rate on new Federal Consolidation Loans
(previously a fixed rate based on the weighted average of the loans
consolidated, rounded up to the nearest whole percent) to the annually variable
rate applicable to Stafford Loans in repayment status (i.e., the rate is based
on the 91-day Treasury Bills plus 3.10%, not to exceed 8.25% per annum); (3)
providing that the portion of a Federal Consolidated Loan that is comprised of
Federal Stafford Loans retains its subsidy benefits during periods of deferment;
and (4) establishing prohibitions against various forms of discrimination in the
making of Federal Consolidation Loans. Except for the last of the above changes,
all such provisions expired on September 30, 1998. The combination of the change
to a variable rate and the 8.25% interest cap reduced the lender's yield in most
cases below the rate that would have been applicable under the previous weighted
average formula.

         FY 1998 BUDGET. In the 1997 Budget Reconciliation Act (P.L. 105-33),
several changes were made to the Higher Education Act that impact the FFELP.
These provisions include, among other things, requiring federal guarantors to
return $1 billion of their reserves to the U.S. Treasury by September 1, 2002
(to be paid in annual installments), greater restrictions on use of reserves by
federal guarantors and a continuation of the Administrative Cost Allowance
payable to federal guarantors (which is a fee paid to federal guarantors equal
to 0.85% of new loans guaranteed).

         1998 AMENDMENTS. On May 22, 1998, Congress passed, and on June 9, 1998,
the President signed into law, a temporary measure relating to the Higher
Education Act and FFELP loans as part of the Intermodal Surface Transportation
Efficiency Act of 1998 (the "1998 Amendments") that revised interest rate
changes under the FFELP that were scheduled to become effective on July 1, 1998.
For loans made during the period July 1, 1998 through September 30, 1998, the
borrower interest rate for Stafford Loans and Unsubsidized Stafford Loans is
reduced to a rate of 91-day Treasury Bill Rate plus 2.30% (1.70% during school,
grace and deferment), subject to a maximum rate of 8.25%. As described below,
the formula for Special Allowance Payments on Federal Stafford Loans and Federal
Unsubsidized Stafford Loans is calculated to produce a yield to the loan holder
of 91-day Treasury Bill Rate plus 2.80% (2.20% during school, grace and
deferment). The 1998 Amendments also adjusted the interest rate on PLUS Loans
disbursed on or after July 1, 1998, and before October 1, 1998, to a rate of
91-day T-bill plus 3.10%, subject to a maximum rate of 9%, but did not affect
the rate change on Federal Consolidation Loans during the same period which is
fixed at the rate of 91-day T-bill established at the final auction held prior
to June 1, 1998, plus 3.10% subject to a maximum rate of 8.25%. The formula for
Special Allowance Payments for PLUS Loans provides that no Special Allowance
Payments will be paid unless the interest rate formula described in the
preceding sentence produces a rate which exceeds 9%.

                                       38
<PAGE>
         1998 REAUTHORIZATION BILL. On October 7, 1998, President Clinton signed
into law the 1998 Reauthorization Bill, which enacted significant reforms in
FFELP. The major provisions of the 1998 Reauthorization Bill include the
following:

         o     All references to a "transition" to full implementation of the
               Federal Direct Student Loan Program were deleted from the FFELP
               statute.

         o     Guarantor reserve funds were restructured so that federal
               guarantors are provided with additional flexibility in choosing
               how to spend certain funds they receive.

         o     The minimum Federal Guarantor reserve level requirement is
               reduced from 0.50% of the total attributable amount of all
               outstanding loans guaranteed to 0.25% of the total attributable
               amount of all outstanding loans guaranteed.

         o     Additional recall of reserve funds by the Secretary was mandated,
               amounting to $85 million in fiscal year 2002, $82.5 million in
               fiscal year 2006, and $82.5 million in fiscal year 2007. However,
               certain minimum reserve levels are protected from recall.

         o     The administrative cost allowance was replaced by two (2) new
               payments, a student loan processing and issuance fee equal to 65
               basis points (40 basis points for loans made on or after October
               1, 2003) paid at the time a loan is guaranteed, and an account
               maintenance fee of 12 basis points (10 basis points for fiscal
               years 2001-2003) paid annually on outstanding FFELP Loans.

         o     The percentage of collections on defaulted FFELP Loans a federal
               guarantor is permitted to retain is reduced from 27% to 24% (23%
               beginning on October 1, 2003) plus the complement of the
               reinsurance percentage applicable at the time a claim was paid to
               the lender on the student loan.

         o     Federal reinsurance provided to federal guarantors is reduced
               from 98% to 95% for FFELP Loans first disbursed on or after
               October 1, 1998.

         o     The delinquency period required for a loan to be declared in
               default is increased from 180 days to 270 days for loans on which
               the first day of delinquency occurs on or after the date of
               enactment of the 1998 Reauthorization Bill.

         o     Interest rates charged to borrowers on Federal Stafford Loans,
               and the yield for Federal Stafford Loan holders established by
               the 1998 Amendments, were made permanent.

         o     Federal Consolidation Loan interest rates were revised to equal
               the weighted average of the loans consolidated rounded up to the
               nearest one-eighth of 1%, capped at 8.25%. When the 91-day
               Treasury Bill Rate plus 3.1% exceeds the borrower's interest
               rate, Special Allowance Payments are made to make up the
               difference.

                                       39
<PAGE>

         o     The lender-paid offset fee on Federal Consolidation Loans of
               1.05% is reduced to 0.62% for Federal Consolidation Loans made
               pursuant to applications received on or after October 1, 1998,
               and on or before January 31, 1999.

         o     The Federal Consolidation Loan interest rate calculation was
               revised to reflect the rate for Federal Consolidation Loans, and
               will be effective for loans on which applications are received on
               or after February 1, 1999.

         o     Lenders are required to offer extended repayment schedules to new
               borrowers after the enactment of the 1998 Reauthorization Bill
               who accumulate after such date outstanding loans under FFELP
               totaling more than $30,000, under these extended schedules the
               repayment period may extend up to 25 years subject to certain
               minimum repayment amounts.

         o     The Secretary is authorized to enter into six (6) voluntary
               flexible agreements with federal guarantors under which various
               statutory and regulatory provisions can be waived.

         o     Federal Consolidation Loan lending restrictions are revised to
               allow lenders who do not hold one of the borrower's underlying
               FFELP Loans to issue a Federal Consolidation Loan to a borrower
               whose underlying FFELP Loans are held by multiple holders.

         o     Inducement restrictions were revised to permit federal guarantors
               and lenders to provide assistance to schools comparable to that
               provided to schools by the Secretary under the Federal Direct
               Student Loan Program.

         o     The Secretary is now required to pay off FFELP Loan amounts owed
               by borrowers due to failure of the borrower's school to make a
               tuition refund allocable to the FFELP Loan.

         o     Discharge of FFELP Loans and certain other student loans in
               bankruptcy is now limited to cases of undue hardship regardless
               of whether the student loan has been due for more than seven (7)
               years prior to the bankruptcy filing.

         The new recall of reserves and reduced reinsurance for federal
guarantors increases the risk that resources available to the Federal Guarantors
to meet their guarantee obligations will be significantly reduced.

1999 AMENDMENT.

         The Work Incentives Improvement Act of 1999 passed by Congress in late
November 1999 and signed into law by President Clinton on December 17, 1999,
included a change in the reference index for determining lender yield of
Stafford loans, PLUS loans and Federal Consolidation loans. The formula used to
calculate Special Allowance Payments for loans first disbursed on or after
January 1, 2000, and before July 1, 2003, is based on the 90-day Commercial
Paper (financial) rates in effect for each of the days in such quarter as
reported by

                                       40
<PAGE>
the Federal Reserve in Publication H-15 (the "CP Rate"). Under the new formula,
special allowance rates for Stafford Loans and unsubsidized Stafford Loans will
be calculated to provide the loan holder with a minimum yield equal to the CP
Rate plus 1.74 percent during in-school periods, grace periods and deferment
periods, and CP Rate plus 2.34 percent during repayment periods; PLUS loans and
Consolidation loans will be calculated based on the CP Rate plus 2.64 percent.

DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND RELATED
AGENCIES APPROPRIATIONS ACT, 2001.

         On December 21, 2000, former President Clinton signed into law the
Departments of Labor, Health and Human Services, and Education, and Related
Agencies Appropriations Act, 2001 (P.L. No. 106-554) (the "Consolidated
Appropriations Act"). In response to the Department of Treasury's announced
intention to discontinue auctions of new 52-week Treasury Bills, the
Consolidated Appropriations Act amended the Higher Education Act to tie the
calculation of interest rates on variable rate SLS and PLUS Loans for periods
beginning on or after July 1, 2001 to the weekly average 1-year constant
maturity Treasury yield. This revision is not expected to materially affect the
yield to holders of SLS or PLUS loans.

ELECTRONIC SIGNATURES IN GLOBAL AND NATIONAL COMMERCE ACT.

         The Electronic Signatures in Global and National Commerce Act, commonly
referred to as the "E-Sign Act", became law on June 30, 2000. The E-Sign Act
generally covers all transactions and related records required to be in writing.
Under the E-Sign Act, FFELP guaranty agencies, lenders, schools and borrowers
are authorized to use electronic records and electronic signatures in lieu of
traditional paper records and handwritten signatures. This authority took effect
June 30, 2001. In April 2001, the Department issued standards for electronic
signatures in electronic student loan transactions ("Standards"). In the
Standards, the Department of Education stated that a lender or holder whose
processes for electronic signatures and related electronic records satisfy the
Standards will be protected from the loss of Federal benefits on a Student Loan
if the Student Loan is determined to be legally unenforceable by a court based
solely on the processes used for the electronic signature or related records.

ELIGIBLE LENDERS, STUDENTS AND EDUCATIONAL INSTITUTIONS

         Lenders eligible to make loans under FFELP generally include banks,
savings and loan associations, credit unions, pension funds, insurance
companies, and under certain conditions, schools and guarantors. FFELP Loans may
only be made to a "Qualified Student," generally defined as a United States
citizen or national or otherwise eligible individual under federal regulations
who (a) has been accepted for enrollment or is enrolled and is maintaining
satisfactory progress at a participating educational institution, (b) is
carrying at least one-half of the normal full-time academic workload for the
course of study the student is pursuing, as determined by such institution, (c)
has agreed to notify promptly the holder of the loan of any address change, and
(d) for Federal Stafford Loans, meets the application "need" requirements for
the particular loan program. Each loan is to be evidenced by an unsecured
promissory note.

                                       41
<PAGE>

         Eligible schools include institutions of higher education and
proprietary institutions. Institutions of higher education must meet certain
standards, which generally provide that the institution (i) only admits persons
who have a high school diploma or its equivalent, (ii) is legally authorized to
operate within a state, (iii) provides not less than a two-year program with
credit acceptable toward a bachelor's degree, (iv) is a public or non-profit
institution and (v) is accredited by a nationally recognized accrediting agency
or is determined by the Department to meet the standards of an accredited
institution. Eligible proprietary institutions of higher education include
business, trade and vocational schools meeting standards which provide that the
institution (i) only admits persons who have a high school diploma or its
equivalent, or persons who are beyond the age of compulsory school attendance
and have the ability to benefit from the training offered (as defined in the
Act), (ii) is authorized by a state to provide a program of vocational education
designed to fit individuals for useful employment in recognized occupations,
(iii) has been in existence for at least two years, (iv) provides at least a
six-month training program to prepare students for gainful employment in a
recognized occupation and (v) is accredited by a nationally recognized
accrediting agency or is specially accredited by the Department.

         With specified exceptions, institutions are excluded from consideration
as educational institutions if the institution (i) offers more than 50 percent
of its courses by correspondence, (ii) enrolls 50 percent or more of its
students in correspondence courses, (iii) has a student enrollment in which more
than 25 percent of the students are incarcerated or (iv) has a student
enrollment in which more than 50 percent of the students are admitted without a
high school diploma or its equivalent on the basis of their ability to benefit
from the education provided (as defined by statute and regulation). Further,
schools are specifically excluded from participation if (i) the educational
institution has filed for bankruptcy, (ii) the owner, or its chief executive
officer, has been convicted or pleaded "nolo contendere" or "guilty" to a crime
involving the acquisition, use or expenditure of federal student aid funds, or
has been judicially determined to have committed fraud involving funds under the
student aid program or (iii) the educational institution has a cohort default
rate in excess of the rate prescribed by the Act. In order to participate in the
program, the eligibility of a school must be approved by the Department under
standards established by regulation.

FINANCIAL NEED ANALYSIS

         FFELP Loans may generally be made in amounts, subject to certain limits
and conditions, to cover the student's estimated costs of attendance, including
tuition and fees, books, supplies, room and board, transportation and
miscellaneous personal expenses (as determined by the institution). Each Federal
Stafford Loan and Federal Unsubsidized Stafford Loan borrower must undergo a
financial need analysis, which requires the borrower to submit a financial need
analysis form to a multiple data entry processor that forwards the information
to the federal central processor. The central processor evaluates the parents'
and student's financial condition under federal guidelines and calculates the
amount that the student and/or the family must contribute towards the student's
cost of education (the "family contribution"). After receiving information on
the family contribution, the institution then subtracts the family contribution
from the cost for the student to attend such institution to determine the
student's eligibility for grants, loans, and work assistance. The difference
between the amount of grants and Federal Stafford Loans for which the borrower
is eligible and the student's estimated cost of

                                       42
<PAGE>
attendance (the "Unmet Need") may be borrowed through Federal Unsubsidized
Stafford Loans subject to annual and aggregate loan limits prescribed in the
Act. Parents may finance the family contribution amount through their own
resources or through Federal PLUS Loans.

SPECIAL ALLOWANCE PAYMENTS

         The Act provides for quarterly special allowance payments ("Special
Allowance Payments") to be made by the Department to holders of FFELP Loans to
the extent necessary to ensure that such holder receives at least a specified
market interest rate of return on such loans. The rates for Special Allowance
Payments are based on formulas that differ according to the type of loan, the
date the loan was originally made or insured and the type of funds used to
finance such loan (tax-exempt or taxable). A Special Allowance Payment is made
for each of the 3-month periods ending March 31, June 30, September 30 and
December 31. The Special Allowance Payment equals the average unpaid principal
balance (including interest permitted to be capitalized) of all eligible loans
held by such holder during such period multiplied by the special allowance
percentage. The special allowance percentage is computed by (i) determining the
average of the bond equivalent rates of either 91-Day Treasury bills auctioned
for such 3-month period ("91-Day T-Bill"), or in the case of loans first
disbursed on or after January 1, 2000 and before July 1, 2003, the quotes of the
three-month commercial paper (financial) rates in effect for each of the days in
such quarter as reported by the Federal Reserve in Publication H-15 (the "CP
Rate"), (ii) subtracting the applicable borrower interest rate on such loan from
such average, (iii) adding the applicable Special Allowance Margin (as set forth
below) to the resultant percentage and (iv) dividing the resultant percentage by
4; provided, however, that, if the amount determined by the application of
clauses (i), (ii) and (iii) is in the negative, the Special Allowance Margin is
zero.

<Table>
<Caption>
DATE OF DISBURSEMENT                            SPECIAL ALLOWANCE MARGIN
--------------------                            ------------------------
<S>                                             <C>
Prior to 10/17/86                               3.50%
10/17/86 - 09/30/92                             3.25%
10/01/92 - 06/30/95                             3.10%
07/01/95 - 06/30/98                             2.50% (Federal Stafford Loans and Federal Unsubsidized Stafford
                                                Loans that are In-School, Grace or Deferment); 3.10% (Federal
                                                Stafford Loans and Federal Unsubsidized Stafford Loans that are in
                                                repayment and all other loans)

07/01/98 - 12/31/99                             2.2% (Federal Stafford Loans and Federal Unsubsidized Stafford Loans
                                                during In-School, Grace or Deferment Status); 2.8% (Federal Stafford
                                                Loans and Federal Unsubsidized Stafford Loans during repayment
                                                periods) and 3.10% for all other loans

01/01/00 - 06/30/03                             1.74% (Federal Stafford Loans and Federal Unsubsidized Stafford
                                                Loans during In-School, Grace or Deferment); 2.34% (Federal Stafford
                                                Loans and Federal Unsubsidized Stafford Loans during Repayment) and
                                                2.64% for all other loans.
</Table>

         A holder of a PLUS, SLS or Federal Consolidation Loan is eligible to
receive Special Allowance Payments during any quarter equal to the amount by
which (1) the average of the bond equivalent rates of 91-day Treasury bills
auctioned during the quarter (or the CP Rate in the case of PLUS Loans first
disbursed, and Federal Consolidation Loans for which the application is
received, on or after January 1, 2000, and before July 1, 2003) plus the
Interest Rate Margin

                                       43
<PAGE>
(2.64% in the case of PLUS Loans first disbursed, and Federal Consolidation
Loans for which the application is received, on or after January 1, 2000, and
before July 1, 2003) exceeds (2) the specified Borrower Rate. However, Special
Allowance Payments are available on variable rate PLUS and SLS Loans first
disbursed before July 1, 1994, and PLUS loans first disbursed on or after July
1, 1998, only if the loan is accruing at the maximum interest rate specified by
law and the interest rate for each July 1 to June 30 period (as calculated prior
to applying the interest rate maximum or cap) exceeds the maximum interest rate
for the loan.

FEDERAL STAFFORD LOANS

         The Act provides for (i) federal insurance or reinsurance of Federal
Stafford Loans made by eligible lenders to qualified students, (ii) federal
interest subsidy payments on certain eligible Federal Stafford Loans to be paid
by the Department to holders of the loans in lieu of the borrower making
interest payments ("Interest Subsidy Payments") and (iii) Special Allowance
Payments representing an additional subsidy paid by the Department to the
holders of eligible Federal Stafford Loans (such federal reinsurance
obligations, together with those obligations referred to in clauses (ii) and
(iii) above, being collectively referred to herein as "Federal Assistance").

         INTEREST. The borrower's interest rate on a Federal Stafford Loan may
be fixed or variable. Federal Stafford Loan interest rates are summarized in the
chart below.

<Table>
<Caption>
TRIGGER DATE(1)                  BORROWER RATE(2)             MAXIMUM RATE                INTEREST RATE MARGIN
---------------                  ----------------             ------------                --------------------
<S>                             <C>                          <C>                          <C>
Prior to 01/01/81               7%                           7%                           N/A
01/01/81 - 09/12/83             9%                           9%                           N/A
09/13/83 - 06/30/88             8%                           8%                           N/A
07/01/88 - 09/30/92             8% for 48 months;            8% for 48 months, then 10%    3.25%
                                thereafter,
                                91-Day T-Bill + Interest
                                Rate
                                Margin
10/01/92 - 06/30/94             91-Day T-Bill + Interest     9%                           3.10%
                                Rate
                                Margin
07/01/94 - 06/30/95             91-Day T-Bill + Interest     8.25%                        3.10%
                                Rate
                                Margin
07/01/95 - 06/30/98             91-Day T-Bill + Interest     8.25%                        2.50% (During In-
                                Rate                                                      School, Grace or
                                Margin                                                    Deferment status); 3.10%
                                                                                          (in repayment)
07/01/98 - 06/30/03             91-Day T-Bill + Interest     8.25%                        1.7% (During In-School
                                Rate                                                      Grace or Deferment
                                Margin                                                    status); 2.3% (in
                                                                                          repayment)
</Table>

------------
(1)  The Trigger Date for Federal Stafford Loans made before October 1, 1992, is
     the first day of enrollment period for which a borrower's first Federal
     Stafford Loan is made and for Federal Stafford Loans made on October 1,
     1992 and after, the Trigger Date is the date of the disbursement of a
     borrower's first Federal Stafford Loan.

(2)  The rate for variable rate Federal Stafford Loans applicable for any
     12-month period beginning on July 1 and ending on June 30, is determined on
     the preceding June 1 and is equal to the lesser of (a) the applicable
     Maximum Rate or (b) the sum of (i) the bond equivalent rate of 91-day
     T-Bills auctioned at the final auction held prior to such June 1 and (ii)
     the applicable Interest Rate Margin.

         The 1992 Amendments provide that, for fixed rate loans made on or after
July 23, 1992 and for certain loans made to new borrowers on or after July 1,
1988, the lender must have converted by January 1, 1995, the interest rate on
such loans to an annual interest rate adjusted

                                       44
<PAGE>
each July 1 equal to (a) for certain loans made between July 1, 1988, and July
23, 1992, the 91-day T-Bill rate at the final auction prior to the preceding
June 1 plus 3.25% and (b) for loans made on or after July 23, 1992, the 91-day
T-Bill rate at the final auction prior to the preceding June 1 plus 3.10%, in
each case capped at the applicable interest rate for such loan existing prior to
the conversion. The variable interest rate does not apply to loans made prior to
July 23, 1992, during the first 48 months of repayment.

         INTEREST SUBSIDY PAYMENTS. The Department is responsible for paying
interest on Federal Stafford Loans while the borrower is a qualified student,
during a Grace Period or during certain Deferral Periods. The Department makes
quarterly Interest Subsidy Payments to the owner of Federal Stafford Loans in
the amount of interest accruing on the unpaid balance thereof prior to the
commencement of repayment or during any Deferral Periods. The Act provides that
the owner of an eligible Federal Stafford Loan shall be deemed to have a
contractual right against the United States of America to receive Interest
Subsidy Payments (and Special Allowance Payments) in accordance with its
provisions. Receipt of Interest Subsidy Payments and Special Allowance Payments
is conditioned on compliance with the requirements of the Act, including
satisfaction of certain need-based criteria (and the delivery of sufficient
information by the borrower and the lender to the Department to confirm the
foregoing) and continued eligibility of such loan for federal reinsurance. Such
eligibility may be lost, however, if the loans are not held by an eligible
lender, in accordance with the requirement of the Act and the applicable Federal
Guarantee Agreements. See "--Eligible Lenders, Students and Educational
Institutions" above, "RISK FACTORS--Risk that Failure to Comply with Origination
and Servicing Procedures for Financed Student Loans May Adversely Affect the
Issuer's Ability to Pay Principal of and Interest on the Notes," "THE ELIGIBLE
LENDER TRUSTEE" and "THE TRANSFER AND SERVICING AGREEMENTS--Servicing
Procedures." The Seller expects that substantially all of the Federal Stafford
Loans that are to be conveyed to the Issuer will be eligible to receive Interest
Subsidy Payments and Special Allowance Payments.

         Interest Subsidy Payments and Special Allowance Payments are generally
received within 45 days to 60 days after submission to the Department of the
applicable claim forms for any given calendar quarter, although there can be no
assurance that such payments will in fact be received from the Department within
that period. See "RISK FACTORS--Variability of Actual Cash Flows; Risk of
Shortfalls to Holders of Notes Resulting from the Inability of the Indenture
Trustee to Liquidate Financed Student Loans." The Servicer has agreed to prepare
and file with the Department all such claims forms and any other required
documents or filings on behalf of each Eligible Lender Trustee as owner of the
related FFELP Loans on behalf of the Issuer. The Servicer has also agreed to
assist the Eligible Lender Trustee in monitoring, pursuing and obtaining such
Interest Subsidy Payments and Special Allowance Payments, if any, with respect
to such FFELP Loans. The Eligible Lender Trustee will be required to remit
Interest Subsidy Payments and Special Allowance Payments it receives with
respect to such FFELP Loans within two business days of receipt thereof to the
related Collection Account.

         LOAN LIMITS. The Act requires that loans be disbursed by eligible
lenders in at least two separate and equal disbursements. The Act limited the
amount a student can borrow in any academic year and the amount he or she can
have outstanding in the aggregate. The following chart sets forth the current
and historic loan limits.

                                       45
<PAGE>

<Table>
<Caption>
                                                                       ALL STUDENTS(1)      INDEPENDENT STUDENTS(1)
                                                                       ---------------    --------------------------
                                                                         BASE AMOUNT       ADDITIONAL
                                                                        SUBSIDIZED AND    UNSUBSIDIZED      MAXIMUM
                                                         SUBSIDIZED    UNSUBSIDIZED ON     ONLY ON OR      AGGREGATE
                                           SUBSIDIZED    ON OR AFTER       OR AFTER          AFTER           TOTAL
BORROWER'S ACADEMIC LEVEL                  PRE-1/1/87      1/1/87         10/1/93(2)       7/1/94(3)       AMOUNT IN
-------------------------                  ----------    -----------   ---------------    ------------     ---------
<S>                                        <C>            <C>           <C>                <C>             <C>
Undergraduate (per year)
   1st year...........................      $  2,500      $  2,625          $ 2,625          $ 4,000        $  6,625
   2nd year...........................      $  2,500      $  2,625          $ 3,500          $ 4,000        $  7,500
   3rd year and above.................      $  2,500      $  4,000          $ 5,500          $ 5,000        $ 10,500
Graduate (per year)...................      $  5,000      $  7,500          $ 8,500          $10,000        $ 18,500
   Aggregate Limited Undergraduate....      $ 12,500      $ 17,250          $23,000          $23,000        $ 46,000
   Graduate (including undergraduate).      $ 25,000      $ 54,750          $65,500          $73,000        $138,500
</Table>

------------

(1)  The loan limits are inclusive of both Federal Stafford Loans and Federal
     Direct Student Loans.

(2)  These amounts represent the combined maximum loan amount per year for
     Federal Stafford and Federal Unsubsidized Stafford Loans. Accordingly, the
     maximum amount that a student may borrow under a Federal Unsubsidized
     Stafford Loan is the difference between the combined maximum loan amount
     and the amount the student received in the form of a Federal Stafford Loan.

(3)  Independent undergraduate students, graduate students or professional
     students may borrow these additional amounts. In addition, dependent
     undergraduate students may also receive these additional loan amounts if
     the parents of such students are unable to provide the family contribution
     amount and it is unlikely that the student's parents will qualify for a
     Federal PLUS Loan.

         The annual loan limits are reduced in some instances where the student
has less than a full academic year remaining in his or her program. The
Department has discretion to raise these limits to accommodate highly
specialized or exceptionally expensive courses of study.

         REPAYMENT. Repayment of principal on a Federal Stafford Loan generally
does not commence while a student remains a qualified student, but generally
begins upon expiration of the applicable Grace Period, as described below. Any
borrower may voluntarily prepay without premium or penalty any loan and in
connection therewith may waive any Grace Period or Deferral Period. In general,
each loan must be scheduled for repayment over a period of not more than ten
years after the commencement of repayment. New borrowers on or after October 7,
1998, who accumulate outstanding loans under FFELP totaling more than $30,000,
are entitled to extended repayment schedules of up to 25 years subject to
certain minimum repayment amounts. The Act currently requires minimum annual
payments of $600 or, if greater, the amount of accrued interest for that year,
unless the borrower and the lender agree to lesser payments. Effective July 1,
1993, the Act and regulations promulgated thereunder require lenders to offer
the choice of a standard, graduated or income-sensitive repayment schedule to
all borrowers who receive a loan on or after that date. For Stafford Loans
entering repayment on or after October 1, 1995, borrowers may choose among
several repayment options, including the option to make interest only payments
for limited periods.

         GRACE PERIODS, DEFERRAL PERIODS AND FORBEARANCE PERIODS. Repayment of
principal on a Federal Stafford Loan must generally commence following a period
of (a) not less than 9 months or more than 12 months (with respect to loans for
which the applicable interest rate is 7% per annum) and (b) not more than 6
months (with respect to loans for which the applicable interest rate is 9% per
annum or 8% per annum and for loans to first-time borrowers on or after July 1,
1988) after the borrower ceases to pursue at least a half-time course of study
(a "Grace Period"). However, during certain other periods (each, a "Deferral
Period") and subject to certain conditions, no principal repayments need be
made, including periods when the student

                                       46
<PAGE>
has returned to an eligible educational institution on a full-time basis or is
pursuing studies pursuant to an approved graduate fellowship program, or when
the student is a member of the United States Armed Forces or a volunteer under
the Peace Corps Act or the Domestic Volunteer Service Act of 1973, or when the
borrower is temporarily totally disabled, or periods during which the borrower
may defer principal payments because of temporary financial hardship. For new
borrowers to whom loans are first disbursed on or after July 1, 1993, payment of
principal may be deferred only while the borrower is at least a half-time
student or is in an approved graduate fellowship program or is enrolled in a
rehabilitation program, or when the borrower is seeking but unable to find
full-time employment, subject to a maximum deferment of three years, or when for
any reason the lender determines that payment of principal will cause the
borrower economic hardship, also subject to a maximum deferment of three years.
The 1992 Amendments also permit and in some cases require forbearance of loan
collection in certain circumstances (each such period, a "Forbearance Period").

FEDERAL UNSUBSIDIZED STAFFORD LOANS

         The Federal Unsubsidized Stafford Loan program created under the 1992
Amendments is designed for students who do not qualify for the maximum Federal
Stafford Loan due to parental and/or student income and assets in excess of
permitted amounts. The basic requirements for Federal Unsubsidized Stafford
Loans are essentially the same as those for the Federal Stafford Loans,
including with respect to provisions governing the interest rate, the annual
loan limits and the Special Allowance Payments. The terms of the Federal
Unsubsidized Stafford Loans, however, differ in some respects. The federal
government does not make Interest Subsidy Payments on Federal Unsubsidized
Stafford Loans. The borrower must either begin making interest payments within
60 days after the time the loan is disbursed or permit capitalization of the
interest by the lender until repayment begins. Federal Unsubsidized Stafford
Loan borrowers are required to pay, upon disbursement, a 6.5% insurance fee to
the Department, though no guarantee fee may be charged by the applicable Federal
Guarantor. Effective July 1, 1994, the maximum insurance premium charged by the
Federal Guarantor is reduced to 1% and the origination fee is 3%. Subject to the
same loan limits established for Federal Stafford Loans, the student may borrow
up to the amount of such student's Unmet Need. Lenders are authorized to make
Federal Unsubsidized Stafford Loans applicable for periods of enrollment
beginning on or after October 1, 1992.

FEDERAL PLUS AND FEDERAL SLS LOAN PROGRAMS

         The Act authorizes Federal PLUS Loans to be made to parents of eligible
dependent students and previously authorized Federal SLS Loans to be made to
certain categories of students. After July 1, 1993, only parents who do not have
an adverse credit history or who can secure an endorser without an adverse
credit history are eligible for Federal PLUS Loans. The basic provisions
applicable to Federal PLUS and Federal SLS Loans are similar to those of Federal
Stafford Loans with respect to the federal insurance and reinsurance on the
loans. However, Federal PLUS and Federal SLS Loans differ from Federal Stafford
Loans, particularly because Interest Subsidy Payments are not available under
the Federal PLUS and Federal SLS Programs and in some instances Special
Allowance Payments are more restricted.

                                       47
<PAGE>

         LOAN LIMITS. Federal PLUS and Federal SLS Loans disbursed prior to July
1, 1993, are limited to $4,000 per academic year with a maximum aggregate amount
of $20,000. Federal SLS Loan limits for loans disbursed on or after July 1,
1993, depended upon the class year of the student and the length of the academic
year. The annual loan limit for Federal SLS Loans first disbursed on or after
July 1, 1993, ranged from $4,000 for first and second year undergraduate
borrowers to $10,000 for graduate borrowers, with a maximum aggregate amount of
$23,000 for undergraduate borrowers and $73,000 for graduate and professional
borrowers. After July 1, 1994, for purposes of new loans being originated, the
Federal SLS programs were merged with the Federal Unsubsidized Stafford Loan
program with the borrowing limits reflecting the combined eligibility under both
programs. The only limit on the annual and aggregate amounts of Federal PLUS
Loans first disbursed on or after July 1, 1993, is the cost of the student's
education less other financial aid received, including scholarship, grants and
other FFELP Loans.

         INTEREST. The interest rate determination for a Federal PLUS or SLS
loan is dependent on when the loan was originally made and disbursed and the
period of enrollment. The interest rates for Federal PLUS and SLS loans are
summarized in the following chart.

<Table>
<Caption>
                                                                                                           INTEREST
TRIGGER DATE(1)                                      BORROWER RATE(2)                  MAXIMUM RATE       RATE MARGIN
---------------                                      ----------------                  ------------       -----------
<S>                                      <C>                                      <C>                   <C>
Prior to 10/01/81......................    9%                                       9%                    N/A
10/01/81 - 10/31/82....................   14%                                      14%                    N/A
11/01/82 - 06/30/87....................   12%                                      12%                    N/A
07/01/87 - 09/30/92....................   52-Week Treasury (3)+ Interest Rate      12%                    3.25%
                                          Margin
10/01/92 - 6/30/94
(SLS repealed 07/01/94)................   52-Week Treasury (3) + Interest Rate     PLUS 10%, SLS 11%      3.10%
                                          Margin
07/01/94 - 06/30/98....................   52-Week Treasury (3)+ Interest Rate       9%                    3.10%
                                          Margin
07/01/98-06/30/03......................   91-Day T-Bill + Interest Rate Margin      9%                    3.10%
</Table>

------------
(1)  The Trigger Date for Federal PLUS and SLS loans made before October 1,
     1992, is the first day of enrollment period for which the loan is made, and
     for Federal PLUS and SLS loans made on October 1, 1992 and after, the
     Trigger Date is the date of the disbursement of the loan, respectively.

(2)  For Federal PLUS or SLS loans that carry a variable rate, the rate is set
     annually for 12-month periods beginning on July 1 and ending on June 30 on
     the preceding June 1 and is equal to the lesser of (a) the applicable
     maximum rate and (b) the sum of (i) the bond equivalent rate of 52-week
     Treasury bills (or 91-day Treasury bills in the case of Federal PLUS or SLS
     loans made or disbursed on or after June 30, 1998) auctioned at the final
     auction held prior to such June 1, and (ii) the applicable Interest Rate
     Margin.

(3)  For periods beginning on or after July 1, 2001, the interest rate is equal
     to the weekly average 1-year constant maturity Treasury yield, as published
     by the Board of Governors of the Federal Reserve System, for the last
     calendar week ending on the preceding June 26, plus the applicable interest
     rate margin.

         A holder of a Federal PLUS or SLS Loan is eligible to receive Special
Allowance Payments during any quarter if (a) the sum of (i) the average of the
bond equivalent rates of 91-day Treasury bills auctioned during such quarter and
(ii) the Interest Rate Margin exceeds (b) the Maximum Rate.

         REPAYMENT, DEFERMENTS. The 1992 Amendments provide Federal SLS
borrowers with the option to defer commencement of repayment of principal until
the commencement of repayment of Federal Stafford Loans. Otherwise, repayment of
principal of Federal PLUS and

                                       48
<PAGE>
Federal SLS Loans is required to commence no later than 60 days after the date
of disbursement of such loan, subject to certain deferral and forbearance
provisions. The deferral provisions which apply are more limited than those
which apply to Federal Stafford Loans. Repayment of interest, however, may be
deferred and capitalized during certain periods of educational enrollments and
periods of unemployment or hardship as specified under the Act. Further, whereas
Interest Subsidy Payments are not available for such deferments, interest may be
capitalized during such periods upon agreement of the lender and borrower.
Maximum loan repayment periods and minimum payment amounts are the same as for
Federal Stafford Loans.

         A borrower may refinance all outstanding Federal PLUS Loans under a
single repayment schedule for principal and interest, with the new repayment
period calculated from the date of repayment of the most recent included loan.
The interest rate of such refinanced loan shall be the weighted average of the
rates of all Federal PLUS Loans being refinanced. A second type of refinancing
enables an eligible lender to reissue a Federal PLUS Loan which was initially
originated at a fixed rate prior to July 1, 1987 in order to permit the borrower
to obtain the variable interest rate available on Federal PLUS Loans on and
after July 1, 1987. If a lender is unwilling to refinance the original Federal
PLUS Loan, the borrower may obtain a loan from another lender for the purpose of
discharging the loan and obtaining a variable interest rate.

FEDERAL CONSOLIDATION LOAN PROGRAM

         The Act authorizes a program under which certain borrowers may
consolidate one or more of their FFELP Loans into a single loan (each, a
"Federal Consolidation Loan") insured and reinsured on a basis similar to
Federal Stafford Loans. Federal Consolidation Loans may be made in an amount
sufficient to pay outstanding principal, unpaid interest, late charges and
collection costs on all FFELP Loans selected by the borrower, as well as loans
made pursuant to various other federal student loan programs and which may have
been made by different lenders. Under this program, a lender may make a Federal
Consolidation Loan to an eligible borrower at the request of the borrower if the
lender holds an outstanding loan of the borrower or the borrower certifies that
he has been unable to obtain a Federal Consolidation Loan from the holders of
the outstanding loans made to him. A borrower who is unable to obtain a Federal
Consolidation Loan from an eligible lender or a Federal Consolidation Loan with
an income-sensitive repayment plan acceptable to the borrower may obtain a
Federal Consolidation Loan under the direct loan program. Federal Consolidation
Loans that were made on or after July 1, 1994, have no minimum loan amount,
although Federal Consolidation Loans for less than $7,500 must be repaid in ten
years. Applications for Federal Consolidation Loans received on or after January
1, 1993, but prior to July 1, 1994, were available only to borrowers who had
aggregate outstanding student loan balances of at least $7,500; for applications
received before January 1, 1993, Federal Consolidation Loans are available only
to borrowers who have aggregate outstanding student loan balances of at least
$5,000. The borrowers must be either in repayment status or in a grace period
preceding repayment and, for applications received prior to January 1, 1993, the
borrower must not have been delinquent by more than 90 days on any student loan
payment; for applications received on or after January 1, 1993, delinquent or
defaulted borrowers are eligible to obtain Federal Consolidation Loans if they
will reenter repayment through loan consolidation. For applications received on
or after January 1, 1993, borrowers may, within 180 days of the origination of a
Federal Consolidation Loan, add additional loans made prior to consolidation
("Add-on Federal Consolidation Loans") for consolidation therewith. If the

                                       49
<PAGE>
borrower obtains loans subsequent to the Federal Consolidation Loan, the
borrower may consolidate the new loans and the Federal Consolidation Loan. The
interest rate and term of such Federal Consolidation Loan, following the
consolidation with the related Add-on Federal Consolidation Loans, may be
recomputed within the parameters permitted by the Act. For applications received
on or after January 1, 1993, married couples who agree to be jointly and
severally liable will be treated as one borrower for purposes of loan
consolidation eligibility. For applications received on or after November 13,
1997, through September 30, 1998, student loan borrowers may include federal
direct loans in Federal Consolidation Loans.

         Federal Consolidation Loans bear interest at a rate which equals the
weighted average of interest rates on the unpaid principal balances of
outstanding loans, rounded to the nearest whole percent, with a minimum rate of
9% for loans originated prior to July 1, 1994. For Federal Consolidation Loans
made on or after July 1, 1994, such weighted average interest rate must be
rounded up to the nearest whole percent. However, Federal Consolidation Loans
made from applications received on or after November 13, 1997, through September
30, 1998, will bear interest at the annual variable rate applicable to Federal
Stafford Loans in repayment (i.e., the rate based on the 91 day T-bill plus
3.1%, capped at 8.25%). Federal Consolidation Loans for which the application is
received on or after October 1, 1998, bear interest at a rate equal to the
weighted average interest rate of the loans consolidated, rounded up to the
nearest one-eighth percent and capped at 8.25%. Interest on Federal
Consolidation Loans accrues and, for applications received prior to January 1,
1993, is to be paid without Interest Subsidy by the Department. For Federal
Consolidation Loans received on or after January 1, 1993, all interest of the
borrower is paid during all periods of Deferment. However, Federal Consolidation
Loan applications received on or after August 10, 1993, will only be subsidized
if all of the underlying loans being consolidated were subsidized Federal
Stafford Loans; provided, however, that in the case of Federal Consolidation
Loans made on or after November 13, 1997, that portion of the Federal
Consolidation Loan that is comprised of Subsidized Stafford Loans will retain
its subsidy benefits during periods of deferment. Borrowers may elect to
accelerate principal payments without penalty. Further, no insurance premium may
be charged to a borrower and no insurance premium may be charged to a lender in
connection with a Federal Consolidation Loan. However, a fee may be charged to
the lender by a Federal Guarantor to cover the costs of increased or extended
liability with respect to a Federal Consolidation Loan, and lenders must pay a
monthly rebate fee at an annualized rate of 1.05% for Federal Consolidation
Loans disbursed on or after October 1, 1993 (or 0.62% per annum for loans on
which applications are received between October 1, 1998, and January 31, 1999).
Special Allowance Payments are made on Consolidation Loans whenever the formula
exceeds the borrower's interest rate.

         Repayment of Federal Consolidation Loans begins within 60 days after
discharge of all prior loans which are consolidated. Repayment schedule options
must include, for applications received on or after January 1, 1993, graduated
and income sensitive repayment plans with maximum repayment terms, subject to
certain limits applicable to the sum of the Federal Consolidation Loan and the
amount of the borrower's other eligible Financed Student Loans outstanding. The
lender may, at its option, include such graduated and income sensitive repayment
plans for applications received prior to that date. Generally, depending on the
total of loans outstanding, repayment may be scheduled over periods no shorter
than ten but not more than 25 years in length. For applications received on or
after January 1, 1993, the maximum maturity schedule is 30 years for Federal
Consolidation Loans of $60,000 or more.

                                       50
<PAGE>

         All eligible loans of a borrower paid in full through consolidation are
discharged in the consolidation process when the new Federal Consolidation Loan
is issued.

FEDERAL GUARANTORS

         The Act authorizes Federal Guarantors to support education financing
and credit needs of students at post-secondary schools. The Act encourages every
state either to establish its own agency or to designate another Federal
Guarantor in cooperation with the Secretary. Under various programs throughout
the United States of America, Federal Guarantors insure and sometimes service
guaranteed Financed Student Loans. The Federal Guarantors are reinsured by the
federal government for from 80% to 100% of each default claim paid, depending on
their claims experience, for loans disbursed prior to October 1, 1993, from 78%
to 98% of each default claim paid for loans disbursed on or after October 1,
1993, and from 75% to 95% of each default claim paid for loans disbursed on or
after October 1, 1998. Federal Guarantors are reinsured by the federal
government for 100% of death, disability, bankruptcy, closed school and false
certification claims paid. Loans guaranteed under the lender of last resort
provisions of the Act are also 100% guaranteed and reinsured. See "--Federal
Insurance and Reinsurance of Federal Guarantors" below.

         Federal Guarantors collect a one-time insurance premium ranging from 0%
to 3% of the principal amount of each guaranteed loan, depending on the Federal
Guarantor. Federal Guarantors are prohibited from charging insurance premiums on
loans made under the Federal Unsubsidized Stafford Loan program prior to July 1,
1994. On such loans made prior to July 1, 1994, the Act requires that a 6.5%
combined loan origination fee and insurance premium be paid by the borrower on
Federal Unsubsidized Stafford Loans. This fee is passed through to the
Department by the originating lender. Effective July 1, 1994, the maximum
insurance premium and origination fee for Federal Stafford Loans and Federal
Unsubsidized Stafford Loans are 1% and 3%, respectively.

         Each Financed Student Loan to be sold to the Eligible Lender Trustee on
behalf of the Issuer will be guaranteed as to principal and interest by a
Federal Guarantor pursuant to a guarantee agreement (each, a "Guarantee
Agreement") between such Federal Guarantor and the Eligible Lender Trustee.

         The 1993 Act granted the Department broad powers over Federal
Guarantors and their reserves. These powers include the authority to require a
Federal Guarantor to return all reserve funds to the Department if the
Department determines such action is necessary to ensure an orderly termination
of the Federal Guarantor, to serve the best interests of the student loan
programs or to ensure the proper maintenance of such Federal Guarantor's funds
or assets. The Department is also now authorized to direct a Federal Guarantor
to return a portion of its reserve funds which the Department determines is
unnecessary to pay the program expenses and contingent liabilities of the
Federal Guarantor and/or to cease any activities involving the use of the
Federal Guarantor's reserve funds or assets which the Department determines is a
misapplication or otherwise improper. The Department may also terminate a
Federal Guarantor's reinsurance agreement if the Department determines that such
action is necessary to protect the federal fiscal interest. These various
changes create a significant risk that the

                                       51
<PAGE>
resources available to the Federal Guarantors to meet their guarantee
obligations will be significantly reduced.

         The 1998 Reauthorization Bill created additional risks that the
resources available to Federal Guarantors to meet their guarantee obligations
will be further reduced in the future by mandating additional recall of
guarantor reserves and reducing reinsurance to guarantors from 98% to 95%.

FEDERAL INSURANCE AND REINSURANCE OF FEDERAL GUARANTORS

         A FFELP Loan is considered to be in default for purposes of the Act
when the borrower fails to make an installment payment when due or to comply
with other terms of the loan, and if the failure persists for a certain period
of time as specified by the Act. Under certain circumstances a loan deemed
ineligible for Federal Reinsurance may be restored to eligibility. Procedures
for such restoration of eligibility are discussed below. If the loan in default
is covered by federal loan insurance in accordance with the provisions of the
Act, the Department is to pay the applicable Federal Guarantor, as insurance
beneficiary, the amount of the loss sustained thereby, upon notice and
determination of such amount, within 90 days of such notification, subject to
reduction as described above.

         If the loan is guaranteed by a Federal Guarantor, the eligible lender
is reimbursed by the Federal Guarantor for 100% (or not less than 98% for loans
disbursed on or after October 1, 1993, or 95% for loans disbursed on or after
October 1, 1998) of the unpaid principal balance of the defaulted loan plus
accrued and unpaid interest thereon so long as the eligible lender has properly
originated and serviced such loan. Under the Act, the Department enters into a
guarantee agreement with each Federal Guarantor, which provides for federal
reinsurance for amounts paid to eligible lenders by the Federal Guarantor with
respect to defaulted loans.

         Pursuant to such agreements, the Department also agrees to reimburse a
Federal Guarantor for 100% of the amounts expended in connection with a claim
resulting from the death, bankruptcy, total and permanent disability of a
borrower, the death of a student whose parent is the borrower of a Federal PLUS
Loan or claims by borrowers who received loans on or after January 1, 1986, and
who are unable to complete the programs in which they are enrolled due to school
closure or borrowers whose borrowing eligibility was falsely certified by the
eligible institution; such claims are not included in calculating a Federal
Guarantor's claims rate experience for federal reinsurance purposes. The
Department also agrees to reimburse a Federal Guarantor for 100% of the amounts
expended in connection with claims on loans made under the lender of last resort
provisions. The Department is also required to repay the unpaid balance of any
loan if the borrower files for relief under Chapter 12 or 13 of the Bankruptcy
Code or files for relief under Chapter 7 or 11 of the Bankruptcy Code and
commences an action for a determination of dischargeability under Section
523(a)(8)(b) of the Bankruptcy Code, and is authorized to acquire the loans of
borrowers who are at high risk of default and who request an alternative
repayment option from the Department.

         The amount of such reinsurance payment to the Federal Guarantor for
default claims is subject to reduction based upon the annual default claims rate
of the Federal Guarantor, calculated to equal the amount of federal reinsurance
claims paid by the Department to the

                                       52
<PAGE>
Federal Guarantor during any fiscal year as a percentage of the original
principal amount of guaranteed loans in repayment at the end of the prior
federal fiscal year. The formula is summarized as follows:

<Table>
<Caption>
CLAIMS RATE OF FEDERAL GUARANTOR               REIMBURSEMENT TO FEDERAL GUARANTOR BY THE DEPARTMENT OF EDUCATION(1)
--------------------------------               --------------------------------------------------------------------
<S>                                            <C>
0% to and including 5%....................     100%
Greater than 5% to and including 9%.......     100% of claims to and including 5%; 90% of claims greater than 5%
Greater than 9%...........................     100% of claims to and including 5%; 90% of claims greater than 5% to
                                               and including 9%; and 80% of claims greater than 9%
</Table>

-----------
(1)  The federal reimbursement has been reduced to 98%, 88% and 78% for loans
     disbursed on or after October 1, 1993, and to 95%, 85% and 75% for loans
     disbursed on or after October 1, 1998.

         The claims experience is not accumulated from year to year, but is
determined solely on the basis of claims in any one federal fiscal year compared
with the original principal balance of loans in repayment at the beginning of
that year.

         Pursuant to the 1992 Amendments and additional changes made in 1997 and
1998, Federal Guarantors are required to maintain a current minimum reserve
level of at least 0.25% of the total attributable amount of all outstanding
loans guaranteed by the Federal Guarantor. If the Federal Guarantor fails to
achieve the minimum reserve level in any two consecutive years, if the Federal
Guarantor's federal annual claims rate equals or exceeds 5% or if the Department
determines the Federal Guarantor's administrative or financial condition
jeopardizes its continued ability to perform its responsibilities, the
Department may require the Federal Guarantor to submit and implement a
management plan to address the deficiencies. The Department may terminate the
Federal Guarantor's agreements with the Department if the Guarantor fails to
submit the required plan, or fails to improve its administrative or financial
condition substantially, or if the Department determines the Federal Guarantor
is in danger of financial collapse. In such event, the Department is required to
assume responsibility for the functions of such Federal Guarantor and in
connection therewith is authorized to undertake specified actions to assure the
continued payment of claims, including maturity advances to Federal Guarantors
to cover immediate cash needs, transferring of guarantees to another Federal
Guarantor, or transfer of guarantees to the Department itself. No assurance can
be made that the Department will under any given circumstance exercise its right
to terminate a reimbursement agreement with a Federal Guarantor or make a
determination that such Federal Guarantor is unable to meet its guarantee
obligations.

         The Act requires that, subject to compliance with the Act, the
Secretary must pay all amounts which may be required to be paid under the Act as
a result of certain events of death, disability, bankruptcy, school closure or
false certification by the educational institution described therein. It further
provides that Federal Guarantors shall be deemed to have a contractual right
against the United States of America to receive reinsurance in accordance with
its provisions. In addition, the 1992 Amendments provide that if the Department
determines that a Federal Guarantor is unable to meet its insurance obligations,
holders of loans may submit insurance claims directly to the Department until
such time as the obligations are transferred to a new Federal Guarantor capable
of meeting such obligations or until a successor Federal Guarantor assumes such
obligations. No assurance can be made that the Department would under any given
circumstances assume such obligation to assure satisfaction of a guarantee

                                       53
<PAGE>

obligation by exercising its right to terminate a reimbursement agreement with a
Federal Guarantor or by making a determination that such Federal Guarantor is
unable to meet its guarantee obligations.

                          THE ALTERNATIVE LOAN PROGRAM

GENERAL

         A portion of the proceeds of the Notes will be used to purchase
Alternative Loans. Alternative Loans are student loans that are not guaranteed
or insured by a federal or state guarantor. Each of the Alternative Loans is
insured against default under the TUITIONGard(R) program (the "TuitionGard
Program") by either Landmark American Insurance Company ("Landmark") or American
and Foreign Insurance Company ("American and Foreign"). Both of these insurance
companies are subsidiaries of Royal Group, Inc. All TuitionGard Program loans
originated prior to August 1, 2001 were insured by Landmark. In the event that
the financial status of either Landmark or American and Foreign and either of
their ability to honor guarantee claims were to deteriorate over time, such
event may negatively impact the Issuer's ability to, or result in a failure on
the part of the Issuer to, make payments of interest and principal on the Notes.

         The Alternative Loans are not insured or reinsured by the Secretary of
Education under the Higher Education Act. In addition, the Alternative Loans are
not entitled to any federal reinsurance or assistance from the Secretary of
Education under the Higher Education Act.

LANDMARK AMERICAN INSURANCE COMPANY

         Landmark American Insurance Company ("Landmark") is an indirect
wholly-owned subsidiary of Orion Auto, Inc. ("Orion Auto"). Orion Auto is an
indirect wholly-owned subsidiary of Royal Group, Inc. Orion Auto's six insurance
subsidiaries, including Landmark, are authorized as multiple-line insurance
carriers and may insure most types of property and liability risks. Landmark
began insuring student loans through the TuitionGard Program in April 1997.
Landmark is 100% reinsured by Guaranty National Insurance Company ("GNIC"), one
of the six insurance subsidiaries of Orion Auto. The policyholder surplus of
GNIC at June 30, 2001 was $185,252,872.

         Under the TuitionGard Program, Landmark insures, subject to a 5%
deductible, the principal, accumulated interest and lost interest during the
150-day delinquency period for the insured loans, as defined in the insurance
policy form. Default of the student loans generally is the failure by a borrower
to make monthly principal and/or interest payments on a student loan when due,
provided such failure continues for a period of one hundred fifty (150)
consecutive days. Landmark's insurance generally applies to all claims for any
default by the borrower so long as such claims do not result in whole or in part
from (i) war, insurrection, rebellion or revolution of any kind, (ii) nuclear
energy liability, or (iii) any actual or alleged failure, malfunction or
inadequacy of (a) regardless of the owner, any of (u) computer hardware,
including microprocessors, (v) computer application software, (w) computer
operating systems and related software, (x) computer networks, (y)
microprocessors (computer chips) not part of any computer system or (z) any
other computerized or electronic equipment or components, or

                                       54
<PAGE>
(b) any other products, and any services, data or functions that directly or
indirectly use or rely upon, in any manner, any of the items listed above, in
each case due to the inability to correctly recognize, process, distinguish,
interpret or accept one or more dates or times, including but not limited to the
year 2000.

         Landmark's obligation to honor its insurance for any loan is
conditioned, among other things, upon the origination, disbursement, servicing
and timely filing of the claim for insurance in accordance with program
requirements. The above summary of terms of the insurance policy is for
information purposes only. If any of the summary differs from the actual policy
terms, the policy terms will prevail.

         Landmark is domiciled in the State of Oklahoma and authorized to do
business in forty-four states. Oklahoma has laws prescribing minimum capital
requirements, limiting classes and concentrations of investments and requiring
the approval of policy rates and forms. State laws also regulate the amount of
both the aggregate and individual risks that may be insured, the payment of
dividends by Landmark, changes in control and transactions among affiliates.
Additionally, Landmark is required by statute to maintain reserves on its
failure claims obligations in certain amounts and for certain periods of time.

         A.M. Best, Fitch, Moody's and Standard & Poor's Rating Service ("S&P"),
a Division of McGraw-Hill Companies, currently rate the claims paying ability of
Guaranty National Insurance Company as "A+ (Superior)", "AA-", "A1" and "A+"
respectively. These ratings reflect such rating agency's current assessment of
the creditworthiness of Landmark American Insurance Company and its ability to
pay claims (claim paying ability) on its policies of insurance. Any further
explanations as to the significance of the above ratings may be obtained only
from A.M. Best, Fitch, Moody's and S&P.

AMERICAN AND FOREIGN INSURANCE COMPANY

         American and Foreign Insurance Company ("American and Foreign") is a
wholly-owned subsidiary of Royal Group, Inc. ("Royal Group"). Royal Group's
insurance subsidiaries, including American and Foreign, are authorized as
multiple-line insurance carriers and may insure most types of property and
liability risks. American and Foreign began insuring student loans through the
TuitionGard Program in January 2001. The policyholder surplus of American and
Foreign at June 30, 2001 was $122,869,952.

         Under the TuitionGard Program, American and Foreign insures, subject to
a 5% deductible, the principal, accumulated interest and lost interest during
the 150-day delinquency period for the insured loans, as defined in the
insurance policy form. Default of the student loans generally is the failure by
a borrower to make monthly principal and/or interest payments on a student loan
when due, provided such failure continues for a period of one hundred fifty
(150) consecutive days. American and Foreign insurance generally applies to all
claims for any default by the borrower so long as such claims do not result in
whole or in part from (i) war, insurrection, rebellion or revolution of any
kind, (ii) nuclear energy liability, or (iii) any actual or alleged failure,
malfunction or inadequacy of (a) regardless of the owner, any of (u) computer
hardware, including microprocessors, (v) computer application software, (w)
computer operating systems and related software, (x) computer networks, (y)
microprocessors (computer chips) not

                                       55
<PAGE>
part of any computer system or (z) any other computerized or electronic
equipment or components, or (b) any other products, and any services, data or
functions that directly or indirectly use or rely upon, in any manner, any of
the items listed above, in each case due to the inability to correctly
recognize, process, distinguish, interpret or accept one or more dates or times,
including but not limited to the year 2000.

         American and Foreign's obligation to honor its insurance for any loan
is conditioned, among other things, upon the origination, disbursement,
servicing and timely filing of the claim for insurance in accordance with
program requirements. The above summary of terms of the insurance policy is for
information purposes only. If any of the summary differs from the actual policy
terms, the policy terms will prevail.

         American and Foreign is domiciled in the State of Delaware and
authorized to do business in fifty states. Delaware has laws prescribing minimum
capital requirements, limiting classes and concentrations of investments and
requiring the approval of policy rates and forms. State laws also regulate the
amount of both the aggregate and individual risks that may be insured, the
payment of dividends by American and Foreign, changes in control and
transactions among affiliates. Additionally, American and Foreign is required by
statute to maintain reserves on its future claims obligations in certain amounts
and for certain periods of time.

         A.M. Best, Fitch, Moody's and Standard & Poor's Rating Service ("S&P"),
a Division of McGraw-Hill Companies, currently rate the claims paying ability of
American and Foreign Insurance Company as "A+ (Superior)", "AA-", "Al" and "A+"
respectively. These ratings reflect such rating agency's current assessment of
the creditworthiness of American and Foreign Insurance Company and its ability
to pay claims (claim paying ability) on its policies of insurance. Any further
explanations as to the significance of the above ratings may be obtained only
from A.M. Best, Fitch, Moody's and S&P.

                         THE FINANCED STUDENT LOAN POOL

GENERAL

         The FFELP Loans to be sold and/or contributed by the Seller to the
Eligible Lender Trustee on behalf of the Issuer pursuant to the Purchase and
Contribution Agreement will be selected from student loans originated under
FFELP by several criteria, including that each such FFELP Loan (i) is guaranteed
as to principal and interest by a Federal Guarantor and is in turn reinsured by
the Department in accordance with the terms of FFELP, (ii) was originated in the
United States of America, its territories or its possessions under and in
accordance with FFELP, (iii) contains terms in accordance with those required by
FFELP, the applicable Guarantee Agreements and other applicable requirements and
(iv) provides for regular payments that fully amortize the amount financed over
its original term to maturity (exclusive of any deferral or forbearance
periods). The Alternative Loans to be sold and/or contributed by the Seller to
the Issuer pursuant to the Purchase and Contribution Agreement will be selected
by Richland State Bank using underwriting guidelines prescribed by the
TuitionGard Program. Each Alternative Loan is insured by either Landmark or
American and Foreign. No selection procedures believed by the Seller to

                                       56
<PAGE>
be adverse to the Noteholders or the Insurer will be used in selecting the
related Financed Student Loans.

         The FFELP Loans that comprise assets of the Issuer will be beneficially
owned by the Issuer although legal title will be held by the Eligible Lender
Trustee. The Eligible Lender Trustee has entered into Guarantee Agreements with
the Federal Guarantors pursuant to which each of such Financed Student Loans
will be guaranteed by one of such Federal Guarantors. See "THE ELIGIBLE LENDER
TRUSTEE."

ORIGINATION AND MARKETING PROCESS

         For FFELP Loans, the Act specifies rules regarding loan origination
practices which lenders must comply with in order for the FFELP Loans to be
guaranteed and to be eligible to receive federal assistance in respect of FFELP
Loans. Lenders of FFELP Loans are prohibited from offering points, premiums,
payments or other inducements, directly or indirectly, to any educational
institution, guarantor or individual in order to secure FFELP Loan applications,
and no lender may conduct unsolicited mailings of FFELP Loan applications to
students who have not previously received student loans from that lender.

         Generally in the case of FFELP Loans, the student and school complete
the combined application with promissory note and mail or electronically
transmit it either to a lender or directly to the applicable Federal Guarantor.
Both the lender and such Federal Guarantor must approve such application,
including confirming that such application is complete and that it (and the
prospective borrower and institution) complies with all applicable requirements
of the Act and the requirements of such Federal Guarantor. The Act requires that
each Federal Guarantor have procedures designed to assure that it guarantees
FFELP Loans only to students attending institutions which meet the requirements
of the Act. Certain lenders establish maximum default rates for institutions
whose students they will serve. Each lender will only make loans that are
approved by the Federal Guarantor (consistent with the approval requirements of
the Act and the Federal Guarantor). For each such application that is approved,
the Federal Guarantor will issue a guarantee certificate to the lender, which
will then cause the loan to be disbursed (typically in multiple installments)
and a disclosure statement confirming the terms of the FFELP Loan to be sent to
the student borrower.

         These procedures differ somewhat for Federal Consolidation Loans and
for the Alternative Loans.

SERVICING AND COLLECTIONS PROCESS

         The applicable Guarantee Agreements and the Act require the holder of
FFELP Loans to cause specified procedures, including due diligence procedures
and the taking of specific steps at specific intervals, to be performed with
respect to the servicing of the FFELP Loans. These procedures are designed to
ensure that such FFELP Loans are repaid on a timely basis by or on behalf of
borrowers. The Servicer agrees to perform such servicing and collection
procedures with respect to the FFELP Loans on behalf of the Issuer pursuant to
the Servicing Agreement. Such procedures generally include periodic attempts to
contact any delinquent borrower by telephone and by mail, commencing with one
written notice within the first ten days of

                                       57
<PAGE>
delinquency and including multiple written notices and telephone calls to the
borrower thereafter at specified times during any such delinquency. All
telephone calls and letters are automatically registered, and a synopsis of each
call or the mailing of each letter is noted in the loan file for the borrower.
The Servicer is also required to perform skip tracing procedures on delinquent
borrowers whose current location is unknown, including contacting such
borrowers' schools and references. Failure to comply with the established
procedures could adversely affect the ability of the Eligible Lender Trustee, as
holder of legal title to the FFELP Loans on behalf of the Issuer, to realize the
benefits of any Federal Guarantee Agreement or, to receive the benefits of
federal assistance from the Department with respect thereto. Failure to comply
with certain of the established procedures with respect to a FFELP Loan may also
result in the denial of coverage under a Federal Guarantee Agreement for certain
accrued interest amounts, in circumstances where such failure has not caused the
loss of the guarantee of the principal of such FFELP Loan. See "RISK
FACTORS--Risk That Failure to Comply with Origination and Servicing Procedures
for Financed Student Loans May Adversely Affect the Issuer's Ability to Pay
Principal of and Interest on the Notes."

         At prescribed times prior to submitting a claim for payment under a
Guarantee Agreement for a delinquent FFELP Loan, the Servicer generally is
required to notify the applicable Federal Guarantor of the existence of such
delinquency. These notices advise the Federal Guarantor of seriously delinquent
accounts and allow the Federal Guarantor to make additional attempts to collect
on such loans prior to the filing of claims. Any Financed Student Loan which is
delinquent beyond a certain number of days is considered to be in default, after
which the Servicer will submit a claim for reimbursement therefor to either the
applicable Federal Guarantor in the case of FFELP Loans or the applicable
guarantor under the TuitionGard Program in the case of Alternative Loans.
Failure to file a claim within specified time frames of delinquency may result
in denial of the guarantee claim with respect to such Financed Student Loan and
failure to file such a claim within certain shorter specified time frames may
result in a denial of certain interest amounts included in such claims. The
Servicer will utilize the Subservicer to perform the servicing functions with
respect to the Financed Student Loans, including those described above.
Nonetheless, a failure, whether by the Servicer directly or any Subservicer on
its behalf, to file a guarantee claim in a timely fashion would constitute a
breach by the Servicer of its covenants under the Servicing Agreement and would,
if as a result of such failure the related Guarantee Payment is no longer
available to the Issuer, create an obligation of the Servicer to purchase or
arrange for the purchase of the applicable Financed Student Loan from the Issuer
(and also the Eligible Lender Trustee) on behalf of the Issuer. The obligation
of the Servicer to purchase or arrange for such a purchase will constitute the
sole remedy available to Noteholders or the Indenture Trustee for such a failure
by the Servicer. See "THE TRANSFER AND SERVICING AGREEMENTS--Servicer
Covenants."

         These procedures differ somewhat for the Alternative Loans.

FINANCED STUDENT LOAN POOL

         The pool of Financed Student Loans will consist of the FFELP Loans
acquired by the Eligible Lender Trustee on behalf of the Issuer on the Closing
Date and the Alternative Loans acquired by the Issuer on the Closing Date (the
"Initial Financed Student Loans") and those acquired during the Funding Period
and the Acquisition Period (together, the "Additional

                                       58
<PAGE>

Financed Student Loans," and together with the Initial Financed Student Loans,
the "Financed Student Loans").

          The Financed Student Loans were selected from the Seller's portfolio
of Student Loans by several criteria, including, as of the Statistical
Calculation Date, the following: each Financed Student Loan (i) was originated
in the United States or its territories or possessions under and in accordance
with FFELP or the TuitionGard Program, (ii) contains terms in accordance with
those required by FFELP or the TuitionGard Program, (iii) contains Guarantee
Agreements, Insurance Certificates, and other applicable requirements, and (iv)
provides for regular payments that fully amortize the amount financed over its
original term to maturity (exclusive of any deferral or forbearance periods). No
Financed Student Loan as of the Statistical Calculation Date consists of a FFELP
Loan or an Alternative Loan that was subject to the Seller's prior obligation to
sell such loan to a third party. As of the Statistical Calculation Date, none of
the Financed Student Loans is a non-performing FFELP Loan or a non-performing
Alternative Loan. Non-performing FFELP Loans are FFELP Loans which are in
default and which the Seller expects to write off at a loss. Non-performing
Alternative Loans are Alternative Loans which are in default and which the
Seller expects to write off at a loss. No selection procedures believed by the
Seller to be adverse to the Noteholders or the Insurer were used or will be used
in selecting the Financed Student Loans.

          As of the Statistical Calculation Date, the aggregate principal
balance plus accrued interest thereon of the Initial Financed Student Loans was
equal to $280,807,119. As of the Statistical Calculation Date the aggregate
principal balance plus accrued interest thereon of the FFELP Loans was equal to
$244,964,629 which includes principal balance due from Obligors, plus accrued
interest thereon estimated to be $3,309,690 as of the Statistical Calculation
Date. As of the Statistical Calculation Date the aggregate principal balance
plus accrued interest thereon of the Alternative Loans was equal to $35,842,490
which includes principal balance due from Obligors, plus accrued interest
thereon estimated to be $3,112,585 as of the Statistical Calculation Date.

         Set forth below in the following tables is a description of certain
additional characteristics of the Initial Financed Student Loans as of the
Statistical Calculation Date:

                COMPOSITION OF THE INITIAL FINANCED STUDENT LOANS
                     AS OF THE STATISTICAL CALCULATION DATE

<Table>
<S>                                                                                  <C>
Aggregate Outstanding Principal Balance........................................      $274,384,844.76
Accrued Interest...............................................................      $  6,422,274.64
Number of Borrowers............................................................               29,218
Average Outstanding Principal Balance Per Borrower.............................      $      9,390.95
Number of Loans................................................................               63,145
Average Outstanding Principal Balance Per Loan.................................      $      4,345.31
Weighted Average Original Term to Maturity(1)..................................           132 Months
Weighted Average Remaining Term to Maturity(1).................................           116 Months
Weighted Average Annual Interest Rate(2).......................................                6.16%
</Table>

------------------
(1)  Determined from the date of origination or the Statistical Calculation
     Date, as the case may be, to the stated maturity date of the applicable
     Initial Financed Student Loans, assuming repayment commences promptly upon
     expiration of the typical grace period following the expected graduation
     date and without giving effect to any deferral or forbearance periods that
     may be granted in the future. See "THE FEDERAL FAMILY EDUCATION LOAN
     PROGRAM" herein.

                                       59
<PAGE>

(2)  Determined using the interest rates applicable to the Initial Financed
     Student Loans as of the Statistical Calculation Date. However, because a
     portion of the Initial Financed Student Loans effectively bear interest
     generally at a variable rate per annum to the borrower, there can be no
     assurance that the foregoing percentage will remain applicable to the
     Initial Financed Student Loans at any time after the Statistical
     Calculation Date. See "THE FEDERAL FAMILY EDUCATION LOAN PROGRAM" herein.

         DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY LOAN TYPE
                     AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                                 NUMBER OF                                PERCENT OF POOL
                                              INITIAL FINANCED   AGGREGATE OUTSTANDING     BY OUTSTANDING
  LOAN TYPE                                    STUDENT LOANS       PRINCIPAL BALANCE     PRINCIPAL BALANCE
  ---------                                   ----------------   ---------------------   -----------------
<S>                                           <C>                <C>                     <C>
  Alternative Loans
       TuitionGard Program Loans.............      2,664          $  32,729,905.64             11.93%
  FFELP Loans
       Federal Stafford Loans (Subsidized)        40,155            138,390,480.82             50.44
       Federal Stafford Loans (Unsubsidized)      20,326            103,264,458.30             37.63
                                                  ------          ----------------            ------
            Total............................     63,145          $ 274,384,844.76            100.00%
                                                  ======          ================            ======
  </Table>

     DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY BORROWER INTEREST
                  RATE AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                           NUMBER OF                                       PERCENT OF POOL BY
                                        INITIAL FINANCED       AGGREGATE OUTSTANDING          OUTSTANDING
BORROWER INTEREST RATE (1)               STUDENT LOANS           PRINCIPAL BALANCE         PRINCIPAL BALANCE
--------------------------              ----------------       ---------------------       -----------------
<S>                                     <C>                    <C>                         <C>
Less than 5.50%...............               17,780                 $ 107,960,289.89               39.35%
5.50% to 5.99%................                3,488                    11,292,120.12                4.12
6.00% to 6.49%................                4,821                    37,978,689.06               13.84
6.50% to 6.99%................               34,199                   110,046,047.21               40.11
More than 6.99%...............                2,857                     7,107,698.48                2.59
                                             ------                 ----------------              ------
          Total...............               63,145                 $ 274,384,844.76              100.00%
                                             ======                 ================              ======
</Table>

----------------
(1)  Determined using the interest rates applicable to the Initial Financed
     Student Loans as of the Statistical Calculation Date. However, because a
     portion of the Initial Financed Student Loans effectively bear interest
     generally at a variable rate per annum to the borrower, there can be no
     assurance that the foregoing percentage will remain applicable to the
     Initial Financed Student Loans at any time after the Statistical
     Calculation Date. See "THE FEDERAL FAMILY EDUCATION LOAN PROGRAM" herein.

     DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY SCHOOL TYPE AS OF
     THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                           NUMBER OF                                       PERCENT OF POOL BY
                                        INITIAL FINANCED       AGGREGATE OUTSTANDING          OUTSTANDING
BORROWER INTEREST RATE (1)               STUDENT LOANS           PRINCIPAL BALANCE         PRINCIPAL BALANCE
--------------------------              ----------------       ---------------------       -----------------
<S>                                     <C>                    <C>                         <C>
2 Year........................                 4,133            $   8,049,610.07                 2.93%
4 Year/Graduate...............                55,541              259,430,364.61                94.55
Proprietary...................                 3,462                6,852,440.70                 2.50
Unknown.......................                     9                   52,429.38                 0.02
                                              ------            ----------------               ------
          Total...............                63,145            $ 274,384,844.76               100.00%
                                              ======            ================               ======
</Table>

                                       60
<PAGE>

              DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY
              REMAINING TERM AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                            NUMBER OF                                      PERCENT OF POOL BY
                                        INITIAL FINANCED       AGGREGATE OUTSTANDING          OUTSTANDING
REMAINING TERM(1)                        STUDENT LOANS           PRINCIPAL BALANCE         PRINCIPAL BALANCE
-----------------                       ----------------       ---------------------       -----------------
<S>                                      <C>                   <C>                         <C>
24 of less....................                  738                 $  704,537.26                   0.26%
25-48.........................                2,968                  5,342,942.73                   1.95
49-72.........................                9,608                 27,791,553.17                  10.13
73-96.........................               23,110                 77,053,310.53                  28.08
97-120........................               22,426                124,008,409.18                  45.20
121-144.......................                1,411                  6,173,122.76                   2.25
145-180.......................                  212                    589,978.44                   0.22
181-240.......................                2,472                 30,227,010.93                  11.02
241 or greater................                  200                  2,493,979.76                   0.91
                                             ------              ----------------                 ------
          Total...............               63,145              $ 274,384,844.76                 100.00%
                                             ======              ================                 ======
</Table>

----------------
(1)  Determined from the Statistical Calculation Date to the stated maturity
     date of the applicable Initial Financed Student Loan, assuming repayment
     commences promptly upon expiration of the typical grace period following
     the expected graduation date and without giving effect to any deferral or
     forbearance periods that may be granted in the future.

              DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS BY
                              BORROWER LOAN STATUS
                     AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                           NUMBER OF                                        PERCENT OF POOL BY
                                        INITIAL FINANCED        AGGREGATE OUTSTANDING           OUTSTANDING
LOAN STATUS (1)                          STUDENT LOANS            PRINCIPAL BALANCE          PRINCIPAL BALANCE
---------------                          -------------          ---------------------        -----------------
<S>                                     <C>                     <C>                          <C>
Deferment.....................                4,498                $  15,984,577.50                5.83%
Forbearance...................                3,844                   14,184,316.60                5.17
In Grace......................                1,652                   11,580,607.38                4.22
In School.....................               17,764                  122,125,674.66               44.51
Repayment.....................               35,387                  110,509,668.62               40.28
Total.........................               63,145                $ 274,384,844.76              100.00%
</Table>

----------------
(1)  Refers to the status of the borrower of each Initial Financed Student Loan
     as of the Statistical Calculation Date: such borrower may still be
     attending school ("In-School"), may be in a grace period prior to repayment
     commencing ("Grace"), may be repaying such loan ("Repayment") or may have
     temporarily ceased repaying such loan through a deferral ("Deferral") or a
     forbearance ("Forbearance") period. See "THE FEDERAL FAMILY EDUCATION LOAN
     PROGRAM" herein.

                                       61
<PAGE>

                           DISTRIBUTION OF THE INITIAL
                   FINANCED STUDENT LOANS BY DISBURSEMENT DATE
                     AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                                     NUMBER OF INITIAL                            PERCENT OF POOL BY
                                                      FINANCED STUDENT    AGGREGATE OUTSTANDING       OUTSTANDING
DISBURSEMENT DATE                                          LOANS            PRINCIPAL BALANCE      PRINCIPAL BALANCE
-----------------                                    -----------------    ---------------------    -----------------
<S>                                                  <C>                  <C>                      <C>
FFELP Loans (1)

     Prior to October 1, 1993......................         6,113          $  12,767,211.07               4.65%

     October 1, 1993, and prior to October 1, 1998.        34,573            113,799,571.60              41.47

     October 1, 1998 and thereafter................        19,795            115,088,156.45              41.94

Alternative Loans

     October 1, 1998 and thereafter................         2,664             32,729,905.64              11.93%
                                                          -------          ----------------            -------
     Total.........................................        63,145          $ 274,384,844.76             100.00%
                                                          =======          ================            =======
</Table>

------------------
(1)  FFELP Loans disbursed prior to October 1, 1993, are 100% guaranteed by the
     applicable Federal Guarantor, and reinsured against default by the
     Department up to a maximum of 100% of the Guarantee Payments. FFELP Loans
     disbursed on or after October 1, 1993 but prior to October 1, 1998, are 98%
     guaranteed by the applicable Federal Guarantor, and reinsured against
     default by the Department up to a maximum of 98% of the Guarantee Payments.
     FFELP Loans disbursed on or after October 1, 1998, are 98% guaranteed by
     the applicable Federal Guarantor, and reinsured against default by the
     Department up to a maximum of 95% of the Guarantee Payments.

                  DISTRIBUTION OF THE INITIAL FINANCED STUDENT
                       LOANS BY NUMBER OF DAYS DELINQUENT
                     AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                            NUMBER OF INITIAL
                            FINANCED STUDENT       AGGREGATE OUTSTANDING     PERCENT OF POOL BY OUTSTANDING
DAYS DELINQUENT                   LOANS              PRINCIPAL BALANCE             PRINCIPAL BALANCE
---------------             ------------------     ---------------------     ------------------------------
<S>                         <C>                    <C>                       <C>
less than 30............          61,667            $ 269,690,138.05                    98.29%

31 - 60.................           1,478                4,694,706.71                     1.71
                                  ------            ----------------                   ------
    Total...............          63,145            $ 274,384,844.76                   100.00%
                                  ======            ================                   ======
</Table>

         Each of the Financed Student Loans provides or will provide for the
amortization of the outstanding principal balance of such Financed Student Loan
over a series of regular payments. Each regular payment consists of an
installment of interest which is calculated on the basis of the outstanding
principal balance of such Financed Student Loan multiplied by the applicable
interest rate and further multiplied by the period elapsed (as a fraction of a
calendar year) since the preceding payment of interest was made. As payments are
received in respect of such Financed Student Loan, the amount received is
applied first to interest accrued to the date of payment and the balance is
applied to reduce the unpaid principal balance. Accordingly, if a borrower pays
a regular installment before its scheduled due date, the portion of the payment
allocable to interest for the period since the preceding payment was made will
be less than it would have been had the payment been made as scheduled, and the
portion of the payment applied to reduce the unpaid principal balance will be
correspondingly greater. Conversely, if a borrower pays a monthly installment
after its scheduled due date, the portion of the payment

                                       62
<PAGE>
allocable to interest for the period since the preceding payment was made will
be greater than it would have been had the payment been made as scheduled, and
the portion of the payment applied to reduce the unpaid principal balance will
be correspondingly less. In either case, subject to any applicable Deferral
Periods or Forbearance Periods, the borrower pays a regular installment until
the final scheduled payment due date, at which time the amount of the final
installment is increased or decreased as necessary to repay the then outstanding
principal balance of the Financed Student Loan.

GUARANTEE OF FINANCED STUDENT LOANS

         GENERAL. Each FFELP Loan is required to be guaranteed as to principal
and interest by one of the Federal Guarantors described below and reinsured by
the Department under the Act and must be eligible for Special Allowance Payments
and, with respect to certain FFELP Loans which are Financed Student Loans,
Interest Subsidy Payments paid by the Department. Each Alternative Loan is
guaranteed as to principal and interest by the applicable guarantor under the
TuitionGard Program.

         FEDERAL GUARANTORS. The Eligible Lender Trustee has entered into a
separate Guarantee Agreement with each of the guarantors listed below (each, a
"Federal Guarantor") pursuant to which each of the Federal Guarantors has agreed
to serve as guarantor for certain of the FFELP Loans.

         Pursuant to the Higher Education Amendments of 1992 (the "1992
Amendments"), under Section 432(o) of the Act, if the Department has determined
that a Federal Guarantor is unable to meet its insurance obligations, the loan
holder may submit claims directly to the Department and the Department is
required to pay the full Guarantee Payment due with respect thereto in
accordance with guarantee claim processing standards no more stringent than
those of such Federal Guarantor. However, the Department's obligation to pay
guarantee claims directly in this fashion is contingent upon the Department
making the determination referred to above. There can be no assurance that the
Department would ever make such a determination with respect to a Federal
Guarantor or, if such a determination was made, whether such determination or
the ultimate payment of such guarantee claims would be made in a timely manner.
See "FEDERAL FAMILY EDUCATION LOAN PROGRAM--Federal Guarantors" and "--Federal
Insurance and Reinsurance of Federal Guarantors" herein.

         The following table provides information with respect to the portion of
the Financed Student Loans guaranteed by each Federal Guarantor under FFELP:

                                       63
<PAGE>

               DISTRIBUTION OF THE INITIAL FINANCED STUDENT LOANS
               BY GUARANTOR AS OF THE STATISTICAL CALCULATION DATE

<Table>
<Caption>
                                                  NUMBER OF INITIAL                                PERCENT OF POOL
                                                   FINANCED STUDENT     AGGREGATE OUTSTANDING      BY OUTSTANDING
FFELP LOANS: NAME OF FEDERAL GUARANTOR                  LOANS             PRINCIPAL BALANCE       PRINCIPAL BALANCE
--------------------------------------            -----------------     ---------------------     -----------------
<S>                                               <C>                   <C>                      <C>
United Student Aid Funds, Inc. ..................         35,694         $165,174,440.54                  60.20%
California Student Aid Commission ...............          9,470           30,199,530.43                  11.01
New York State Higher Education Service
   Corporation ..................................          8,493           23,796,054.09                   8.67
Great Lakes Higher Education Corporation ........          4,149           13,022,353.43                   4.75
American Student Assistance .....................          2,311            8,040,643.65                   2.93
Northwest Education Loan Association ............            267            1,064,120.31                   0.39
Michigan Higher Education Assistance
   Authority ....................................             24                    0.05
                                                                                                     125,296.21
Iowa College Student Aid Commission .............              6                    0.03
                                                                                                      76,533.00
Oklahoma State Regents for Higher Education .....             35                    0.03
                                                                                                      71,008.80
Student Loan Guarantee Foundation of Arkansas ...             16                    0.02
                                                                                                      45,966.33
Oregon State Scholarship Commission .............              8                    0.01
                                                                                                      23,966.00
Finance Authority of Maine ......................              6                    0.00
                                                                                                      12,330.00
Louisiana Student Financial
   Assistance Authority .........................              2                2,696.33                   0.00
                                                          ------         ---------------             ----------
   Total ........................................         60,481         $241,654,939.12                  88.07%
ALTERNATIVE LOANS
TuitionGard Program .............................          2,664           32,729,905.64                  11.93
                                                          ------         ---------------             ----------
      Total .....................................         63,145         $274,384,844.76                 100.00%
                                                          ======         ===============             ==========
</Table>

         PRIVATE GUARANTORS. Each of the Alternative Loans is insured against
default under the TuitionGard Program by either Landmark or American and
Foreign. Both of these insurance companies are subsidiaries of Royal Group, Inc.
All TuitionGard Program loans originated prior to August 1, 2001 were insured by
Landmark. See "ALTERNATIVE LOAN PROGRAM -- General", "-- Landmark American
Insurance Company" and "-- American and Foreign Insurance Company" herein.

                            DESCRIPTION OF THE NOTES

GENERAL

         The Notes will be issued pursuant to the terms of the Indenture and
substantially in the form attached as an exhibit to the Indenture. The following
summary describes certain terms of the Notes and the Indenture. The summary does
not purport to be complete and is qualified in its entirety by reference to the
provisions of the Notes and the Indenture.

         The Notes will initially be represented by one or more Notes, in each
case registered in the name of the nominee of DTC (together with any successor
depository selected by the Issuer, the "Depository") except as set forth below.
The Notes will be available for purchase in minimum denominations of $100,000 in
book-entry form only. Unless and until Definitive Notes are issued under the
limited circumstances described herein, no Noteholder will be entitled

                                       64
<PAGE>
to receive a physical certificate representing a Note. All references herein to
actions by Noteholders of Notes held in book-entry form refer to actions taken
by DTC (since its nominee will be the sole Noteholder of record) upon
instructions from its Participants and all references herein to distributions,
notices, reports and statements to Noteholders refer to distributions, notices,
reports and statements to DTC or its nominee, as the registered holder of the
Notes, as the case may be, for distribution to Noteholders in accordance with
DTC's procedures with respect thereto. See "DESCRIPTION OF THE NOTES--Book-Entry
Registration" and "--Definitive Notes."

         Interest on and principal (to the extent payable as described herein)
of the Notes will be payable every thirty-five (35) days (or such longer period
as described below) on the dates described below (with respect to any and all
Classes of Notes, as applicable, a "Payment Date"). Interest accrued on the
Notes during all related Interest Periods up to each Fee Remittance Date
(together with interest to accrue during the remainder of such Interest Period
to the extent any related Payment Date occurs prior to the next succeeding Fee
Remittance Date) and principal (to the extent payable as described herein) of
each Class of Notes will be allocated to the applicable Note Distribution
Account on each Fee Remittance Date and then payable on the first Business Day
after each Auction Date as described below. The initial Auction Date for the
Class A-1 Notes will be March 11, 2002, or if such day is not a Business Day,
the next succeeding Business Day. After the initial Auction Date for the Class
A-1 Notes, an Auction Date for the Class A-1 Notes will occur every fifth
succeeding Monday thereafter (each, a "Class A-1 Auction Date"), provided that
if any fifth succeeding Monday thereafter is not a Business Day, such Class A-1
Auction Date shall occur on the next succeeding Business Day. The initial
Auction Date for the Class A-2 Notes will be March 13, 2002, or if such day is
not a Business Day, the next succeeding Business Day. After the initial Auction
Date for the Class A-2 Notes, an Auction Date for the Class A-2 Notes will occur
every fifth succeeding Wednesday thereafter (each, a "Class A-2 Auction Date"),
provided that if any fifth succeeding Wednesday thereafter is not a Business
Day, such Class A-2 Auction Date shall occur on the next succeeding Business
Day. The initial Auction Date for the Class A-3 Notes will be March 18, 2002, or
if such day is not a Business Day, the next succeeding Business Day. After the
initial Auction Date for the Class A-3 Notes, an Auction Date for the Class A-3
Notes will occur every fifth succeeding Monday thereafter (each, a "Class A-3
Auction Date"), provided that if any fifth succeeding Monday thereafter is not a
Business Day, such Class A-3 Auction Date shall occur on the next succeeding
Business Day. The initial Auction Date for the Class A-4 Notes will be March 20,
2002, or if such day is not a Business Day, the next succeeding Business Day.
After the initial Auction Date for the Class A-4 Notes, an Auction Date for the
Class A-4 Notes will occur every fifth succeeding Wednesday thereafter (each, a
"Class A-4 Auction Date"), provided that if any fifth succeeding Wednesday
thereafter is not a Business Day, such Class A-4 Auction Date shall occur on the
next succeeding Business Day. The resulting Payment Date for the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes is referred to as
the "Class A-1 Payment Date," "Class A-2 Payment Date," "Class A-3 Payment Date"
and "Class A-4 Payment Date," respectively. Auctions will be conducted for the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes on their
respective Auction Dates. Under certain circumstances described in Annex I under
"Changes to Auction Terms," in order to conform with then current market
practice or based on other economic and financial factors, the Auction Date may
be changed by the Broker-Dealer with the consent of the Insurer.

                                       65
<PAGE>

PAYMENTS OF INTEREST

         Interest will accrue on the outstanding principal balance of each Class
of Notes at a rate per annum equal to the "Class A-1 Note Rate," the "Class A-2
Note Rate," the "Class A-3 Note Rate" or the "Class A-4 Note Rate,"
respectively. Interest accrued on each Class of Notes will be allocated to the
applicable Note Distribution Account monthly on each Fee Remittance Date from
Available Funds and then payable to the Class A-1 Noteholders, Class A-2
Noteholders, Class A-3 Noteholders and Class A-4 Noteholders on each Class A-1
Payment Date, Class A-2 Payment Date, Class A-3 Payment Date and Class A-4
Payment Date, respectively. Interest accrued as of any Payment Date but not paid
on such Payment Date will be due on the next Payment Date, together with an
amount equal to interest on such amount at the applicable Note Rate per annum
specified above. Interest payments on the Notes will be funded from funds on
deposit in the Note Distribution Account. Interest on the Notes will be
calculated on the basis of the actual number of days elapsed in each Interest
Period divided by 360. See "THE TRANSFER AND SERVICING
AGREEMENTS--Distributions" herein.

         The Class A-1 Note Rate, Class A-2 Note Rate, Class A-3 Note Rate and
Class A-4 Note Rate will be equal, except as described below, to the Auction
Rate established for such Class of Notes for each Payment Date. Notwithstanding
the foregoing, if any Note Rate for any Interest Period (after the first
Interest Period) is greater than the Student Loan Rate for the related
Collection Period, then the Note Rate for the applicable Class of Notes for the
applicable Payment Date will be the Student Loan Rate.

         If any Note Rate for any Payment Date is based on the Student Loan
Rate, Noteholders' Interest Basis Carryover will be payable on that or
subsequent Payment Dates for the related Class of Notes to the extent the
remaining Available Funds, if any, as described under "THE TRANSFER AND
SERVICING AGREEMENTS -Distributions" herein, after all other required
allocations therefrom are sufficient. To the extent that Noteholders' Interest
Basis Carryover has accrued, any such remaining Available Funds, as described
above, will be allocated on the applicable Fee Remittance Date between any
unpaid Class A-1 Noteholders' Interest Basis Carryover, Class A-2 Noteholders'
Interest Basis Carryover, Class A-3 Noteholders' Interest Basis Carryover and
Class A-4 Noteholders' Interest Basis Carryover pro rata (based on the ratio of
each such amount to the aggregate Noteholders' Interest Basis Carryover for all
Classes).

         The Insurance Policy will not be available under any circumstances to
pay any Noteholders' Interest Basis Carryover. The only source for payment to
pay any Noteholders' Interest Basis Carryover will be any remaining Available
Funds to be allocated on each Fee Remittance Date, as described above, after all
other required allocations therefrom have been made. The Reserve Account will
not be available to pay any Noteholders' Interest Basis Carryover. Due to the
method by which the amount payable as principal of the Notes is determined, as
described under "THE TRANSFER AND SERVICING AGREEMENTS - Distributions" herein,
no funds will be available to pay any Noteholders' Interest Basis Carryover on
any Payment Date occurring prior to the Parity Date. Thus, any Noteholders'
Interest Basis Carryover accrued prior to the Parity Date will in no event be
paid until on or after the Parity Date. No assurance can be provided as to when
the Parity Date will occur.

                                       66
<PAGE>
DISTRIBUTIONS OF PRINCIPAL

         Principal of the Notes will generally be allocated to the applicable
Note Distribution Account monthly on each Fee Remittance Date on or after the
end of the Acquisition Period and then will be payable in installments on each
applicable Payment Date occurring on or after the end of the Acquisition Period
in an amount generally equal to the Principal Distribution Amount for such
Payment Date. "Principal Distribution Amount" means (A) to the extent the Class
A Note Principal Amount (less all amounts on deposit in all Note Distribution
Accounts in respect of the principal on all the Notes) as of such Fee Remittance
Date (i) prior to giving effect to all distributions to the Note Distribution
Accounts and (ii) after giving effect to any purchase of Additional Financed
Student Loans on such date times 103% plus $150,000, is equal to or less than
the Pool Balance as of the last day of the related Collection Period, the amount
of principal paid and collected (plus any realized losses thereon) during the
related Collection Period less any accrued and unpaid interest on the Financed
Student Loans for such Collection Period to the extent such interest will be
capitalized and added to the principal balance of such Student Loans, upon the
commencement of repayment of such Student Loans, as described herein, or (B) to
the extent the Class A Note Principal Amount as of such Fee Remittance Date (i)
prior to giving effect to all distributions to the Note Distribution Accounts
and (ii) after giving effect to any purchase of Additional Financed Student
Loans on such date times 103% plus $150,000, is greater than the Pool Balance as
of the last day of the related Collection Period, all Available Funds remaining
after the payment of the Policy Premium, Servicing Fee, Eligible Lender Trustee
Fees, Indenture Trustee Fees, Auction Agent Fees, Broker-Dealer Fees, the
deposit into the applicable Note Distribution Account of the Class A-1
Noteholders' Interest Distribution Amount, Class A-2 Noteholders' Interest
Distribution Amount, Class A-3 Noteholders' Interest Distribution Amount and
Class A-4 Noteholders' Interest Distribution Amount, the payment of any net
amounts accrued and unpaid to a Swap Counterparty (other than any termination
payments under the related Swap Agreement) and making any required deposits to
the Reserve Account up to such amount which would cause the Class A Note
Principal Amount plus all amounts on deposit in all Note Distribution Accounts
in respect of principal on the Notes as of such Fee Remittance Date, after
giving effect to (i) all distributions to the Note Distribution Accounts and
(ii) any purchase of Additional Financed Student Loans on such date times 103%
plus $150,000, to equal the Pool Balance as of the last day of the related
Collection Period. During the Acquisition Period, an amount generally equal to
the Principal Distribution Amount shall be deposited into the Acquisition
Account and utilized to purchase Additional Financed Student Loans from the
Seller. See "THE TRANSFER AND SERVICING AGREEMENTS--Distributions."

         Except in a circumstance where an Event of Default has occurred and is
continuing, principal payments will first be made by lot at random only to the
holders of the Class A-1 Notes until such Class A-1 Notes have been paid in
full. Principal payments will then be made by lot at random only to the holders
of the Class A-2 Notes until such Class A-2 Notes have been paid in full.
Principal payments will then be made by lot at random only to the holders of the
Class A-3 Notes until such Class A-3 Notes have been paid in full. Principal
payments will then be made by lot at random only to the holders of the Class A-4
Notes until such Class A-4 Notes have been paid in full.

                                       67
<PAGE>

         Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable, if not previously paid, on the date on which
an Event of Default shall have occurred, if the Indenture Trustee (acting, so
long as no Insurer Default has occurred at the direction of the Insurer) has
declared the Notes to be immediately due and payable. If an Event of Default has
occurred and is continuing, all distributions in respect of principal will be
allocated between the Class A-1, Class A-2, Class A-3 and Class A-4 Notes pro
rata based on the outstanding principal amount of each such Class, until the
aggregate principal balance thereof has been reduced to zero.

         No failure to make principal payments on the Notes will result in an
Event of Default prior to the Final Scheduled Payment Date so long as the
portion of Available Funds allocable to principal payments on the Notes is in
fact so allocated and paid in accordance with the terms of the Indenture. In
addition, prior to the Final Scheduled Payment Date (whether as scheduled or if
accelerated after an Event of Default), draws may be made under the Insurance
Policy to pay principal on the Notes only after the Parity Date and only if a
Subordination Deficit exists. See "CERTAIN INFORMATION REGARDING THE INSURER AND
THE INSURANCE POLICY--The Policy."

         The outstanding principal amount, if any, of the Notes will be payable
in full on the applicable Final Scheduled Payment Date. However, the actual
maturity of the Notes could occur other than on such date as a result of a
variety of factors including the exercise by the Issuer of its option to redeem
the Notes of each Class, in whole or in part, on each Class' respective Payment
Date and prepayments of the Financed Student Loans.

DETERMINATION OF THE AUCTION RATES

         The Indenture Trustee will act as calculation agent and will use the
Auction Procedures described in Annex I hereto to determine the applicable
Auction Rate.

BOOK-ENTRY REGISTRATION

         The Notes initially will be offered by the Issuer through the Placement
Agent in reliance on exemptions from the registration requirements of the
Securities Act to institutional "accredited investors" within the meaning of
Rule 501(a)(1), (2), (3) or (7) under Regulation D of the Securities Act, each
of which has delivered a letter (each, a "Purchaser's Letter") in the form of
Exhibit A hereto. In all cases, the Notes may be sold only in reliance on
exemptions from the registration requirements of the Securities Act to
institutional "accredited investors" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under Regulation D of the Securities Act, each of which has delivered
a Purchaser's Letter in the form of Exhibit A hereto, and each of which has
sufficient knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of the Notes and are able and
prepared to bear the economic risk of investing in and holding the Notes.

         Except as otherwise provided, the Notes sold in reliance on exemptions
from the registration requirements of the Securities Act to institutional
"accredited investors" within the meaning of Rule 501(a)(1), (2), (3) or (7)
under the Securities Act will be represented by global notes in fully registered
form without coupons (each, a "Restricted Global Note") deposited with

                                       68
<PAGE>

the Indenture Trustee as custodian for, and registered in the name of, a nominee
of DTC. Investors may hold their interests in the Restricted Global Notes
directly through DTC if they are DTC participants, or indirectly through
organizations which are DTC participants. The Restricted Global Notes will be
deposited with the Indenture Trustee as custodian, and registered in the name of
a nominee of DTC. Beneficial interests in the Restricted Global Notes will be
subject to certain restrictions on transfer set forth under "Transfer
Restrictions."

         So long as the Notes of any Class are represented by a Restricted
Global Note, a Noteholder of such Class may sell, transfer or otherwise dispose
of Notes of such Class only to a purchaser who has executed and delivered a
Purchaser's Letter in the form of Exhibit A hereto to the Indenture Trustee and
the Broker-Dealer, and only to the Issuer (pursuant to a redemption), in an
Auction or to or through a Broker-Dealer; provided, however, that in the case of
all transfers to or through a Broker-Dealer other than those pursuant to
Auctions, that Broker-Dealer shall advise the Auction Agent of such transfer. If
the Notes of any Class are no longer represented by a Restricted Global Note,
the Notes of such Class may be sold only in reliance on an applicable exemption
from the registration requirements of the Securities Act.

         No service charge will be made for any registration of transfer or
exchange of Notes, but the Indenture Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.

         Except in the limited circumstances described below, owners of
beneficial interests in the Restricted Global Notes will not be entitled to
receive physical delivery of definitive Notes. The Notes are not issuable in
bearer form. See "SETTLEMENT AND CLEARING."

         NONE OF THE ISSUER, THE INSURER, THE SELLER, THE SERVICER, THE ELIGIBLE
LENDER TRUSTEE, THE INDENTURE TRUSTEE OR THE PLACEMENT AGENT WILL HAVE ANY
RESPONSIBILITY OR OBLIGATION TO ANY PARTICIPANTS OR THE PERSONS FOR WHOM THEY
ACT AS NOMINEES WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY
DTC OR ANY PARTICIPANT, (2) THE PAYMENT BY DTC OR ANY PARTICIPANT OF ANY AMOUNT
DUE TO ANY BENEFICIAL OWNER IN RESPECT OF THE PRINCIPAL AMOUNT OF OR INTEREST ON
THE NOTES, (3) THE DELIVERY BY ANY PARTICIPANT OF ANY NOTICE TO ANY BENEFICIAL
OWNER WHICH IS REQUIRED OR PERMITTED UNDER THE TERMS OF THE INDENTURE TO BE
GIVEN TO NOTEHOLDERS OR (4) ANY OTHER ACTION TAKEN BY DTC AS THE NOTEHOLDER.

DEFINITIVE NOTES

         The Notes will be issued in fully registered, certificated form
("Definitive Notes") to Noteholders or their respective nominees, rather than to
DTC or its nominee, only if (i) the Issuer advises the Indenture Trustee in
writing that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to the Notes and the Issuer is
unable to locate a qualified successor, (ii) the Issuer, at its option, elects
to terminate the book-entry system through DTC or (iii) after the occurrence of
an Event of Default, Noteholders representing at least a majority of the
outstanding principal amount of the Notes advise the Indenture Trustee through
DTC in writing that the continuation of a book-entry system through DTC (or a

                                       69
<PAGE>

successor thereto) with respect to the Notes is no longer in the best interest
of the holders of such Notes.

         Upon the occurrence of any event described in the immediately preceding
paragraph, the Indenture Trustee will be required to notify all Noteholders
through Participants of the availability of Definitive Notes. Upon surrender by
DTC of the Definitive Notes representing the corresponding Notes and receipt of
instructions for re-registration, the Indenture Trustee will reissue such Notes
as Definitive Notes to the Noteholders.

         Distributions of principal of, and interest on, such Definitive Notes
will thereafter be made by the Indenture Trustee in accordance with the
procedures set forth in the Indenture directly to holders of Definitive Notes in
whose names the Definitive Notes were registered at the close of business on the
applicable Record Date specified for the Notes. Such distributions will be made
by check mailed to the address of such holder as it appears on the register
maintained by the Indenture Trustee. The final payment on any such Definitive
Note, however, will be made only upon presentation and surrender of such
Definitive Note at the office or agency specified in the notice of final
distribution to applicable Noteholders.

         Definitive Notes will be transferable and exchangeable at the offices
of the Indenture Trustee or of a registrar named in a notice delivered to
holders of Definitive Notes. No service charge will be imposed for any
registration of transfer or exchange, but the Indenture Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge
imposed in connection therewith.

REPORTS TO NOTEHOLDERS

         On or about each Fee Remittance Date, the Indenture Trustee will
provide to Noteholders of record as of the related Record Date a statement
setting forth substantially the same information as is required to be provided
on the periodic report provided to the Indenture Trustee and the Issuer
described under "THE TRANSFER AND SERVICING AGREEMENTS--Statements to Indenture
Trustee and Issuer." The statements provided to Noteholders will not constitute
financial statements prepared in accordance with generally accepted accounting
principles.

         Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Notes, the Indenture
Trustee will mail to each person who at any time during such calendar year was a
Noteholder and received any payment thereon, a statement containing certain
information for the purposes of such Noteholder's preparation of federal income
tax returns. See "CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES."

THE INDENTURE

         MODIFICATION OF INDENTURE. With the consent of the Insurer (or in the
event of an Insurer Default, the holders of not less than 66 2/3% of the
outstanding Notes), the Indenture Trustee and the Issuer may execute a
supplemental indenture to add provisions to, or change in any manner or
eliminate any provisions of, the Indenture with respect to the Notes, or to
modify (except as provided below) in any manner the rights of the related
Noteholders. An "Insurer Default"

                                       70
<PAGE>
means (i) the occurrence of certain events of bankruptcy with respect to the
Insurer or (ii) the occurrence of a failure by the Insurer to make an Insured
Payment in accordance with the applicable Insurance Policy.

         Without the consent of the holder of each such outstanding Note
affected thereby, however, no supplemental indenture will (i) change the Final
Scheduled Payment Date of any Note or the principal payments or interest
payments due or to become due on any Payment Date with respect to any Note, or
change the priority of payment thereof, or reduce the principal amount thereof
or the Note Rate thereon, or change the place of payment where, or the coin or
currency in which, any Note or the interest thereon is payable, or impair the
right to institute suit for the enforcement of any such payment on or after the
maturity thereof, (ii) reduce the percentage of the outstanding Notes the
consent of whose Noteholders is required for any such supplemental indenture,
for any waiver of compliance with provisions of the Indenture or the Events of
Default and their consequences, or for any act of Noteholders, (iii) modify any
of the provisions of the section of the Indenture concerning amendments to the
Indenture and supplemental indentures except to increase any percentage or
fraction set forth therein or to provide that certain other provisions of the
Indenture cannot be modified or waived without the consent of the holder of each
outstanding Note affected thereby, (iv) modify or alter the provisions of the
Indenture regarding the voting of Notes held by the Issuer, the Seller, an
affiliate of either of them or any obligor on such Notes, (v) permit the
creation of any lien ranking prior to or on a parity with the lien of the
Indenture with respect to any part of the Indenture trust estate or terminate
the lien of the Indenture on any property at any time subject to the Indenture
or deprive any Noteholder of the security afforded by the lien of the Indenture
or (vi) result in a taxable event to any Class of Noteholders.

         The Issuer and the Indenture Trustee may also enter into supplemental
indentures, without obtaining the consent of Noteholders but with prior written
consent from the Insurer (so long as no Insurer Default has occurred), for the
purpose of (i) adding to the covenants of the Issuer for the benefit of the
Noteholders, or surrendering any right or power conferred upon the Issuer in the
Indenture, (ii) curing any ambiguity, correcting or supplementing any provision
of the Indenture which may be inconsistent with any other provision of the
Indenture, (iii) correcting or amplifying the description of any property at any
time subject to the lien of the Indenture, or to better assure, convey and
confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of the Indenture, (iv) to evidence and provide for the
acceptance of the appointment of a successor Indenture Trustee or (v) add,
change or eliminate any other provision of the Indenture; provided, such action
will not materially and adversely affect the interests of the Noteholders in any
material respect.

         EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT. An "Event of Default"
under the Indenture will consist of the following: (i) without taking into
account any payments under the Insurance Policy, a default for two days or more
in the payment of any interest (excluding any Noteholders' Interest Basis
Carryover) on any Note after the same becomes due and payable; (ii) a default in
the payment of the remaining principal balance of the Notes on the Final
Scheduled Payment Date; (iii) a default for three Business Days or more in the
payment of any installment of the principal of any Note when the same becomes
due and payable and when Available Funds are sufficient to make such payment;
(iv) a default in any material respect in the observance or performance of any
covenant or agreement of the Issuer made in the Indenture and

                                       71
<PAGE>
the continuation of any such default for a period of 30 days after notice
thereof is given to the Issuer by the Indenture Trustee or to the Issuer and the
Indenture Trustee by the holders of at least 25% in principal amount of the
Notes then outstanding; provided, however, that if the Issuer demonstrates that
it is making a good-faith attempt to cure such default, such 30-day period may
be extended by the Indenture Trustee (with the prior consent of the Insurer) to
90 days; (v) any representation or warranty made by the Issuer in the Indenture
or in any certificate delivered pursuant thereto or in connection therewith
having been incorrect in a material adverse respect as of the time made, and
such breach not having been cured within 45 days after notice thereof is given
to the Issuer by the Indenture Trustee or to the Issuer and the Indenture
Trustee by the holders of at least 25% in principal amount of the Notes then
outstanding; provided, however, that if the Issuer demonstrates that it is
making a good-faith attempt to cure such breach, such 45-day period may be
extended by the Indenture Trustee (with the prior consent of the Insurer) to 90
days; or (vi) certain events of bankruptcy, insolvency, receivership or
liquidation of the Issuer.

         If an Event of Default should occur and be continuing with respect to
the Notes, the Indenture Trustee may, with the consent of the Insurer, or shall,
at the direction of the Insurer, declare the principal of such Notes to be
immediately due and payable.

         If the Notes have been declared to be due and payable following an
Event of Default with respect thereto, the Indenture Trustee shall, to the
extent so directed by the Insurer, either sell the Financed Student Loans or
have the Issuer (and Eligible Lender Trustee) maintain possession of the
Financed Student Loans and continue to apply collections with respect to such
Financed Student Loans as if there had been no declaration of acceleration;
provided, that, if an Event of Default has occurred and is continuing, all
distributions in respect of principal will be allocated between the Class A-1,
Class A-2, Class A-3 and Class A-4 Notes pro rata based on the outstanding
principal amount of each such Class. See "--Distributions of Principal" above.

         Subject to the provisions of the Indenture relating to the duties of
the Indenture Trustee, if an Event of Default should occur and be continuing,
the Indenture Trustee will be under no obligation to exercise any of the rights
or powers under the Indenture if the Indenture Trustee reasonably believes it
will not be adequately indemnified against the costs, expenses and liabilities
which might be incurred by it in complying with such request. Subject to such
provisions for indemnification and certain limitations contained in the
Indenture, the Insurer will have the right to direct the time, method and place
of conducting any proceeding or any remedy available to the Indenture Trustee
and may waive any default with respect thereto.

         No holder of Notes will have the right to institute any proceeding with
respect to the Indenture, unless (i) such holder previously has given to the
Indenture Trustee written notice of a continuing Event of Default, (ii) the
holders of not less than 25% in principal amount of the outstanding Notes have
requested in writing that the Indenture Trustee institute such proceeding in its
own name as Indenture Trustee, (iii) such holder or holders have offered the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request, (iv) the Indenture
Trustee has for 60 days failed to institute such proceeding, (v) no direction
inconsistent with such written request has been given to the Indenture Trustee
during such 60-day period by the holders of a majority in principal amount of
the outstanding Notes and (vi) the Insurer shall have given its prior written
consent.

                                       72
<PAGE>
Notwithstanding the foregoing, any Noteholder shall have the right, which is
absolute and unconditional, to receive payment of the principal of and interest
(and, to the extent remaining Available Funds in accordance with the priority of
allocation thereof are sufficient for the payment thereof, of any Noteholders'
Interest Basis Carryover) on such Note on or after the respective due dates
thereof expressed in such Note or in the Indenture (or any date fixed for
redemption) and to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Noteholder.

         In addition, the Indenture Trustee and the Noteholders will covenant
that they will not at any time institute against the Issuer any bankruptcy,
reorganization or other proceeding under any federal or state bankruptcy or
similar law.

         With respect to the Issuer, none of the Indenture Trustee, the Insurer,
AMS, the Issuer, the Servicer or the Eligible Lender Trustee in its individual
capacity, nor any holder of a Note representing an interest in the assets of the
Issuer, nor any of their respective owners, beneficiaries, agents, officers,
directors, employees, successors or assigns will, in the absence of an express
agreement to the contrary (including in the case of the Insurer, except as
provided in the Insurance Policy), be personally liable for the payment of the
principal of or interest on the Notes or for the agreements of the Issuer
contained in the Indenture.

         CERTAIN COVENANTS. The Indenture will provide that the Issuer may not
consolidate with or merge into any other entity, unless (i) the entity formed by
or surviving such consolidation or merger is organized under the laws of the
United States of America and any state, (ii) such entity expressly assumes the
Issuer's obligation to make due and punctual payments upon the Notes and the
performance or observance of every agreement and covenant of the Issuer under
the Indenture, (iii) no Event of Default shall have occurred and be continuing
immediately after such merger or consolidation, (iv) the Insurer has consented
to such action and (v) the Issuer has received an opinion of counsel to the
effect that such consolidation or merger would have no material adverse federal
tax consequence to the Issuer or to any Noteholder.

         The Issuer will not, among other things, (i) except as expressly
permitted by the Indenture, the Purchase and Contribution Agreement, the
Insurance Policy and the Servicing Agreement or certain related documents
(collectively, the "Related Documents"), sell, transfer, exchange or otherwise
dispose of any of its assets securing the Notes, (ii) claim any credit on or
make any deduction from the principal and interest payable in respect of the
Notes (other than amounts withheld under the Code or applicable state law) or
assert any claim against any present or former holder of such Notes because of
the payment of taxes levied or assessed upon the Issuer, (iii) except as
contemplated by the Related Documents, dissolve or liquidate in whole or in
part, (iv) permit the validity or effectiveness of the Indenture to be impaired
or permit any person to be released from any covenants or obligations with
respect to the Notes under the Indenture except as may be expressly permitted
thereby or (v) permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance to be created on or extend to or otherwise arise
upon or burden the assets of the Issuer or any part thereof, or any interest
therein or the proceeds thereof, except as expressly permitted by the Related
Documents.

         The Issuer may not engage in any activity other than as specified
herein. The Issuer will not incur, assume or guarantee any indebtedness with
respect to the collateral securing the Notes

                                       73
<PAGE>
other than indebtedness incurred pursuant to the Notes and the Indenture or
otherwise in accordance with the Related Documents.

         QUARTERLY COMPLIANCE STATEMENT. The Issuer will be required to file
quarterly with the Indenture Trustee a written statement as to the fulfillment
of its obligations under the Indenture.

         SATISFACTION AND DISCHARGE OF INDENTURE. The Indenture will be
discharged with respect to the collateral securing the Notes upon the delivery
to the Indenture Trustee for cancellation of all the Notes and the return of the
Insurance Policy to the Insurer for cancellation and payment of all amounts due
to the Insurer, or, with certain limitations, upon deposit with the Indenture
Trustee of funds sufficient for the payment in full of all the Notes and payment
of all amounts owed to the Insurer.

        THE INDENTURE TRUSTEE. The Indenture Trustee will be Bank One, National
Association. The Indenture Trustee may resign at any time by giving 90 days
written notice to the Issuer, the Insurer and the Noteholders, in which event
the Issuer will be obligated to appoint a successor trustee for the Notes. The
Insurer or a majority of the Noteholders with the consent of the Insurer, may
also remove any Indenture Trustee if such Indenture Trustee ceases to be
eligible to continue as such under the Indenture or if such Indenture Trustee
becomes insolvent. In such circumstances, the Issuer will be obligated to
appoint a successor trustee for the Notes. Any resignation or removal of the
Indenture Trustee and appointment of a successor trustee for the Notes will not
become effective until acceptance of the appointment by the successor trustee.

INTEREST RATE SWAP AGREEMENTS

         As permitted by the terms of the Indenture, the Issuer may enter into
one or more Swap Agreements with one or more Swap Counterparties in connection
with the Notes. Pursuant to the Indenture, no Swap Agreement may be entered into
by the Issuer unless the Indenture Trustee first receives the consent of the
Insurer, which consent shall not be unreasonably withheld.

         "Swap Agreement" means an interest rate exchange agreement between the
Issuer and a Swap Counterparty, as originally executed and as amended or
supplemented, or other interest rate hedge agreement between the Issuer and a
Swap Counterparty, as originally executed and as amended or supplemented, in
each case only upon receipt of (a) a Rating Confirmation and (b) the approval of
the Insurer, for the purpose of converting in whole or in part the Issuer's
interest rate liability on all or a portion of the Notes to a fixed or variable
rate liability (including converting a variable rate liability to a different
variable rate liability).

         "Swap Counterparty" means any Person (approved by the Insurer, which
approval shall not be unreasonably withheld) with whom the Issuer shall, from
time to time, enter into a Swap Agreement.

               CERTAIN INFORMATION REGARDING THE INSURANCE POLICY
                                 AND THE INSURER

         The following information has been supplied by MBIA Insurance
Corporation (the "Insurer") for inclusion in this Offering Memorandum. The
Insurer does not accept any

                                       74
<PAGE>
responsibility for the accuracy or completeness of this Offering Memorandum or
any information or disclosure contained herein, or omitted herefrom, other than
with respect to the accuracy of the information regarding the insurance policy
and the Insurer set forth under the heading "CERTAIN INFORMATION REGARDING THE
INSURANCE POLICY AND THE INSURER" herein. Additionally, the Insurer makes no
representation regarding the Notes or the advisability of investing in the
Notes.

         The Insurer, in consideration of the payment of a premium and subject
to the terms of the Insurance Policy, thereby unconditionally and irrevocably
guarantees to any Noteholder that an amount equal to each full and complete
Insured Payment will be received from the Insurer by the trustee or its
successors, as trustee for the Noteholders, on behalf of the Noteholders, for
distribution by the trustee to each Noteholder of that Noteholder's
proportionate share of the Insured Payment.

         The Insurer's obligations under the Insurance Policy, with respect to a
particular Insured Payment, will be discharged to the extent funds equal to the
applicable Insured Payment are received by the trustee, whether or not those
funds are properly applied by the trustee. Insured Payments will be made only at
the time set forth in the Insurance Policy, and no accelerated Insured Payments
will be made regardless of any acceleration of the Notes, unless the
acceleration is at the sole option of the Insurer.

         Notwithstanding the foregoing paragraph, the Insurance Policy does not
cover shortfalls, if any, attributable to the liability of the trust or the
trustee for withholding taxes, if any (including interest and penalties in
respect of any liability for withholding taxes).

         The Insurer will pay any Insured Payment that is a Preference Amount on
the business day following receipt on a business day by the Insurer's fiscal
agent of the following:

         o        a certified copy of the order requiring the return of a
         preference payment;

         o        an opinion of counsel satisfactory to the Insurer that the
         order is final and not subject to appeal;

         o        an assignment in a form that is reasonably required by the
         Insurer, irrevocably assigning to the Insurer all rights and claims of
         the Noteholder relating to or arising under the Notes against the
         debtor which made the preference payment or otherwise with respect to
         the preference payment; and

         o        appropriate instruments to effect the appointment of the
         Insurer as agent for the Noteholder in any legal proceeding related to
         the preference payment, which instruments are in a form satisfactory to
         the Insurer;

provided that if these documents are received after 12:00 p.m., New York time,
on that business day, they will be deemed to be received on the following
business day. Payments by the Insurer will be disbursed to the receiver or the
trustee in bankruptcy named in the final order of the court exercising
jurisdiction on behalf of the Noteholder and not to any Noteholder directly
unless the

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<PAGE>
Noteholder has returned principal or interest paid on the Notes to
the receiver or trustee in bankruptcy, in which case that payment will be
disbursed to the Noteholder.

         The Insurer will pay any other amount payable under the Insurance
Policy no later than 12:00 p.m., New York time, on the later of the Payment Date
on which the related Deficiency Amount is due or the third business day
following receipt in New York, New York on a business day by State Street Bank
and Trust Company, N.A., as fiscal agent for the Insurer or any successor fiscal
agent appointed by the Insurer of a notice from the trustee specifying the
Insured Payment which is due and owing on the applicable Payment Date, provided
that if the notice is received after 12:00 p.m., New York time, on that business
day, it will be deemed to be received on the following business day. If any
notice received by the Insurer's fiscal agent is not in proper form or is
otherwise insufficient for the purpose of making a claim under the Insurance
Policy, it will be deemed not to have been received by the Insurer's fiscal
agent for the purposes of this paragraph, and the Insurer or the fiscal agent,
as the case may be, will promptly so advise the trustee and the trustee may
submit an amended notice.

         Insured Payments due under the Insurance Policy, unless otherwise
stated therein, will be disbursed by the Insurer's fiscal agent to the trustee,
on behalf of the Noteholders, by wire transfer of immediately available funds in
the amount of the Insured Payment less, in respect of Insured Payments related
to Preference Amounts, any amount held by the trustee for the payment of the
Insured Payment and legally available therefor.

         The fiscal agent is the agent of the Insurer only and the fiscal agent
will in no event be liable to Noteholders for any acts of the fiscal agent or
any failure of the Insurer to deposit or cause to be deposited sufficient funds
to make payments due under the insurance policy.

         Subject to the terms of the Indenture, the Insurer will be subrogated
to the rights of each Noteholder to receive payments under the Notes to the
extent of any payment by the Insurer under the Insurance Policy.

         As used in the Insurance Policy, the following terms shall have the
following meanings:

         "Available Funds" means, with respect to each class of Notes, solely
with respect to Required Distributions for such class, for any Payment Date, the
Available Funds for such class, for the immediately preceding Fee Remittance
Date plus any amounts available from the Reserve Account for such class less all
amounts allocated pursuant to the Indenture in respect of the Servicing Fee, the
Trustee Fees, the Auction Agent Fee, the Broker-Dealer Fees and the Policy
Premium, including any such amounts that are overdue.

         "Deficiency Amount" means, with respect to each class of Notes, the
excess, if any, of the Required Distribution for such class over, in the case of
any Payment Date or the Final Scheduled Payment Date for such class of Notes,
the Available Funds for such class for such date.

         "Insured Payment" means, with respect to each class of Notes, (i) as of
any Fee Remittance Date, any Deficiency Amount for such class of Notes and (ii)
any Preference Amount for such class of Notes.

                                       76
<PAGE>

         "Owner" means each Noteholder who, on the applicable Payment Date is
entitled under the terms of the applicable Notes to payment thereunder.

         "Preference Amount" means any amount previously distributed to an Owner
of the Notes that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.

         "Required Distribution" means for the Insurance Policy and (i) any
Payment Date prior to the Final Scheduled Payment Date, an amount equal to the
sum of the Class A-1 Noteholders' Interest Distribution Amount, Class A-2
Noteholders' Interest Distribution Amount, Class A-3 Noteholders' Interest
Distribution Amount and Class A-4 Noteholders' Interest Distribution Amount, as
applicable, plus the Subordination Deficit, if any, and (ii) for the Final
Scheduled Payment Date (whether as scheduled or if accelerated after an Event of
Default) with respect to the Notes, an amount equal to the sum of the
Noteholders' Interest Distribution Amount and the outstanding Note Principal
Amount.

         Capitalized terms used in the Insurance Policy and not otherwise
defined in the Insurance Policy shall have the meanings set forth in the
Indenture as of the date of execution of the Insurance Policy, without giving
effect to any subsequent amendment or modification to the Indenture unless such
amendment or modification has been approved in writing by the Insurer.

         The insurance policy is not cancelable for any reason. The premium on
the insurance policy is not refundable for any reason including payment, or
provision being made for payment, prior to the maturity of the Notes.

         The insurance policy is being issued under and pursuant to, and will be
construed under, the laws of the State of New York, without giving effect to the
conflict of laws principles thereof.

         THE INSURANCE PROVIDED BY THE INSURANCE POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.

THE INSURER

         MBIA Insurance Corporation (the "Insurer") is the principal operating
subsidiary of MBIA Inc., a New York Stock Exchange listed company ("MBIA Inc.").
MBIA Inc. is not obligated to pay the debts of or claims against the Insurer.
The Insurer is domiciled in the State of New York and licensed to do business in
and is subject to regulation under the laws of all 50 states, the District of
Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the Northern
Mariana Islands, the Virgin Islands of the United States and the Territory of
Guam. The Insurer has three branches, one in the Republic of France, one in the
Republic of Singapore and the other in the Kingdom of Spain. New York has laws
prescribing minimum capital requirements, limiting classes and concentrations of
investments and requiring the approval of policy rates and forms. State laws
also regulate the amount of both the aggregate and individual risks that may be
insured, the payment of dividends by the Insurer, changes in control and

                                       77
<PAGE>

transactions among affiliates. Additionally, the Insurer is required to maintain
contingency reserves on its liabilities in certain amounts and for specified
periods of time.

FINANCIAL INFORMATION ABOUT THE INSURER

         The following documents filed by MBIA Inc. with the Securities and
Exchange Commission are incorporated herein by reference:

         o        MBIA Inc.'s Annual Report on Form 10-K for the year ended
December 31, 2000;

         o        MBIA Inc.'s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001; and

         o        the report on Form 8-K filed by MBIA Inc. on January 30, 2001.

         Any documents filed by MBIA Inc. pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934, as amended, after the date of
this Offering Memorandum and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference in
this Offering Memorandum and to be a part hereof. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein, or
contained in this Offering Memorandum, shall be deemed to be modified or
superseded for purposes of this Offering Memorandum to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Offering Memorandum.

         The consolidated financial statements of the Insurer, a wholly owned
subsidiary of MBIA Inc., and its subsidiaries as of December 31, 2000 and
December 31, 1999 and for each of the three years in the period ended December
31, 2000, prepared in accordance with generally accepted accounting principles,
included in the Annual Report on Form 10-K of MBIA Inc. for the year ended
December 31, 2000, and the consolidated financial statements of the Insurer and
its subsidiaries as of September 30, 2001 and for the nine month period ended
September 30, 2001 and September 30, 2000 included in the Quarterly Report on
Form 10-Q of MBIA Inc. for the period ended September 30, 2001, are hereby
incorporated by reference into this Offering Memorandum and shall be deemed to
be a part hereof. Any statement contained in a document incorporated by
reference herein shall be modified or superseded for purposes of this Offering
Memorandum to the extent that a statement contained herein or in any other
subsequently filed document which also is incorporated by reference herein
modifies or supersedes that statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Offering Memorandum.

         All financial statements of the Insurer and its subsidiaries included
in documents filed by MBIA Inc. pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, subsequent to the date of this
Offering Memorandum and prior to the termination of

                                       78
<PAGE>
the offering of the Notes shall be deemed to be incorporated by reference into
this Offering Memorandum and to be a part hereof from the respective dates of
filing those documents.

         MBIA Inc. files annual, quarterly and special reports, information
statements and other information with the Securities and Exchange Commission
under File No. 1-9583. Copies of the Securities and Exchange Commission filings
including

         o        MBIA Inc.'s Annual Report on Form 10-K for the year ended
December 31, 2000,

         o        MBIA Inc.'s Quarterly Report on Form 10-Q for the quarter
ended September 30, 2001, and

         o        the report on Form 8-K filed by MBIA Inc. on January 30, 2001

         are available

         o        over the Internet at the Securities and Exchange Commission's
web site at http://www.sec.gov;

         o        at the Securities and Exchange Commission's public reference
room in Washington, D.C.;

         o        over the Internet at MBIA Inc.'s web site at
http://www.mbia.com; and

         o        at no cost, upon request to MBIA Insurance Corporation, 113
King Street, Armonk, New York 10504. The telephone number of the Insurer is
(914) 273-4545.

         The tables below present selected financial information of the Insurer
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities and generally accepted accounting
principles:

<Table>
<Caption>
                                                                       STATUTORY ACCOUNTING PRACTICES
                                                               -----------------------------------------------
                                                               December 31, 2000            September 30, 2001
                                                               -----------------            ------------------
                                                                   (Audited)                   (Unaudited)
                                                                                (In millions)
<S>                                                            <C>                          <C>
Admitted Assets......................................                $7,627                       $8,463
Liabilities..........................................                 5,245                        6,049
Capital and Surplus..................................                 2,382                        2,414
</Table>

                                       79
<PAGE>

<Table>
<Caption>
                                                                  GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
                                                               -----------------------------------------------
                                                               December 31, 2000            September 30, 2001
                                                               -----------------            ------------------
                                                                   (Audited)                   (Unaudited)
                                                                                (In millions)
<S>                                                            <C>                          <C>
Assets...............................................                $8,450                       $9,505
Liabilities..........................................                 3,642                        4,252
Shareholder's Equity.................................                 4,808                        5,253
</Table>

FINANCIAL STRENGTH RATINGS OF THE INSURER

         Moody's Investors Service, Inc. rates the financial strength of the
Insurer "Aaa."

         Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., rates the financial strength of the Insurer "AAA."

         Fitch rates the financial strength of the Insurer "AAA."

         Each rating of the Insurer should be evaluated independently. The
ratings reflect each respective rating agency's current assessment of the
creditworthiness of the Insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.

         The above ratings are not recommendations to buy, sell or hold the
Notes, and the ratings may be subject to revision or withdrawal at any time by
the rating agencies. Any downward revision or withdrawal of any of the above
ratings may have an adverse effect on the market price of the Notes. The Insurer
does not guaranty the market price of the Notes nor does it guaranty that the
ratings on the Notes will not be revised or withdrawn.

                      THE TRANSFER AND SERVICING AGREEMENTS

GENERAL

         The following is a summary of certain terms of the Purchase and
Contribution Agreement, pursuant to which the Issuer acquires the Financed
Student Loans from the Seller, the Servicing Agreement pursuant to which the
Servicer will service the Financed Student Loans, and the Indenture pursuant to
which the Issuer will grant a security interest in the Financed Student Loans
and certain other collateral to the Indenture Trustee and issue the Notes. This
summary does not purport to be complete and is subject to, and qualified in its
entirety by reference to, all the provisions of the Purchase and Contribution
Agreement, the Servicing Agreement and the Indenture.

SALE OF FINANCED STUDENT LOANS; REPRESENTATIONS AND WARRANTIES

         On the Closing Date, pursuant to the Purchase and Contribution
Agreement the Issuer (or the Eligible Lender Trustee on behalf of the Issuer)
will acquire the Initial Financed Student Loans from AMS (or the AMS Eligible
Lender Trustee on behalf of the Seller) as seller, without recourse, including
all collections received and to be received with respect thereto for the period
on and after the Initial Cutoff Date. Each Initial Financed Student Loan will be
identified in

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<PAGE>
schedules appearing as an exhibit to the Purchase and Contribution Agreement.
The Issuer will, concurrently with such sale and assignment, execute,
authenticate and deliver the related Notes. The net proceeds received from the
sale of the Notes will be applied to the purchase of the Initial Financed
Student Loans, the funding of the Reserve Account Initial Deposit for deposit
into the Reserve Account, the payment of certain expenses and the funding of the
Funding Account, with the remainder of such proceeds deposited into the
Collection Account.

         THE FUNDING PERIOD. During the period from the Closing Date through the
end of the Collection Period in June 30, 2002 (the "Funding Period"), pursuant
to the Purchase and Contribution Agreement, the Issuer can use funds on deposit
in an account (the "Funding Account") to purchase Additional Financed Student
Loans from AMS (or the AMS Eligible Lender Trustee on behalf of the Seller) as
seller, without recourse. The Funding Account and all proceeds thereof will be
pledged to the Indenture Trustee for the benefit of the Noteholders. The
purchase price for Additional Financed Student Loans purchased by the Issuer
from the Seller shall be withdrawn from the Funding Account. It is expected that
on the Closing Date the Issuer will deposit approximately $50,000,000 from the
proceeds of the issuance of the Notes into the Funding Account. To the extent
the amount remaining on deposit in the Funding Account at the end of the Funding
Period exceeds $1,000,000 (after giving effect to any purchases of Additional
Financed Student Loans on such date), such amount shall be used by the Issuer to
repay principal on the Notes first by lot at random to the Class A-1 Notes until
the aggregate principal balance thereof has been reduced to zero, then by lot at
random to the Class A-2 Notes until the aggregate principal balance thereof has
been reduced to zero, then by lot at random to the Class A-3 Notes until the
aggregate principal balance thereof has been reduced to zero, and then by lot at
random to the Class A-4 Notes until the aggregate principal balance thereof has
been reduced to zero. To the extent the amount remaining is $1,000,000 or less,
such amount will be deposited into the Collection Account.

         THE ACQUISITION PERIOD. During the period from the Closing Date through
the end of the Collection Period in December 31, 2003 (the "Acquisition
Period"), amounts received by the Issuer in respect of Collections and remaining
after the payment of certain amounts described herein each month shall be
deposited into the Acquisition Account and will be available to the Issuer for
the purchase of Additional Financed Student Loans. Amounts remaining on deposit
in the Acquisition Account at the end of the Acquisition Period shall be
deposited into the Collection Account. Additionally, to the extent funds on
deposit in the Acquisition Account remain unutilized for three consecutive
calendar months, all amounts on deposit therein at the end of the third
consecutive calendar month shall be used to redeem the Notes.

         In the Purchase and Contribution Agreement, AMS will make
representations and warranties with respect to the Financed Student Loans,
including, among other things, that (i) each Financed Student Loan, on the date
on which it is transferred to the Issuer, is free and clear of all security
interests, liens, charges and encumbrances and no offsets, defenses or
counterclaims have been asserted or threatened; (ii) the information provided
with respect to the Financed Student Loans is true and correct as of the
applicable Cutoff Date; (iii) each Financed Student Loan, at the time it was
originated, complied and, on the date on which it is transferred to the Issuer,
complies in all material respects with applicable federal and state laws
(including, without limitation, the Act) and applicable restrictions imposed by
FFELP, or any Guarantee

                                       81
<PAGE>
Agreement; and (iv) each Financed Student Loan is the legal, valid and binding
obligation of the related borrower.

         Following the discovery by or notice to the Seller of a breach of any
representation or warranty with respect to any Financed Student Loan that
materially and adversely affects the interests of the Noteholders in such
Financed Student Loan (it being understood that any such breach that (i) with
respect to the FFELP Loans does not affect any Federal Guarantor's obligation to
guarantee payment of such Financed Student Loan and (ii) with respect to the
Alternative Loans does not affect the obligation of the applicable guarantor
under the TuitionGard Program to guarantee payment of such Financed Student
Loan, will not be considered to have such a material adverse effect), the Seller
will, unless such breach is cured within 30 days (or, at the sole discretion of
the Insurer, 60 days), repurchase such Financed Student Loan from the Eligible
Lender Trustee, or the Issuer, as applicable, as of the first Determination Date
following the end of such 30 or 60-day period, at a price equal to (i) the
unpaid principal balance owed by the applicable borrower thereon multiplied,
prior to the Parity Date, by the Premium Percentage plus (ii) accrued interest
on the unpaid principal balance to the day of repurchase (the "Purchase
Amount"). The "Premium Percentage" will equal the percentage equivalent of the
aggregate principal balance of the Notes divided by the Pool Balance.
Alternatively, the Seller may, at its option, remit all or a portion of the
Purchase Amount by substituting in the case of a FFELP Loan another FFELP Loan,
and in the case of an Alternative Loan another Alternative Loan, any of which
must meet certain criteria set forth in the Purchase and Contribution Agreement
for the Financed Student Loan as to which the breach has occurred. In addition,
the Seller will reimburse the Issuer for any accrued interest amounts that a
Federal Guarantor refuses to pay pursuant to its Guarantee Agreement, or for any
Interest Subsidy Payments and Special Allowance Payments that are lost or that
must be repaid to the Department with respect to a Financed Student Loan as a
result of a breach of any such representation or warranty by the Seller. The
repurchase, substitution and reimbursement obligations of the Seller will
constitute the sole remedy available to or on behalf of the Issuer and the
Noteholders for any such uncured breach. The Seller's repurchase and
reimbursement obligations are contractual obligations pursuant to the Purchase
and Contribution Agreement that may be enforced against the Seller, but the
breach of which will not constitute an Event of Default.

         To assure uniform quality in servicing and to reduce administrative
costs, the Subservicer will be appointed custodian on behalf of the Servicer of
the promissory notes representing the Financed Student Loans subserviced by it
and any other related documents. The Seller's and the Servicer's records and
computer systems will reflect the sale and assignment by the Seller of the
Financed Student Loans to the Issuer, and UCC financing statements reflecting
such sale and assignment will be filed by the Seller and the Issuer.

ACCOUNTS

         The Indenture Trustee will establish and maintain one or more accounts,
in the name of the Indenture Trustee on behalf of the Noteholders, into which
all payments made on or with respect to the Financed Student Loans will be
deposited (the "Collection Account").

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<PAGE>

         In addition to the Collection Account, the Indenture Trustee will
establish and maintain the Reserve Account, Funding Account, Acquisition
Account, Class A-1 Distribution Account, Class A-2 Distribution Account, Class
A-3 Distribution Account and Class A-4 Distribution Account in the name of the
Indenture Trustee on behalf of the Noteholders.

         Funds in the Collection Account, the Reserve Account, the Funding
Account, Acquisition Account, Class A-1 Distribution Account, Class A-2
Distribution Account, Class A-3 Distribution Account and Class A-4 Distribution
Account and any other trust accounts (collectively, the "Trust Accounts") will
be invested as provided in the Indenture in Eligible Investments. "Eligible
Investments" are generally limited to investments acceptable to the Rating
Agencies and the Insurer as being consistent with the rating of the Notes.
Eligible Investments are limited to obligations or securities that mature not
later than the Business Day immediately preceding the next applicable Payment
Date. Investment earnings on funds deposited in the Trust Accounts, net of
losses and investment expenses (collectively, "Investment Earnings"), will be
deposited in the Collection Account on each applicable Payment Date and will be
treated as collections of interest on the related Financed Student Loans.

         The Trust Accounts will be maintained as Eligible Deposit Accounts.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with an Eligible
Institution. "Eligible Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (i)
which has either (A) a long-term unsecured debt rating acceptable to the
Insurer, Moody's and Fitch or (B) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Insurer, Moody's and Fitch and
(ii) whose deposits are insured by the Federal Deposit Insurance Corporation.

SERVICING PROCEDURES

         Pursuant to the Servicing Agreement, the Servicer will agree to
service, and perform all other related tasks with respect to, the Financed
Student Loans.

         The Servicer is required pursuant to the Servicing Agreement to perform
all services and duties customary to the servicing of Financed Student Loans
(including all collection practices), and to do so in the same manner as a
reasonable servicer servicing FFELP Loans or the Alternative Loans, as the case
may be, for its own account and to do so in compliance with, and to otherwise
comply with, the Guarantee Agreements, all other applicable federal and state
laws and with respect to the FFELP Loans, and all standards and procedures
provided for in the Act.

         Without limiting the foregoing, the duties of the Servicer under the
Servicing Agreement include, but are not limited to, the following: collecting
and depositing into the Collection Account all payments with respect to the
Financed Student Loans, including claiming and obtaining any Guarantee Payments,
any Interest Subsidy Payments and Special Allowance Payments with respect to
Financed Student Loans entitled thereto, responding to inquiries from borrowers
on the Financed Student Loans, investigating delinquencies and sending out
statements and payment coupons. In addition, the Servicer will keep ongoing
records with respect to such Financed Student Loans and collections thereon and
will furnish quarterly and

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annual statements with respect to such information to the Issuer, as required in
the Servicing Agreement.

         The Servicer may perform all or any of its servicing obligations under
the Servicing Agreement through subservicing agreements with affiliated or
unrelated third-party loan servicers. Accordingly, the Servicer has retained one
Subservicer to perform the actual servicing functions with respect to the
Financed Student Loans. As of the Initial Cutoff Date, Sallie Mae Servicing LP
will subservice the Financed Student Loans. The Servicer will monitor and
supervise the performance by the Subservicer of its servicing activities and
will be responsible for the servicing of the Financed Student Loans in
accordance with the provisions of the Servicing Agreement to the same extent as
if it were servicing them directly. The Servicing Agreement will further provide
that the Servicer may not remove the Subservicer, consent to a successor
Subservicer or assume the Subservicer's obligations with respect to the Financed
Student Loans without the prior written approval of the Insurer.

PAYMENTS ON FINANCED STUDENT LOANS

         The Servicer will deposit all payments on Financed Student Loans and
all proceeds of Financed Student Loans received by it during each Collection
Period into the Collection Account within two business days of receipt. The
Eligible Lender Trustee will deposit all Interest Subsidy Payments and all
Special Allowance Payments with respect to the Financed Student Loans received
by it during each Collection Period into the Collection Account within two
business days of receipt thereof. In addition, the Issuer shall deposit to the
Collection Account no later than the close of business on each Determination
Date the aggregate Purchase Amounts payable by the Seller or the Servicer.

SERVICER COVENANTS

         In the Servicing Agreement, the Servicer will covenant that: (a) it
will duly satisfy all obligations on its part to be fulfilled under or in
connection with the Financed Student Loans, maintain in effect all
qualifications required in order to service the Financed Student Loans and
comply in all material respects with all requirements of law in connection with
servicing the Financed Student Loans, the failure to comply with which would
have a materially adverse effect on the Noteholders; (b) it will not permit any
rescission or cancellation of a Student Loan except as ordered by a court of
competent jurisdiction or other government authority or as otherwise consented
to by the Eligible Lender Trustee and the Indenture Trustee; (c) it will do
nothing to impair the rights of the Noteholders in the Financed Student Loans;
and (d) it will not 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 its
guidelines for servicing Financed Student Loans in general and those of the
Seller in particular and any applicable FFELP or Federal Guarantor requirements.

         Under the terms of the Servicing Agreement, if the Issuer or the
Servicer discovers, or receives written notice, that any covenant of the
Servicer set forth above has not been complied with in all material respects and
such noncompliance has not been cured within 30 days (or, in the sole discretion
of the Insurer, 60 days) thereafter and has a materially adverse effect on the
interest of the Noteholders in any Financed Student Loan, unless such breach is
cured or unless

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the Seller is otherwise required to purchase the related Financed Student Loan
as a result of a breach of the Seller's warranties in the Purchase and
Contribution Agreement, the Servicer will be obligated to purchase or arrange
for the purchase of such Financed Student Loan as of the first Determination
Date following the end of such 30 or 60-day period (it being understood in the
Servicing Agreement that any such breach that does not affect any Federal
Guarantor's obligation to make Guarantee Payments with respect to the related
Financed Student Loan will not be considered to have a material adverse effect
for this purpose). In that event, the Servicer will be obligated to arrange to
be deposited into the Collection Account an amount equal to the Purchase Amount
of such Financed Student Loan and the Issuer's interest in any such purchased
Financed Student Loan will be automatically assigned to the Servicer or its
designee. Upon such assignment, the Servicer or its designee will be entitled to
all payments made on such Financed Student Loan. In addition, the Servicer will
reimburse the Issuer for any accrued interest amounts that a Federal Guarantor
refuses to pay pursuant to its Guarantee Agreement, or for any prior Interest
Subsidy Payments and Special Allowance Payments that are lost or that must be
repaid to the Department with respect to a Financed Student Loan as a result of
a breach of any such covenant of the Servicer.

SERVICING COMPENSATION

         Under the Indenture and Servicing Agreement, the Servicer will be
entitled to receive from the Issuer monthly on each Fee Remittance Date a
servicing fee (the "Servicing Fee") in an amount generally equal to the product
of (i) one-twelfth of 0.75% times (ii) the aggregate principal balance of the
Financed Student Loans as of the close of business on the last day of the second
preceding Collection Period.

         The Servicing Fee (together with any portion of the Servicing Fee that
remains unpaid from prior Fee Remittance Dates) will be payable on each Fee
Remittance Date and will be paid solely out of Available Funds. The Servicer
will be responsible for all fees and any other amounts owed to the Subservicer
under the Subservicing Agreement.

EVIDENCE AS TO COMPLIANCE

         The Servicing Agreement will provide that a firm of independent public
accountants will furnish to the Issuer, the Insurer and Indenture Trustee
annually within 90 days of the end of the Servicer's regular calendar year audit
period, a statement (based on the examination of certain documents and records
and on such accounting and auditing procedures considered appropriate under the
circumstances) as to compliance by the Servicer during the preceding twelve
months (or, in the case of the first such certificate, the period from the
applicable Closing Date) with all applicable standards under the Servicing
Agreement relating to the servicing of Financed Student Loans, the Servicer's
accounting records and computer files with respect thereto and certain other
matters.

         The Servicing Agreement will also provide for delivery to the Issuer,
the Insurer and Indenture Trustee, concurrently with the delivery of each
statement of compliance referred to above, of a certificate signed by an officer
of the Servicer stating that, to his knowledge, the Servicer has fulfilled its
obligations under the Servicing Agreement throughout the preceding twelve months
(or, in the case of the first such certificate, the period from the applicable
Closing

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Date) or, if there has been a default in the fulfillment of any such obligation,
describing each such default. The Servicer will agree to give the Issuer, the
Indenture Trustee and Eligible Lender Trustee notice of Servicer Defaults under
the Servicing Agreement.

         Copies of such statements and certificates may be obtained by
Noteholders by a request in writing addressed to the Issuer.

CERTAIN MATTERS REGARDING THE SERVICER

         The Servicing Agreement will provide that the Servicer may not resign
from its obligations and duties as the Servicer thereunder, except upon
determination that the Servicer's performance of such duties is no longer
permissible under applicable law. No such resignation will become effective
until the Indenture Trustee or a successor servicer has assumed the Servicer's
servicing obligations and duties under the Servicing Agreement.

         The Servicing Agreement will further provide that neither the Servicer
nor any of its directors, officers, employees or agents will be under any
liability to the Issuer or the Noteholders for taking any action or for
refraining from taking any action pursuant to the Servicing Agreement, or for
errors in judgment; provided, however, that, with respect to the Servicing
Agreement, neither the Servicer nor any such person will be protected against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of the Servicer's duties
thereunder or by reason of reckless disregard of its obligations and duties
thereunder. In addition, the Servicing Agreement will provide that the Servicer
is under no obligation to appear in, prosecute, or defend any legal action that
is not incidental to its servicing responsibilities under the Servicing
Agreement and that, in its opinion, may cause it to incur any expense or
liability. The Servicing Agreement will, however, provide that the Servicer may
undertake any reasonable action that it deems necessary or desirable in respect
of the Servicing Agreement and the interests of the Noteholders.

         Under the circumstances specified in the Servicing Agreement, any
entity into which the Servicer may be merged or consolidated, or any entity
resulting from any merger or consolidation to which the Servicer is a party, or
any entity succeeding to the business of the Servicer, which corporation or
other entity in each of the foregoing cases assumes the obligations of the
Servicer, will be the successor of the Servicer under the Servicing Agreement.

SERVICER DEFAULT

         "Servicer Default" under the Servicing Agreement will occur in the
event of (a) any failure by the Servicer to deliver to the Indenture Trustee for
deposit in any of the Trust Accounts any required payment, which failure
continues unremedied for five business days after written notice from the
Indenture Trustee or the Issuer is received by the Servicer or after discovery
by the Servicer, (b) any failure by the Servicer to observe or perform in any
material respect any other covenant or agreement of the Servicer under the
Servicing Agreement which failure continues unremedied for a period of 45 days
(or for a longer period, not in excess of 90 days, if the Indenture Trustee and
the Insurer reasonably believe such failure is susceptible to cure within such
longer period) after the date notice is provided to the Servicer by the
Indenture Trustee or the Insurer or by the holders of at least 25% in principal
amount of the Notes then

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<PAGE>
outstanding, (c) any limitation, suspension or termination by the Department of
the Servicer's eligibility to service FFELP Loans which materially and adversely
affects its ability to service the Financed Student Loans, (d) an Insolvency
Event with respect to the Servicer occurs or (e) a third party audit of the
Servicer required under the Servicing Agreement is not performed or discloses a
violation has occurred that has a material adverse effect on the ability of the
Servicer to service the Financed Student Loans. "Insolvency Event" means, with
respect to any Person, any of the following events or actions: certain events of
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings with respect to such Person and certain actions by such
Person indicating its insolvency, reorganization pursuant to bankruptcy
proceedings or inability to pay its obligations.

RIGHTS UPON SERVICER DEFAULT

         As long as a Servicer Default under the Servicing Agreement remains
unremedied, the Indenture Trustee, the Insurer or holders of Notes evidencing
not less than 75% in principal amount of the then outstanding Notes with the
consent of the Insurer may terminate all the rights and obligations of the
Servicer under the Servicing Agreement, whereupon a successor servicer appointed
by the Indenture Trustee or the Indenture Trustee will succeed to all the
responsibilities, duties and liabilities of the Servicer under the Servicing
Agreement, and will be entitled to similar compensation arrangements. If,
however, a bankruptcy trustee or similar official has been appointed for the
Servicer, and a Servicer Default other than such appointment has occurred, such
trustee or official may have the power to prevent the Indenture Trustee or the
Noteholders from effecting such a transfer. In the event that the Indenture
Trustee is unwilling or unable to so act, it may appoint, or petition a court of
competent jurisdiction for the appointment of a successor whose regular business
includes the servicing of FFELP Loans and Alternative Loans. The Indenture
Trustee may make such arrangements for compensation to be paid, which in no
event may be greater than the servicing compensation to the Servicer under the
Servicing Agreement, unless such compensation arrangements are consented to by
the Insurer and will not result in a downgrading of the Notes by any Rating
Agency. In the event a Servicer Default occurs and is continuing, the Indenture
Trustee, the Issuer or the Noteholders, as described above, may remove the
Servicer, without the consent of the Issuer.

WAIVER OF PAST SERVICER DEFAULTS

         The Insurer, or if an Insurer Default has occurred and is continuing,
the Noteholders of Notes evidencing not less than a majority of the outstanding
principal amount of the Notes, may waive any default by the Servicer in the
performance of its obligations under the Servicing Agreement and its
consequences, except a default in making any required deposits to or payments
from any of the Trust Accounts in accordance with the Servicing Agreement.
Therefore, the Insurer will have the ability, except as noted above, to waive
defaults by a Servicer. No such waiver will impair the Insurer's or Noteholders'
rights with respect to subsequent defaults.

DISTRIBUTIONS

         DEPOSITS TO COLLECTION ACCOUNT. The Servicer shall be instructed to
remit all Collections received by it in accordance with the Servicing Agreement
to the Collection Account for deposit

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therein no later than the close of business on the second Business Day after
receipt thereof. In addition, the Issuer shall deposit into the Collection
Account no later than the close of business on each Determination Date the
aggregate Purchase Amounts received by the Issuer from the Seller. If the Issuer
shall receive any written statement from the Servicer stating that any amount
previously paid by the Servicer to the Indenture Trustee or Issuer and deposited
into the Collection Account was so paid and deposited into the Collection
Account in error, the Issuer, if it shall concur as to the truth of such
statement, shall forward to the Indenture Trustee in writing, together with such
security or indemnity as may be required by it to hold the Indenture Trustee
harmless, a copy of such written statement from the Servicer, along with an
instruction to the Indenture Trustee to withdraw such amount from the Collection
Account and pay such amount to the Servicer. Following receipt from the Issuer
of the Servicer's statement and the written instructions set forth in the
preceding sentence, so long as no Event of Default shall have occurred and be
continuing, the Indenture Trustee shall withdraw such amount from the Collection
Account and pay such amount to the Servicer.

         "Collections" means (i) all funds which are received by the Issuer, the
Servicer or the Indenture Trustee from or on behalf of the related Obligors in
payment of any amounts owed (including, without limitation, all Interest Subsidy
Payments, Special Allowance Payments, payments under Guarantee Agreements,
finance charges, interest and all other charges in respect of the Financed
Student Loans, and all proceeds (net of expenses) of the liquidation of
defaulted Financed Student Loans ("Liquidated Financed Student Loans")) or
applied to such amounts owed by such Obligors, net of all amounts required by
the Act to be paid to the Department, with respect to the Financed Student Loans
for the related Collection Period, (ii) all funds received pursuant to the
Servicing Agreement, including all payments representing the Purchase Amount in
respect of any purchased Financed Student Loan, (iii) all funds, including any
Purchase Amounts for Financed Student Loans repurchased by the Seller, received
by the Issuer, the Indenture Trustee or the Servicer pursuant to the Purchase
and Contribution Agreement or from any other source in respect of the Financed
Student Loans (iv) all net amounts received by the Issuer from a Swap
Counterparty under any Swap Agreement with respect to the related Collection
Period and (v) any other monies deposited into the Collection Account.

         On or about the fifth Business Day prior to each Fee Remittance Date
(the "Determination Date"), the Servicer will provide the Indenture Trustee with
certain information with respect to the preceding Collection Period including
the amount of Available Funds received with respect to the Financed Student
Loans including the aggregate Purchase Amounts relating to the Financed Student
Loans to be repurchased by the Seller or to be purchased by the Servicer.

         "Collection Period" means, initially the period beginning on the
Initial Cutoff Date and ending February 28, 2002, and thereafter with respect to
any Fee Remittance Date or Auction Date, the preceding calendar month.

         For purposes hereof, the term "Available Funds" means, with respect to
each Fee Remittance Date and the related Collection Period, (a) all Collections
received with respect to the related Collection Period and (b) all Investment
Earnings realized on amounts on deposit in all of the accounts since the
preceding Fee Remittance Date.

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<PAGE>

         DISTRIBUTIONS FROM COLLECTION ACCOUNT. Amounts on deposit on any Fee
Remittance Date in the Collection Account representing Available Funds received
during or with respect to the related Collection Period shall be withdrawn from
the Collection Account on such Fee Remittance Date as specified below no later
than 11:00 a.m. (New York City time), in the amounts required, and applied in
the following order of priority, in each case to the extent of Available Funds
remaining after application of each clause representing a higher priority:

                  first, an amount equal to the Policy Premium then due, if any,
         pursuant to the Insurance Agreement shall be paid to the Insurer on
         such Fee Remittance Date;

                  second, an amount equal to the sum of (i) the Servicing Fee
         for the Financed Student Loans with respect to such Fee Remittance
         Date, plus any overdue Servicing Fees, (ii) the Eligible Lender
         Trustee's Fees with respect to such Fee Remittance Date, plus any
         overdue Eligible Lender Trustee's Fees, (iii) the Indenture Trustee's
         Fees with respect to such Fee Remittance Date, plus any overdue
         Indenture Trustee's Fees, (iv) the Auction Agent Fee with respect to
         such Fee Remittance Date plus any overdue Auction Agent Fee and (v) the
         Broker-Dealer Fee with respect to such Fee Remittance Date, plus any
         overdue Broker-Dealer Fee, shall in each case be paid to the Servicer,
         the Eligible Lender Trustee (in the case of the Eligible Lender
         Trustee's Fee), the Indenture Trustee (in the case of the Indenture
         Trustee's Fee), the Auction Agent (in the case of the Auction Agent
         Fee) and the Broker-Dealer (in the case of the Broker-Dealer Fee), pari
         passu (based on the ratio of each such amount to the total of such
         amounts), on such Fee Remittance Date;

                  third, (i) an amount equal to the Class A-1 Noteholders'
         Interest Distribution Amount, the Class A-2 Noteholders' Interest
         Distribution Amount, the Class A-3 Noteholders' Interest Distribution
         Amount and the Class A-4 Noteholders' Interest Distribution Amount
         shall be deposited into the Class A-1 Distribution Account, the Class
         A-2 Distribution Account, the Class A-3 Distribution Account and the
         Class A-4 Distribution Account, respectively, pari passu (based on the
         ratio of each such amount to the total of such amounts) and shall be
         held in the respective Note Distribution Accounts for distribution on
         the applicable Payment Dates, and (ii) all net amounts, if any, due and
         owing a Swap Counterparty (other than any termination payments under
         the related Swap Agreement) shall be paid to the Swap Counterparty
         (such amounts to be deposited or paid, as the case may be, under (i)
         and (ii) of this clause third pari passu);

                  fourth, if the amount on deposit in the Reserve Account is
         less than the Specified Reserve Account Balance, an amount sufficient
         to cause the amount on deposit in the Reserve Account to equal the
         Specified Reserve Account Balance will be deposited into the Reserve
         Account;

                  fifth, (i) if such Fee Remittance Date occurs after the end of
         the Acquisition Period, an amount equal to the Noteholders' Principal
         Distribution Amount shall be deposited into the Class A-1 Distribution
         Account to be paid as a distribution of principal to the Class A-1
         Noteholders until the Class A-1 Note Principal Amount shall be reduced
         to zero and thereafter shall be deposited in the Class A-2 Distribution
         Account to be paid as a distribution of principal to the Class A-2
         Noteholders on the related Class A-2

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         Payment Date until the Class A-2 Note Principal Amount shall be reduced
         to zero, and thereafter shall be deposited in the Class A-3
         Distribution Account to be paid as a distribution of principal to the
         Class A-3 Noteholders on the related Class A-3 Payment Date until the
         Class A-3 Note Principal Amount shall be reduced to zero, and
         thereafter shall be deposited in the Class A-4 Distribution Account to
         be paid as a distribution of principal to the Class A-4 Noteholders on
         the related Class A-4 Payment Date until the Class A-4 Note Principal
         Amount shall be reduced to zero; and (ii) if an Event of Default has
         occurred and is continuing, all remaining Available Funds shall be
         allocated between the Class A-1, Class A-2, Class A-3 and Class A-4
         Notes pro rata based on the outstanding principal amount of each Class
         and deposited into the Class A-1 Class A-2, Class A-3 and Class A-4
         Distribution Accounts to be paid as distributions of principal on each
         Class of Notes until the outstanding principal balance of each Class of
         Notes has been reduced to zero;

                  sixth, an amount equal to any Insurer Reimbursement Amounts
         shall be set aside in the Collection Account and paid to the Insurer on
         such Fee Remittance Date;

                  seventh, an amount equal to the Class A-1 Noteholders'
         Interest Basis Carryover, Class A-2 Noteholders' Interest Basis
         Carryover, Class A-3 Noteholders' Interest Basis Carryover and Class
         A-4 Noteholders' Interest Basis Carryover shall be allocated to the
         Class A-1 Noteholders, the Class A-2 Noteholders, the Class A-3
         Noteholders and the Class A-4 Noteholders, respectively, pari passu
         (based on the ratio of each such amount to the total of such amounts)
         and shall be distributed to the Class A-1 Noteholders, Class A-2
         Noteholders, Class A-3 Noteholders and Class A-4 Noteholders on the
         related Payment Date;

                  eighth, an amount equal to any amounts due and owing to a Swap
         Counterparty (other than amounts paid in accordance with clause third
         above) shall be paid to the Swap Counterparty; and

                  ninth, any Available Funds remaining in the Collection Account
         after the distributions pursuant to clauses first through eighth above
         (1) on each Fee Remittance Date occurring during the Acquisition
         Period, shall be deposited into the Acquisition Account and used to
         purchase Additional Financed Student Loans from the Seller, and (2) on
         each Fee Remittance Date occurring after the Acquisition Period shall
         be paid to the Issuer free and clear of the lien of the Indenture on
         such Fee Remittance Date.

         For purposes hereof, the following terms have the following meanings:

         "Auction Agent Fee" means the fee payable to the Auction Agent as set
forth in the Auction Agent Agreement.

         "Broker-Dealer Fee" means the fee payable to the Broker-Dealers as set
forth in the Broker-Dealer Agreement.

         "Class A Note Principal Amount" means the sum of the Class A-1 Note
Principal Amount, the Class A-2 Note Principal Amount, the Class A-3 Note
Principal Amount and the Class A-4 Note Principal Amount.

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         "Class A-1 Note Principal Amount" means with respect to the Class A-1
Notes at any time, the Class A-1 Original Note Principal Amount, less all
payments in reduction of principal on the Class A-1 Notes that have actually
been received by the Class A-1 Noteholders.

         "Class A-1 Noteholders' Distribution Amount" means, with respect to any
Class A-1 Payment Date, the sum of (i) the Class A-1 Noteholders' Interest
Distribution Amount for such Payment Date and (ii) the Noteholders' Principal
Distribution Amount for the related Class A-1 Payment Date.

         "Class A-1 Noteholders' Interest Carryover Shortfall" means, with
respect to any Class A-1 Payment Date, the excess, if any, of (i) the Class A-1
Noteholders' Interest Distribution Amount on the preceding Class A-1 Payment
Date over (ii) the amount of interest actually distributed to the Class A-1
Noteholders on such preceding Class A-1 Payment Date, plus interest on the
amount of such excess, to the extent permitted by law, at the interest rate
borne by the Class A-1 Notes from such preceding Class A-1 Payment Date to the
current Class A-1 Payment Date.

         "Class A-1 Noteholders' Interest Distribution Amount" means, (i) with
respect to any Class A-1 Payment Date other than the initial Class A-1 Payment
Date, the sum of (a) the amount of interest accrued at the Class A-1 Note Rate
for the related Interest Period on the outstanding Class A-1 Note Principal
Amount on the immediately preceding Class A-1 Payment Date after giving effect
to all principal distributions to holders of Class A-1 Notes on such date and
(b) the Class A-1 Noteholders' Interest Carryover Shortfall for such Class A-1
Payment Date, (ii) with respect to the initial Class A-1 Payment Date, the
amount of interest accrued at the Class A-1 Note Rate on the outstanding Class
A-1 Note Principal Amount on the Closing Date from and including the Closing
Date up to but excluding the initial Class A-1 Payment Date, and (iii) with
respect to any Fee Remittance Date the sum of (a) the amount of interest accrued
at the Class A-1 Note Rate on the outstanding Class A-1 Note Principal Amount on
the immediately preceding Class A-1 Payment Date after giving effect to all
principal distributions to holders of Class A-1 Notes on such date (or prior to
the first Class A-1 Payment Date, on the Class A-1 Original Note Principal
Amount) from and including for the initial Fee Remittance Date, the Closing Date
and for each Fee Remittance Date thereafter, either (x) the immediately
preceding Class A-1 Payment Date or (y) if no Class A-1 Payment Date has
occurred since the immediately preceding Fee Remittance Date, from and including
the current Fee Remittance Date to but excluding the earlier of (1) the
immediately succeeding Class A-1 Payment Date and (2) the immediately succeeding
Fee Remittance Date and (b) the Class A-1 Noteholders' Interest Carryover
Shortfall for such Class A-1 Payment Date; provided, however, that the Class A-1
Noteholders' Interest Distribution Amount will not include any Class A-1
Noteholders' Interest Basis Carryover.

         "Class A-1 Original Note Principal Amount" means with respect to the
Class A-1 Notes, the principal amount of the Class A-1 Notes on the Closing
Date.

         "Class A-2 Note Principal Amount" means with respect to the Class A-2
Notes at any time, the Class A-2 Original Note Principal Amount, less all
payments in reduction of principal on the Class A-2 Notes that have actually
been received by the Class A-2 Noteholders.

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<PAGE>

         "Class A-2 Noteholders' Distribution Amount" means, with respect to any
Class A-2 Payment Date, the sum of (i) the Class A-2 Noteholders' Interest
Distribution Amount for such Payment Date and (ii) if the outstanding Class A-1
Note Principal Amount has been reduced to zero, the Noteholders' Principal
Distribution Amount for the related Class A-2 Payment Date.

         "Class A-2 Noteholders' Interest Carryover Shortfall" means, with
respect to any Class A-2 Payment Date, the excess, if any, of (i) the Class A-2
Noteholders' Interest Distribution Amount on the preceding Class A-2 Payment
Date over (ii) the amount of interest actually distributed to the Class A-2
Noteholders on such preceding Class A-2 Payment Date, plus interest on the
amount of such excess, to the extent permitted by law, at the interest rate
borne by the Class A-2 Notes from such preceding Class A-2 Payment Date to the
current Class A-2 Payment Date.

         "Class A-2 Noteholders' Interest Distribution Amount" means, (i) with
respect to any Class A-2 Payment Date other than the initial Class A-2 Payment
Date, the sum of (a) the amount of interest accrued at the Class A-2 Note Rate
for the related Interest Period on the outstanding Class A-2 Note Principal
Amount on the immediately preceding Class A-2 Payment Date after giving effect
to all principal distributions to holders of Class A-2 Notes on such date and
(b) the Class A-2 Noteholders' Interest Carryover Shortfall for such Class A-2
Payment Date, (ii) with respect to the initial Class A-2 Payment Date, the
amount of interest accrued at the Class A-2 Note Rate on the outstanding Class
A-2 Note Principal Amount on the Closing Date from and including the Closing
Date up to but excluding the initial Class A-2 Payment Date, and (iii) with
respect to any Fee Remittance Date, the sum of (a) the amount of interest
accrued at the Class A-2 Note Rate on the outstanding Class A-2 Note Principal
Amount on the immediately preceding Class A-2 Payment Date after giving effect
to all principal distributions to holders of Class A-2 Notes on such date (or,
prior to the first Class A-2 Payment Date, on the Class A-2 Original Note
Principal Amount) from and including for the initial Fee Remittance Date, the
Closing Date and for each Fee Remittance Date thereafter, either (x) the
immediately preceding Class A-2 Payment Date or (y) if no Class A-2 Payment Date
has occurred since the immediately preceding Fee Remittance Date, from and
including the current Fee Remittance Date to but excluding the earlier of (1)
the immediately succeeding Class A-2 Payment Date and (2) the immediately
succeeding Fee Remittance Date and (b) the Class A-2 Noteholders' Interest
Carryover Shortfall for such Class A-2 Payment Date; provided, however, that the
Class A-2 Noteholders' Interest Distribution Amount will not include any Class
A-2 Noteholders' Interest Basis Carryover.

         "Class A-2 Original Note Principal Amount" means with respect to the
Class A-2 Notes, the principal amount of the Class A-2 Notes on the Closing
Date.

         "Class A-3 Note Principal Amount" means with respect to the Class A-3
Notes at any time, the Class A-3 Original Note Principal Amount, less all
payments in reduction of principal on the Class A-3 Notes that have actually
been received by the Class A-3 Noteholders.

         "Class A-3 Noteholders' Distribution Amount" means, with respect to any
Class A-3 Payment Date, the sum of (i) the Class A-3 Noteholders' Interest
Distribution Amount for such Payment Date and (ii) if the outstanding Class A-2
Note Principal Amount has been reduced to zero, the Noteholders' Principal
Distribution Amount for the related Class A-3 Payment Date.

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         "Class A-3 Noteholders' Interest Carryover Shortfall" means, with
respect to any Class A-3 Payment Date, the excess, if any, of (i) the Class A-3
Noteholders' Interest Distribution Amount on the preceding Class A-3 Payment
Date over (ii) the amount of interest actually distributed to the Class A-3
Noteholders on such preceding Class A-3 Payment Date, plus interest on the
amount of such excess, to the extent permitted by law, at the interest rate
borne by the Class A-3 Notes from such preceding Class A-3 Payment Date to the
current Class A-3 Payment Date.

         "Class A-3 Noteholders' Interest Distribution Amount" means, (i) with
respect to any Class A-3 Payment Date other than the initial Class A-3 Payment
Date, the sum of (a) the amount of interest accrued at the Class A-3 Note Rate
for the related Interest Period on the outstanding Class A-3 Note Principal
Amount on the immediately preceding Class A-3 Payment Date after giving effect
to all principal distributions to holders of Class A-3 Notes on such date and
(b) the Class A-3 Noteholders' Interest Carryover Shortfall for such Class A-3
Payment Date, (ii) with respect to the initial Class A-3 Payment Date, the
amount of interest accrued at the Class A-3 Note Rate on the outstanding Class
A-3 Note Principal Amount on the Closing Date from and including the Closing
Date up to but excluding the initial Class A-3 Payment Date, and (iii) with
respect to any Fee Remittance Date, the sum of (a) the amount of interest
accrued at the Class A-3 Note Rate on the outstanding Class A-3 Note Principal
Amount on the immediately preceding Class A-3 Payment Date after giving effect
to all principal distributions to holders of Class A-3 Notes on such date (or
prior to the first Class A-3 Payment Date, on the Class A-3 Original Note
Principal Amount) from and including for the initial Fee Remittance Date, the
Closing Date and for each Fee Remittance Date thereafter, either (x) the
immediately preceding Class A-3 Payment Date or (y) if no Class A-3 Payment Date
has occurred since the immediately preceding Fee Remittance Date, from and
including the current Fee Remittance Date to but excluding the earlier of (1)
the immediately succeeding Class A-3 Payment Date and (2) the immediately
succeeding Fee Remittance Date and (b) the Class A-3 Noteholders' Interest
Carryover Shortfall for such Class A-3 Payment Date; provided, however, that the
Class A-3 Noteholders' Interest Distribution Amount will not include any Class
A-3 Noteholders' Interest Basis Carryover.

         "Class A-3 Original Note Principal Amount" means with respect to the
Class A-3 Notes, the principal amount of the Class A-3 Notes on the Closing
Date.

         "Class A-4 Note Principal Amount" means with respect to the Class A-4
Notes at any time, the Class A-4 Original Note Principal Amount, less all
payments in reduction of principal on the Class A-4 Notes that have actually
been received by the Class A-4 Noteholders.

         "Class A-4 Noteholders' Distribution Amount" means, with respect to any
Class A-4 Payment Date, the sum of (i) the Class A-4 Noteholders' Interest
Distribution Amount for such Payment Date and (ii) if the outstanding Class A-3
Note Principal Amount has been reduced to zero, the Noteholders' Principal
Distribution Amount for the related Class A-4 Payment Date.

         "Class A-4 Noteholders' Interest Carryover Shortfall" means, with
respect to any Class A-4 Payment Date, the excess, if any, of (i) the Class A-4
Noteholders' Interest Distribution Amount on the preceding Class A-4 Payment
Date over (ii) the amount of interest actually distributed to the Class A-4
Noteholders on such preceding Class A-4 Payment Date, plus

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interest on the amount of such excess, to the extent permitted by law, at the
interest rate borne by the Class A-4 Notes from such preceding Class A-4 Payment
Date to the current Class A-4 Payment Date.

         "Class A-4 Noteholders' Interest Distribution Amount" means, (i) with
respect to any Class A-4 Payment Date other than the initial Class A-4 Payment
Date, the sum of (a) the amount of interest accrued at the Class A-4 Note Rate
for the related Interest Period on the outstanding Class A-4 Note Principal
Amount on the immediately preceding Class A-4 Payment Date after giving effect
to all principal distributions to holders of Class A-4 Notes on such date and
(b) the Class A-4 Noteholders' Interest Carryover Shortfall for such Class A-4
Payment Date, (ii) with respect to the initial Class A-4 Payment Date, the
amount of interest accrued at the Class A-4 Note Rate on the outstanding Class
A-4 Note Principal Amount on the Closing Date from and including the Closing
Date up to but excluding the initial Class A-4 Payment Date, and (iii) with
respect to any Fee Remittance Date, the sum of (a) the amount of interest
accrued at the Class A-4 Note Rate on the outstanding Class A-4 Note Principal
Amount on the immediately preceding Class A-4 Payment Date after giving effect
to all principal distributions to holders of Class A-4 Notes on such date (or,
prior to the first Class A-4 Payment Date, on the Class A-4 Original Note
Principal Amount) from and including for the initial Fee Remittance Date, the
Closing Date and for each Fee Remittance Date thereafter, either (x) the
immediately preceding Class A-4 Payment Date or (y) if no Class A-4 Payment Date
has occurred since the immediately preceding Fee Remittance Date, from and
including the current Fee Remittance Date to but excluding the earlier of (1)
the immediately succeeding Class A-4 Payment Date and (2) the immediately
succeeding Fee Remittance Date and (b) the Class A-4 Noteholders' Interest
Carryover Shortfall for such Class A-4 Payment Date; provided, however, that the
Class A-4 Noteholders' Interest Distribution Amount will not include any Class
A-4 Noteholders' Interest Basis Carryover.

         "Class A-4 Original Note Principal Amount" means with respect to the
Class A-4 Notes, the principal amount of the Class A-4 Notes on the Closing
Date.

         "Eligible Lender Trustee's Fee" means the fee paid to the Eligible
Lender Trustee pursuant to Section 10 of the Eligible Lender Trust Agreement;
provided, however, that under no circumstance shall such fee (exclusive of the
acceptance fee) exceed an annual amount equal to $12,000, which shall be payable
in twelve equal monthly installments.

         "Indenture Trustee's Fee" means an amount equal to $10,000 per annum,
payable in twelve equal monthly installments.

         "Insurer Reimbursement Amount" means, as of any Payment Date, the sum
of (i) all amounts previously paid by the Insurer under the Insurance Policy
which have not previously been reimbursed and (ii) all other amounts due to the
Insurer under the Insurance Agreement and Indemnification Agreement, other than
the Policy Premium.

         "Noteholders' Distribution Amount" means, with respect to any Payment
Date, the sum of the Noteholders' Interest Distribution Amount and the
Noteholders' Principal Distribution Amount for such Payment Date.

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         "Noteholders' Interest Distribution Amount" means, with respect to any
Payment Date, the sum of the Class A-1 Noteholders' Interest Distribution
Amount, the Class A-2 Noteholders' Interest Distribution Amount, the Class A-3
Noteholders' Interest Distribution Amount and the Class A-4 Noteholders'
Interest Distribution Amount for such Class Payment Date.

         "Noteholders' Principal Carryover Shortfall" means, as of the close of
business on any Payment Date, the excess of (i) the Noteholders' Principal
Distribution Amount on such Payment Date over (ii) the amount of principal
actually distributed or set aside to be distributed to the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and Class A-4
Noteholders on such Payment Date.

         "Noteholders' Principal Distribution Amount" means, with respect to any
Fee Remittance Date, the sum of (a) the Principal Distribution Amount for such
Payment Date and (b) the Noteholders' Principal Carryover Shortfall as of the
close of the preceding Payment Date; provided, however, that such amount will be
rounded down to the nearest whole multiple of $100,000; provided, further, that
the Noteholders' Principal Distribution Amount will in no event exceed the
outstanding Class A Note Principal Amount; and provided, further, that on the
Final Scheduled Payment Date the Noteholders' Principal Distribution Amount will
equal the amount, if any, that is necessary in order to reduce the Class A Note
Principal Balance to zero on such date.

         "Policy Premium" means the premium described in the Insurance Policy.

         "Principal Distribution Amount" means (A) to the extent the Class A
Note Principal Amount (less all amounts on deposit in all Note Distribution
Accounts in respect of the principal on all the Notes) as of such Fee Remittance
Date (i) prior to giving effect to all distributions to the Note Distribution
Accounts and (ii) after giving effect to any purchase of Additional Financed
Student Loans on such date times 103% plus $150,000, is equal to or less than
the Pool Balance as of the last day of the related Collection Period, the amount
of principal paid and collected (plus any realized losses thereon) during the
related Collection Period less any accrued and unpaid interest on the Financed
Student Loans for such Collection Period to the extent such interest will be
capitalized and added to the principal balance of such Student Loans, upon the
commencement of repayment of such Student Loans, as described herein, or (B) to
the extent the Class A Note Principal Amount as of such Fee Remittance Date (i)
prior to giving effect to all distributions to the Note Distribution Accounts
and (ii) after giving effect to any purchase of Additional Financed Student
Loans on such date times 103% plus $150,000, is greater than the Pool Balance as
of the last day of the related Collection Period, all Available Funds remaining
after the payment of the Policy Premium, Servicing Fee, Eligible Lender Trustee
Fees, Indenture Trustee Fees, Auction Agent Fees, Broker-Dealer Fees, the
deposit into the applicable Note Distribution Account of the Class A-1
Noteholders' Interest Distribution Amount, Class A-2 Noteholders' Interest
Distribution Amount, Class A-3 Noteholders' Interest Distribution Amount and
Class A-4 Noteholders' Interest Distribution Amount, the payment of any net
amounts accrued and unpaid to a Swap Counterparty (other than any termination
payments under the related Swap Agreement) and making any required deposits into
the Reserve Account up to such amount which would cause the Class A Note
Principal Amount plus all amounts on deposit in all Note Distribution Accounts
in respect of principal on the Notes as of such Fee Remittance Date, after
giving effect to (i) all distributions to the Note Distribution Accounts and
(ii) any purchase

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of Additional Financed Student Loans on such date times 103% plus $150,000, to
equal the Pool Balance as of the last day of the related Collection Period.

         "Trustee Fees" means the sum of the Eligible Lender Trustee's Fee and
the Indenture Trustee's Fee.

CREDIT ENHANCEMENT

         RESERVE ACCOUNT. Pursuant to the Indenture, an account in the name of
the Indenture Trustee (the "Reserve Account") will be established and maintained
by the Issuer with the Indenture Trustee. Amounts on deposit in the Reserve
Account will be applied (a) on each Fee Remittance Date to cover any shortfalls
(in the priority indicated) in payments of (i) Policy Premiums and any overdue
Policy Premiums and (ii) the Servicing Fee, the Trustee Fees, the Broker-Dealer
Fees, the Auction Agent Fee and any such amounts that are overdue Servicing
Fees, Trustee Fees, Auction Agent Fees or Broker-Dealer Fees (such fees to be
paid pari passu, (b) to the Noteholders' Interest Distribution Amount, for which
funds on deposit in the applicable Note Distribution Account for such Fee
Remittance Date are insufficient to make such payments, and (c) only on the
Payment Date on which either the Final Scheduled Payment Date (whether as
scheduled or if accelerated after an Event of Default) occurs or on which, after
allocating all Available Funds and making any withdrawals required under clause
(a) and (b) above, the remaining balance on deposit in the Reserve Account
exceeds the remaining principal balance of the Notes, to pay the remaining
principal balance of the Notes.

         The Issuer will make an initial deposit into the Reserve Account on the
Closing equal to $1,675,000, representing 0.50% of the aggregate principal
amount of the Notes (the "Reserve Account Initial Deposit").

         On each Fee Remittance Date, any Available Funds remaining as described
under "--Distributions" herein, after the payment of Policy Premiums, the
Servicing Fee, the Trustee Fees, the Broker-Dealer Fees, the Auction Agent Fee
and the Class A Interest Distribution Amount, will be deposited into the Reserve
Account to the extent necessary to cause the amount on deposit therein to equal
the Specified Reserve Account Balance for such Fee Remittance Date. The
"Specified Reserve Account Balance" with respect to any Fee Remittance Date
generally will be equal to the greater of (i) 0.50% of the sum of the aggregate
principal balance of the Notes minus all aggregate amounts being on deposit in
the Note Distribution Accounts for payment in respect of principal on the Notes
on all applicable Payment Dates after taking into account the effect of
distributions on such Fee Remittance Date or Payment Date, as applicable, and
(ii) $500,000.

         In addition, on each Fee Remittance Date, any amounts on deposit in the
Reserve Account, after any other required withdrawals therefrom have been made,
that are in excess of the Specified Reserve Account Balance will be withdrawn
from the Reserve Account and will be deposited into the Collection Account.

         The funding and maintenance of the Reserve Account is intended to
enhance the likelihood of timely payment to the Noteholders of the interest due
on the Notes and the ultimate payment of principal. In certain circumstances,
however, the Reserve Account could be depleted

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and, in the absence of payments under the Insurance Policy, shortfalls in
interest distributions and resulting losses to the Noteholders could occur. In
no event will amounts on deposit in the Reserve Account be available to pay any
Noteholders' Interest Basis Carryover.

STATEMENTS TO INDENTURE TRUSTEE AND ISSUER

         Prior to each Fee Remittance Date, the Servicer will prepare and
provide to the Indenture Trustee, the Eligible Lender Trustee and the Insurer as
of the close of business on the last day of the preceding Collection Period a
statement which will include the following information with respect to such Fee
Remittance Date or the preceding Collection Period as to the Notes, to the
extent applicable:

         (i) the amount of the distribution allocable to principal of each Class
of the Notes;

         (ii) the amount of the distribution allocable to interest on each Class
of the Notes, together with the interest rates applicable with respect thereto;

         (iii) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;

         (iv) the aggregate outstanding principal balance of each Class of Notes
as of such Fee Remittance Date (after giving effect to payments on the related
Payment Date), each after giving effect to payments allocated to principal
reported under clause (i) above;

         (v) the amount of the Servicing Fee paid to the Servicer with respect
to such Collection Period;

         (vi) the amount of the aggregate realized losses on the Liquidated
Financed Student Loans, if any, for such Collection Period;

         (vii) the Noteholders' Interest Basis Carryover, the Noteholders'
Principal Carryover Shortfall, the Class A-1 Noteholders' Interest Carryover
Shortfall, the Class A-2 Noteholders' Interest Carryover Shortfall, the Class
A-3 Noteholders' Interest Carryover Shortfall and the Class A-4 Noteholders'
Interest Carryover Shortfall, if any, and the change in such amounts from the
preceding statement;

         (viii) the aggregate Purchase Amounts for Financed Student Loans, if
any, that were repurchased in such Collection Period.

         Each amount set forth pursuant to subclause (ii) with respect to the
Notes will be expressed as a dollar amount per $100,000 of the initial principal
balance of each Class of Notes.

AMENDMENT

         The Servicing Agreement may be amended by the parties thereto, without
the consent of the Noteholders but with the consent of the Indenture Trustee and
the Insurer, for the purpose of curing any ambiguity, correcting or
supplementing any provisions in the Servicing Agreement, adding any provisions
to or changing in any manner or eliminating any of the provisions of the

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Servicing Agreement or of modifying in any manner the rights of the Noteholders;
provided that such action will not, in the opinion of counsel satisfactory to
the Indenture Trustee and Issuer, materially and adversely affect the interests
of any Noteholder. The Servicing Agreement may also be amended by the Seller,
the Servicer and the Issuer, with the consent of the Indenture Trustee and the
Insurer, or with the consent of the holders of Notes evidencing at least a
majority in principal amount of such then outstanding Notes and with the consent
of the Insurer for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of the Servicing Agreement or of
modifying in any manner the rights of such Noteholders; provided, however, that
no such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments (including any
Guarantee Payments) with respect to the Financed Student Loans or distributions
that are required to be made for the benefit of the Noteholders, or (ii) reduce
the aforesaid percentage of such Notes which are required to consent to any such
amendment, without the consent of the holders of all outstanding Notes.

TERMINATION

         The obligations of the Seller, the Servicer and the Indenture Trustee
pursuant to the Purchase and Contribution Agreement and the Servicing Agreement
will terminate upon (i) the maturity or other liquidation of the last Financed
Student Loan and the disposition of any amount received upon liquidation of any
such remaining Financed Student Loans and (ii) the payment to the Noteholders of
all amounts required to be paid to them pursuant to the Indenture, Notes,
Purchase and Contribution Agreement, and Servicing Agreement.

OPTIONAL REDEMPTION

         On each Class' respective Payment Date, the Issuer may, at its option,
redeem the applicable Class of Notes, in whole or in part, at an aggregate price
equal to the outstanding principal amount of the Notes so redeemed plus, with
respect to the Notes so redeemed, accrued interest thereon to the date of
redemption and any unpaid Noteholders' Interest Basis Carryover relating to the
Notes so redeemed, in each case so long as all amounts owed to the Insurer have
been paid. In addition, at such time the Issuer would be required to pay any
remaining Policy Premiums, Servicing Fees, Trustee Fees, Auction Agent Fees,
Broker-Dealer Fees, Insurer Reimbursement Amounts and certain other expenses.
The Issuer shall provide not less than 30 or more than 60 days prior written
notice to the Noteholders regarding its intention to exercise its option to
redeem the Notes.

               CERTAIN LEGAL ASPECTS OF THE FINANCED STUDENT LOANS

TRANSFER OF FINANCED STUDENT LOANS

         AMS intends that the transfer of the Financed Student Loans by it to
the Issuer or the Eligible Lender Trustee on behalf of the Issuer, will
constitute a valid sale and assignment of such Financed Student Loans.
Notwithstanding the foregoing, if the transfer of the Financed Student Loans by
AMS (or by the AMS Eligible Lender Trustee on its behalf) to the Issuer (or the
Eligible Lender Trustee on behalf of the Issuer) is deemed to be an assignment
of collateral as security, then a security interest in the FFELP Loans may,
pursuant to the provisions of 20

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U.S.C. sec. 1087-2(d)(3), be perfected by, among other things, the filing of
notice of such security interest in the manner provided by the applicable
Uniform Commercial Code ("UCC") for perfection of security interests in
accounts. A financing statement or statements naming AMS as debtor will be filed
under the UCC to protect the interest of the Eligible Lender Trustee on behalf
of the Issuer in the event that the transfer by AMS (or by the AMS Eligible
Lender Trustee on its behalf) is deemed to be an assignment of collateral as
security.

         If the transfer of the Financed Student Loans is deemed to be an
assignment as security for the benefit of the Issuer, there are certain limited
circumstances in which prior or subsequent transferees of Financed Student Loans
could have an interest in such Financed Student Loans with priority over the
Issuer's interest. A tax or other government lien on property of AMS arising
prior to the time a Financed Student Loan comes into existence may also have
priority over the interest of the Issuer in such Financed Student Loan. Under
the Purchase and Contribution Agreement, however, the Seller will warrant that
it has transferred the Financed Student Loans to the Issuer clear of the lien of
any third party arising prior to the Closing Date. In addition, each of the
Seller and the Issuer will covenant that it will not sell, pledge, assign,
transfer or grant any lien on any Financed Student Loan (or any interest
therein) other than to the Indenture Trustee.

         Pursuant to the Servicing Agreement, the Servicer as custodian on
behalf of the Issuer will have custody of the promissory notes evidencing the
Financed Student Loans following the transfer of the Financed Student Loans to
the Issuer; provided, that, the Servicer will utilize the Subservicer to perform
such custodial functions. Although the records of AMS, the Issuer and the
Servicer will be marked to indicate the sale and although AMS and the Issuer
will cause UCC financing statements to be filed with the appropriate
authorities, the Financed Student Loans will not be physically segregated,
stamped or otherwise marked to indicate that such Financed Student Loans have
been sold to the Issuer and to the Eligible Lender Trustee. If, through
inadvertence or otherwise, any of such Financed Student Loans were sold to
another party that (i) purchased such Financed Student Loans in the ordinary
course of its business, (ii) took possession of such Financed Student Loans, and
(iii) acquired the Financed Student Loans for new value and without actual
knowledge of the Eligible Lender Trustee's interest, then such purchaser would
acquire an interest in the Financed Student Loans superior to the interest of
the Seller and the Issuer. See "THE TRANSFER AND SERVICING AGREEMENTS--Sale of
Financed Student Loans; Representations and Warranties."

         In the event of a Servicer Default resulting solely from certain events
of insolvency or bankruptcy that may occur with respect to the Servicer, a
court, conservator, receiver or liquidator may have the power to prevent either
the Indenture Trustee or Noteholders from appointing a successor the Servicer.
See "THE TRANSFER AND SERVICING AGREEMENTS--Rights upon Servicer Default."

CONSUMER PROTECTION LAWS

         Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. Also, unless preempted by federal law, some state laws
impose finance charge ceilings and other restrictions on certain consumer
transactions and require contract disclosures in addition to those required

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under federal law. These requirements impose specific statutory liabilities upon
lenders who fail to comply with their provisions. In certain circumstances, the
Seller or Issuer may be liable for certain violations of consumer protection
laws that apply to the Financed Student Loans, either as assignee from AMS or as
the party directly responsible for obligations arising after the transfer. For a
discussion of the Issuer's rights if the Financed Student Loans were not
originated or serviced in compliance in all material respects with applicable
laws, see "THE TRANSFER AND SERVICING AGREEMENTS--Sale of Financed Student
Loans; Representations and Warranties" and "--Servicer Covenants."

LOAN ORIGINATION AND SERVICING PROCEDURES APPLICABLE TO FFELP LOANS COMPRISING
PART OF THE FINANCED STUDENT LOANS

         The Higher Education Act, including the implementing regulations
thereunder, imposes specified requirements with respect to originating and
servicing FFELP Loans. Generally, those procedures require that a determination
of whether an applicant is an eligible borrower under applicable standards
(including financial need analysis) be made, the borrower's responsibilities
under the loan be explained to him or her, the promissory note evidencing the
loan be executed by the borrower and that the loan proceeds then be disbursed in
a specified manner by the lender. After the loan is made, the lender must
establish repayment terms with the borrower, properly administer deferrals and
forbearance and credit the borrower for payments made thereon. If a borrower
becomes delinquent in repaying a loan, a lender or a servicing agent must
perform certain collection procedures (primarily telephone calls and demand
letters) which vary depending upon the length of time a loan is delinquent. The
Servicer has agreed pursuant to the Servicing Agreement to perform collection
and servicing procedures on behalf of the Issuer. However, failure to follow
these procedures or failure of the Seller to follow procedures relating to the
origination of the Financed Student Loans could result in adverse consequences.
Any such failure could result in the Department's refusal to make reinsurance
payments to the Federal Guarantors or the Department's or the Federal
Guarantors' refusal to make Guarantee Payments to the Eligible Lender Trustee
with respect to such Financed Student Loans. Failure of the Federal Guarantors
to receive reinsurance payments from the Department could adversely affect the
Federal Guarantors' ability or legal obligation to make Guarantee Payments to
the Eligible Lender Trustee with respect to such Financed Student Loans.

         Loss of any such payments could adversely affect the amount of
Available Funds on any Payment Date and the Issuer's ability to pay principal of
and interest on the Notes. Under certain circumstances, the Issuer has the
right, pursuant to the Purchase and Contribution Agreement and the Servicing
Agreement, to cause AMS or the Servicer to purchase or substitute any Financed
Student Loan, if a breach of the representations, warranties or covenants of the
Seller or the Servicer, as the case may be, with respect to such Financed
Student Loan has a material adverse effect on the interest of the Issuer therein
where such breach would result in nonpayment by the applicable Federal Guarantor
or the Department and such breach is not cured within any applicable cure
period. See "THE TRANSFER AND SERVICING AGREEMENTS--Sale of Financed Student
Loans; Representations and Warranties" and "--Servicer Covenants." The failure
of the Seller or the Servicer to so purchase or substitute a Financed Student
Loan would constitute a breach of the Purchase and Contribution Agreement or the
Servicing Agreement, enforceable by the Issuer or by the Indenture Trustee on
behalf of the Noteholders, but would not constitute an Event of Default under
the Indenture.

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LOAN ORIGINATION AND SERVICING PROCEDURES APPLICABLE TO THE ALTERNATIVE LOANS

         The loan origination and servicing procedures implementing the default
insurance coverage provided by both Landmark and American and Foreign under the
TuitionGard Program are contained in a TuitionGard Program manual. The
TuitionGard Program manual is updated from time to time; the procedures
contained in the TuitionGard Program manual at the time a loan is originated are
the procedures used to define and confirm eligibility for claim payment.
Generally, those procedures require that a determination of whether an applicant
is an eligible borrower under the TuitionGard Program manual guidelines be made,
the promissory note evidencing the loan be executed by the borrower and any
co-signer, and that the loan proceeds then be disbursed in a specified manner by
the lender.

         After the loan is made, the lender must establish repayment terms with
the borrower, properly administer deferrals and forbearance and credit the
borrower for payments made thereon. If a borrower becomes delinquent in repaying
a loan, a lender or a servicing agent must perform certain collection procedures
(primarily telephone calls and demand letters) which vary depending upon the
length of time a loan is delinquent. The Servicer has agreed pursuant to the
Servicing Agreement to perform collection and servicing procedures on behalf of
the Issuer. However, failure to follow these procedures or failure of the Seller
to follow procedures relating to the origination of the Alternative Loans could
result in adverse consequences. Any such failure could result in the appropriate
insurer's refusal to make claim payments to the Issuer with respect to such
Financed Student Loans.

         Loss of any such payments could adversely affect the amount of
Available Funds on any Payment Date and the Issuer's ability to pay principal of
and interest on the Notes. Under certain circumstances, the Issuer has the
right, pursuant to the Purchase and Contribution Agreement and the Servicing
Agreement, to cause AMS or the Servicer to purchase or substitute any Financed
Student Loan, if a breach of the representations, warranties or covenants of the
Seller or the Servicer, as the case may be, with respect to such Financed
Student Loan has a material adverse effect on the interest of the Issuer therein
where such breach would result in nonpayment by the applicable insurer under the
TuitionGard Program. See "THE TRANSFER AND SERVICING AGREEMENTS--Sale of
Financed Student Loans; Representations and Warranties" and "--Servicer
Covenants." The failure of the Seller or the Servicer to so purchase or
substitute a Financed Student Loan would constitute a breach of the Purchase and
Contribution Agreement or the Servicing Agreement, enforceable by the Issuer or
by the Indenture Trustee on behalf of the Noteholders, but would not constitute
an Event of Default under the Indenture.

FFELP LOANS GENERALLY NOT SUBJECT TO DISCHARGE IN BANKRUPTCY

         FFELP Loans are generally not dischargeable by a borrower in bankruptcy
pursuant to the U.S. Bankruptcy Code, unless excepting such debt from discharge
will impose an undue hardship on the debtor and the debtor's dependents.

ALTERNATIVE LOANS GENERALLY SUBJECT TO DISCHARGE IN BANKRUPTCY

         Alternative Loans are generally dischargeable in bankruptcy pursuant to
the U.S. Bankruptcy Code if held by an entity such as the Issuer.

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              CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

         The following summarizes certain of the material United States federal
income tax consequences of the purchase, ownership and disposition of the Notes.
The summary does not purport to deal with United States federal income tax
consequences or special rules that are applicable to certain categories of
holders such as dealers in securities or foreign currency, banks, other
financial institutions, insurance companies, real estate investment trusts,
regulated investment companies, tax exempt entities, persons that hold the Notes
as a position in a "straddle," or as part of a synthetic security or "hedge,"
"conversion transaction" or other integrated investment, persons that have a
"functional currency" other than the U.S. dollar, and investors in pass-through
entities. Except to the extent discussed below, this discussion is not
applicable to Non-U.S. Holders (as defined below). The discussion is generally
limited to the initial purchasers of the Notes. In addition, this summary is
generally limited to investors who will hold the Notes as "capital assets"
(generally, property held for investment) within the meaning of Section 1221 of
the Internal Revenue Code of 1986, as amended (the "Code"). Prospective
investors are encouraged to consult their own tax advisors in determining the
federal, state, local, foreign, alternative minimum, estate and gift and any
other tax consequences to them of the purchase, ownership and disposition of the
Notes.

         The following summary is based upon current provisions of the Code, the
Treasury regulations promulgated thereunder and judicial or ruling authority,
all of which are subject to change, which change may be retroactive. Moreover,
there are no cases or Internal Revenue Service ("IRS") rulings on many of the
issues discussed below and no ruling on any of the issues discussed below will
be sought from the IRS. The opinions of counsel (described below) are not
binding on the IRS or the courts. As a result, the IRS may disagree with all or
a part of the discussion below.

         PERSONS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF THE UNITED STATES FEDERAL TAX LAWS TO
THEIR PARTICULAR SITUATIONS AS WELL AS ANY CONSEQUENCES ARISING UNDER THE LAWS
OF ANY OTHER TAXING JURISDICTION.

         For purposes of the discussion below, (i) "U.S. HOLDER" means a
beneficial owner of a Note that is for United States federal income tax purposes
a citizen or resident of the United States, a corporation, partnership or
certain other entities treated as a corporation or a partnership for United
States federal income tax purposes created or organized in or under the laws of
the United States or any state thereof (including the District of Columbia)
unless, in the case of a partnership, Treasury regulations are enacted that
provide otherwise, an estate the income of which is subject to United States
federal income taxation regardless of its source or a trust with respect to
which a court in the U.S. is able to exercise primary authority over its
administration and one or more U.S. persons have the authority to control all of
its substantial decisions and (ii) "NON-U.S. HOLDER" means a person other than a
U.S. HOLDER.

TAX CHARACTERIZATION OF THE ISSUER AS A PARTNERSHIP

         At the Closing, Weil, Gotshal & Manges LLP, federal tax counsel to the
Issuer ("Federal Tax Counsel"), will deliver its opinion, subject to the
assumptions set forth therein, that,

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although there is no direct authority with respect to entities with capital
structures similar to the Issuer, the Issuer will not be an association (or
publicly traded partnership) taxable as a corporation for federal income tax
purposes.

         If the IRS were to successfully assert that the Issuer was a publicly
traded partnership taxable as a corporation for federal income tax purposes,
unless the Issuer's income is "qualifying income" for purposes of Section 7704
of the Code, the Issuer would be subject to corporate income tax on its taxable
income. Any such corporate income tax could materially reduce cash available to
make payments on the Notes, and holders could be liable for any such tax that is
unpaid by the Issuer.

TAX CONSEQUENCES TO HOLDERS OF THE NOTES

         Treatment of the Notes as Indebtedness. The parties to the Indenture
will agree, and the Noteholders by their purchase of Notes will be deemed to
have agreed, to treat the Notes as debt for United States federal income tax
purposes. Federal Tax Counsel will deliver its opinion, subject to the
assumptions set forth therein, that, although there is no specific authority
with respect to the characterization for federal income tax purposes of
securities having the same terms as the Notes, in the hands of the initial
Noteholders the Notes will be classified as debt for federal income tax
purposes. The discussion below assumes this income tax characterization of the
Notes is correct.

         Interest Income on the Notes. The Notes provide for the payment of
stated interest at a floating rate based upon the Auction Rate, but are subject
to certain restrictions on the maximum level of the current payment of such
floating rate. Under Treasury regulations governing original issue discount
("OID"), stated interest payable at a variable rate is not taxed as OID or
contingent interest if the variable rate is a qualified floating rate. The
treatment of interest that is not based on a qualified floating rate is not
certain and the regulations do not address the tax treatment of debt instruments
such as the Notes bearing contingent interest except in circumstances not
relevant to this discussion. Because of the contingent nature of a portion of
the interest on the Notes, i.e., the possibility that there may be a difference
between the accrual rate and pay rate of the Notes (referred to herein as the
Class A-1 Noteholders' Interest Basis Carryover, the Class A-2 Noteholders'
Interest Basis Carryover, the Class A-3 Noteholders' Interest Basis Carryover
and the Class A-4 Noteholders' Interest Basis Carryover), the tax treatment of
interest on the Notes, including, in particular, interest equal to the Class A-1
Noteholders' Interest Basis Carryover, the Class A-2 Noteholders' Interest Basis
Carryover, the Class A-3 Noteholders' Interest Basis Carryover and the Class A-4
Noteholders' Interest Basis Carryover amounts, is not entirely clear under the
regulations. The Issuer, however, intends to treat the stated interest as
accruing pursuant to a "qualified floating rate" and as "qualified stated
interest" for OID purposes and thus such interest should not be taxable to the
Noteholders as OID or as contingent interest. The discussion below assumes that
the Notes will not be considered issued with OID. The stated interest on the
Notes will be taxable to a Noteholder as ordinary interest income when received
or accrued in accordance with such Noteholder's regular method of tax
accounting. A holder of a Note issued with a de minimis amount of OID generally
must include such OID in income, on a pro rata basis, only as principal payments
are made on the Note. However, a holder may elect to accrue de minimis OID under
a constant yield method in connection with an election to accrue all interest,
discount and premium on the Note using the

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<PAGE>
constant yield method. If applicable, Noteholders are urged to consult their own
tax advisors regarding such election. A purchaser who buys a Note for more or
less than its principal amount will generally be subject, respectively, to the
bond premium amortization or market discount rules of the Code.

         Sale or Other Disposition. If a Noteholder sells a Note, the Noteholder
will recognize gain or loss in an amount equal to the difference between the
amount realized on the sale (not including accrued but unpaid interest) and the
Noteholder's adjusted tax basis in the Note (not including accrued but unpaid
interest). The adjusted tax basis of a Note to a particular Noteholder will
equal the Noteholder's cost for the Note, increased by any market discount,
acquisition discount, OID, if any, and gain previously included by such
Noteholder in income with respect to the Note and decreased by the amount of
bond premium (if any) previously amortized and by the amount of principal
payments previously received by such Noteholder with respect to such Note. Any
such gain or loss generally will be capital gain or loss if the Note was held as
a capital asset, except for gain representing accrued interest (including any
Noteholders' Interest Basis Carryover) and accrued market discount not
previously included in income. Any such gain or loss would be long-term capital
gain or loss if the holder's holding period exceeded one year. The maximum rate
of federal income taxation on net long-term capital gains realized by a
non-corporation is 20% with respect to capital assets held for more than one
year. Capital losses generally may be used only to offset capital gains.

TAXATION OF NON-U.S. HOLDERS

         Payments of interest (including OID, if any), principal and premium, if
any, on the Notes to any Non-U.S. Holder should not be subject to United States
federal withholding tax (the "Portfolio Interest Exemption"), providing that, in
the case of interest, such person (i) does not own, actually or constructively,
10% or more of the total combined voting power of all classes of stock entitled
to vote in the Issuer, (ii) is not a controlled foreign corporation related,
directly or indirectly, to the Issuer through stock ownership, (iii) is not a
bank receiving interest described in Section 881(c)(3)(A) of the Code, and
provided that the statement requirement described in the next sentence has been
fulfilled with respect to the beneficial owner and (iv) is not an individual who
ceased being a U.S. citizen or long-term resident for tax avoidance purposes.
Sections 871(h) and 881(c) of the Code require that, in order to obtain the
exemption from withholding tax described in the previous sentence, either the
beneficial owner of the Note, or a securities clearing organization, bank or
other financial institution that holds customers' securities in the ordinary
course of its trade or business (a "Financial Institution") and that is holding
the Note on behalf of such beneficial owner, file a statement with the
withholding agent to the effect that the beneficial owner of the Note is not a
United States person. Under current Treasury regulations which apply to interest
(including OID) and sale or exchange proceeds paid with respect to a Note, such
requirement will be fulfilled if (i) the beneficial owner of a Note certifies,
under penalties of perjury, that it is not a United States person and provides
its name and address and (ii) any Financial Institution (other than a financial
institution that is a qualified intermediary) holding the Note on behalf of the
beneficial owner files a statement with the relevant U.S. withholding agent to
the effect that it has received such a statement from the beneficial owner (and
furnishes the relevant U.S. withholding agent with a copy thereof), signed by an
authorized representative of the Financial Institution under penalties of
perjury. Generally, a Financial Institution will not be required to furnish the
name of a beneficial owner of a Note that is not a

                                       104
<PAGE>
United States person and a copy of such beneficial owner's certificate where the
Financial Institution is a qualified intermediary which has entered into a
withholding agreement with the IRS pursuant to the Treasury regulations. In the
case of payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership (other than payments to a foreign simple trust, a foreign grantor
trust or foreign partnership that qualifies as a withholding foreign trust or a
withholding foreign partnership within the meaning of the regulations and
payments to a foreign simple trust, a foreign grantor trust or a foreign
partnership that are effectively connected with the conduct of a trade or
business in the United States), the beneficiaries of the foreign simple trust,
the persons treated as the owners of the foreign grantor trust or the partners
of the foreign partnership, as the case may be, will be required to provide the
certification discussed above in order to establish an exemption from
withholding tax requirements. Such prospective investors should consult their
tax advisors regarding possible additional reporting requirements. Foreign
partnerships and their partners should consult their tax advisors regarding
possible additional reporting requirements.

         There is a risk, however, that, as described above, the amount of
interest payable on the Notes may be deemed to be considered contingent
interest. Accordingly, the IRS may take the position that the interest on the
Notes does not qualify for the exemption from withholding described above.
Non-U.S. Holders should consult their own tax advisors regarding the application
to them of the Portfolio Interest Exemption.

         Notwithstanding the foregoing, if interest or other income received
with respect to the Note is effectively connected with a United States trade or
business conducted by a Non-U.S. Holder, such Noteholder, although exempt from
the withholding tax described in the preceding paragraph, may be subject to
United States federal income tax on such interest in the same manner as if it
were a United States person. In addition, if such Noteholder is a corporation,
it may be subject to a branch profits tax equal to 30% (or a lower treaty rate)
of its effectively connected earnings and profits for the taxable year, subject
to certain adjustments.

         A Non-U.S. Holder will not be subject to United States federal income
tax on gain realized on the sale, exchange or other disposition of a Note,
unless (i) such Noteholder is an individual who is present in the United States
for 183 days or more in the taxable year of disposition and either (a) such
individual has a "tax home" (as defined in code Section 911(d)(3)) in the United
States (unless such gain is attributable to a fixed place of business in a
foreign country maintained by such individual and has been subject to foreign
tax of at least 10%) or (b) the gain is attributable to an office or other fixed
place of business maintained by such individual in the United States, (ii) such
individual ceased being a U.S. citizen or long-term resident for tax avoidance
purposes or (iii) such gain is effectively connected with the conduct by such
Noteholder of a trade or business in the United States.

INFORMATION REPORTING AND BACKUP WITHHOLDING

         The Indenture Trustee will be required to report annually to the IRS,
and to each Noteholder of record, certain information, including the
Noteholder's name, address and taxpayer identification number (either the
Noteholder's Social Security number or its employer identification number, as
the case may be), the aggregate amount of principal and interest paid and the
amount of tax withheld, if any. This obligation, however, does not apply with
respect to

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<PAGE>
certain U.S. Holders, including corporations, tax-exempt organizations,
qualified pension and profit-sharing trusts and individual retirement accounts.

         In the event a U.S. Holder subject to the reporting requirements
described above fails to supply its correct taxpayer identification number in
the manner required by applicable law or underreports its tax liability,
"backup" withholding of tax of each payment of interest and principal on the
Notes may be required. This backup withholding is not an additional tax and may
be credited against the Noteholder's United States federal income tax liability,
provided that the required information is furnished to the IRS.

         Prospective investors are urged to consult their tax advisors regarding
the application of the backup withholding and information reporting rules.

POSSIBLE ALTERNATIVE TREATMENTS OF THE NOTES

         If, contrary to the opinion of Federal Tax Counsel, the IRS
successfully asserted that one or more classes of Notes did not represent debt
for federal income tax purposes, the Notes might be treated as equity interests
in the Issuer. If so treated, the Issuer might be treated as a publicly traded
partnership that would be taxable as a corporation with the adverse consequences
described above unless it met certain qualifying income tests. Even if the
Issuer qualified for such exception, treatment of the Notes as equity interests
in a publicly traded partnership could have adverse tax consequences to certain
holders. For example, income to foreign investors generally would be subject to
U.S. federal income tax payments, tax return filing and withholding
requirements, and individual holders might be subject to certain limitations on
their ability to deduct their share of Issuer expenses.

         Because the Issuer will treat the Notes as indebtedness for federal
income tax purposes, the Issuer will not comply with the tax reporting
requirements that would apply under the foregoing alternative characterization
of the Notes.

                         STATE, LOCAL AND FOREIGN TAXES

         Noteholders should consult their tax advisors with respect to state,
local and foreign tax considerations relevant to an investment in the Notes.

                              ERISA CONSIDERATIONS

GENERAL

         Set forth below are certain consequences under the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the Code that a fiduciary
(a "Plan Fiduciary") of an "employee benefit plan" (as defined in and subject to
ERISA) or of a "plan" (as defined in Section 4975 of the Code) or any entity
which is deemed to hold the assets of any such employee benefit plan or plan
should consider before deciding to invest the employee benefit plan's or plan's
assets in the Notes of any Series. The following summary is intended to be a
summary of certain relevant ERISA issues under ERISA and the Code and does not
purport to address all ERISA considerations that may be applicable to a
particular plan.

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<PAGE>

         In general, the terms "employee benefit plan" as defined in ERISA and
"plan" as defined in Section 4975 of the Code (each, a "Plan") refer to certain
cplans or accounts of various types which provide retirement benefits or welfare
benefits to an individual or to an employer's employees and their beneficiaries.
Plans include corporate pension and profit-sharing plans, "Simplified Employee
Pension Plans," Keogh plans for self-employed individuals (including partners in
a partnership), individual retirement accounts described in Section 408 of the
Code and medical benefit plans.

         Subject to the General Considerations discussed below, the Notes may be
purchased by a Plan. Each Plan Fiduciary must give appropriate consideration to
the facts and circumstances that are relevant to the role that an investment in
the Notes will play in the Plan's investment portfolio. Each Plan Fiduciary,
before deciding to invest in the Notes, must be satisfied that investment in
such Notes is a prudent investment for the Plan, that the investments of the
Plan, including the investment in such Notes, are diversified so as to minimize
the risks of large losses and that an investment in such Notes complies with the
Plan and related trust documents. Each Plan considering acquiring a Note should
consult its own legal and tax advisors before doing so.

EXEMPT PLANS

         ERISA and Section 4975 of the Code do not apply to governmental plans
and certain church plans, each as defined in Section 3(33) of ERISA and Section
4975(g) of the Code. However, fiduciaries with respect to these plans may be
subject to federal, state or other similar laws. The discussion below does not
purport to address considerations under such federal, state or other laws.

PLAN ASSETS

         A regulation (the "DOL Regulation") issued under ERISA by the United
States Department of Labor (the "DOL") contains rules for determining when an
investment by a Plan in an entity will result in the underlying assets of the
entity being plan assets. The rules provide that the assets of an entity will
not be "plan assets" of a Plan that purchases an interest therein if such
interest is not an "equity interest." The DOL Regulation defines an equity
interest as an interest other than an instrument that is treated as indebtedness
under applicable local law and that has no substantial equity features. The DOL
Regulation provides with respect to the purchase of an equity interest by a
Plan, that the assets of an entity will not be plan assets of a Plan that
purchases an interest therein if investment by all "benefit plan investors" is
not "significant."

         With respect to the preceding paragraph, the term "benefit plan
investors" includes all plans and accounts of the types described above under
"General" as employee benefit plans and accounts, whether or not subject to
ERISA (such as foreign plans), as well as entities that hold "plan assets,"
whether or not subject to ERISA, due to investments made in such entities by any
of such plans or accounts. Investment by benefit plan investors will be deemed
not significant if benefit plan investors own, in the aggregate, less than 25%
of the value of any class of equity in the entity, determined without regard to
the investments of persons (other than Plans) with discretionary authority or
control over the assets of such entity, of any person who provides investment
advice for a fee with respect to such assets and of "affiliates" of such persons
(within

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<PAGE>
the meaning of the DOL Regulation). Because the availability of this exception
to the Issuer depends upon the identity of the Noteholders, there can be no
assurance that the Notes will qualify for this exception.

         If the Notes are treated as equity interests in the Issuer for purposes
of the DOL Regulation and none of the exceptions set forth in the DOL Regulation
apply, the assets of the Issuer will be deemed to be the assets of each Plan
investor for the purposes of ERISA and Section 4975 of the Code. In such a case,
the discussion set forth in the following sections will apply.

         CONSEQUENCES OF CHARACTERIZATION AS PLAN ASSETS. If the assets of the
Issuer are plan assets, the Indenture Trustee will be a fiduciary under ERISA
with respect to Plan investors and its duties and liabilities will be subject to
the provisions of ERISA.

         In addition, Section 406 of ERISA will prohibit the Indenture Trustee,
among others, from causing the assets of the Issuer to be involved, directly or
indirectly, in certain types of "prohibited transactions" with "parties in
interest" to investing Plans unless a statutory or administrative exemption
applies. If the prohibited transaction restrictions of Section 406 of ERISA are
violated, ERISA generally provides for criminal and civil penalties upon the
Plan Fiduciary and possibly other persons. Section 4975(c) of the Code generally
imposes excise tax on "disqualified persons" who engage, directly or indirectly,
in similar types of transactions with the assets of Plans subject to such
Section (except that an individual retirement account that engages in a
prohibited transaction may instead forfeit its tax exempt status) and also
requires rescission of such transaction.

         The types of transactions subject to the prohibited transaction
restrictions of ERISA and Section 4975(c) of the Code include: (i) sales,
exchanges or leases of property (such as the Notes), (ii) loans or other
extensions of credit and (iii) the furnishing of goods and services. As
described in Section 406(b)(1) or Section 4975(c)(1)(E) of the Code, the use of
plan assets by or for the benefit of parties in interest or disqualified persons
may also constitute a prohibited transaction.

         The Issuer, the Indenture Trustee, the Seller and certain other persons
and certain affiliates thereof, might be considered or might become a party in
interest or disqualified person with respect to a Plan. If so, the acquisition,
holding or disposition of Notes by or on behalf of such Plan could give rise to
one or more "prohibited transactions" within the meaning of Section 406 ERISA
and Section 4975(c) of the Code unless an exemption is available.

PURCHASE OF NOTES

         If the Notes are treated as indebtedness under applicable local law and
have no substantial equity features, the assets of the Issuer will not be
treated for purposes of ERISA or Section 4975 of the Code as assets of any Plan.
As a result, the prohibited transaction provisions of ERISA and Section 4975 of
the Code will not apply to transactions involving the underlying assets of the
Issuer. However, if the Issuer is or becomes a "party in interest" or
"disqualified person" with respect to a Plan (for example, if the Issuer were
owned at least 50% by a service

                                       108
<PAGE>
provider to a Plan), the purchase or holding of the Notes could give rise to a
prohibited transaction under ERISA or Section 4975 of the Code.

GENERAL CONSIDERATIONS

         The Notes are guaranteed by the Insurer with respect to the timely
payment of interest and the ultimate payment of principal. In addition, the
Issuer will (i) own a beneficial interest in the trust established pursuant to
the Eligible Lender Trustee Agreement and (ii) establish the Reserve Account
with the Indenture Trustee. Although there can be no assurances that the Notes
will be treated as indebtedness under ERISA, the Issuer believes that the Notes
will so qualify.

         In any case, as described above, the Issuer might become a "party in
interest" or "disqualified person" with respect to a plan by reason, for
example, of the Issuer providing services to such Plan. As a result, the
extension of credit represented by the purchase of the Notes might constitute a
prohibited transaction during the term of the Notes unless an applicable
exemption applies, such as one of the following prohibited transaction class
exemptions ("PTCE"), PTCE 84-14 (qualified professional asset managers), PTCE
90-1 (insurance company pooled separate account), PTCE 91-38 (bank collective
investment funds), PTCE 95-60 (insurance company general accounts) and PTCE
96-23 (in-house asset managers). It should be noted, however, that even if the
conditions specified in one or more of these exemptions are met, the scope of
relief provided by these exemptions may not necessarily cover all acts that
might be construed as prohibited transactions.

         EACH PLAN FIDUCIARY SHOULD CONSULT WITH ITS ATTORNEYS AND FINANCIAL
ADVISORS AS TO THE PROPRIETY OF AN INVESTMENT IN THE NOTES IN LIGHT OF THE
CIRCUMSTANCES OF THE PARTICULAR PLAN AND THE RESTRICTIONS OF ERISA AND SECTION
4975 OF THE CODE.

                              TRANSFER RESTRICTIONS

         The Notes may be resold only to institutional "accredited investors"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act
that have delivered a Purchaser's Letter in the form of Exhibit A hereto.
Additionally, each purchaser of Notes will be deemed to have represented and
agreed as follows:

         1. It is purchasing the Notes for its own account or an account with
respect to which it exercises sole investment discretion and it or such account
is an institutional "accredited investor" within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act which has delivered a Purchaser's
Letter in the form of Exhibit A hereto and is acquiring such Notes for
investment and not with a view to, or for offer or sale in connection with, any
distribution (within the meaning of the Securities Act of 1933) or
fractionalization thereof or with any intention of reselling the Notes or any
part thereof, subject to any requirement of law that the disposition of its
property or the property of such account or accounts be at all times within its
or their control and subject to its or their ability to resell such Notes to an
institutional "accredited investor" within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act.

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<PAGE>

         2. It understands that the Notes are being offered in a transaction not
involving any public offering in the United States within the meaning of the
Securities Act of 1933, and that the Notes have not been and will not be
registered under such Act.

         3. It understands that the Notes, unless otherwise agreed by the Issuer
and the Holder thereof, will bear a legend to the following effect:

         THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES OR "BLUE SKY" LAWS. THE
HOLDER HEREOF, BY ITS PURCHASE OF THE NOTES, AGREES FOR THE BENEFIT OF THE
ISSUER THAT SUCH NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW
TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY TO THE ISSUER
(PURSUANT TO A REDEMPTION), IN AN AUCTION, OR TO OR THROUGH A BROKER-DEALER
PURSUANT TO AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT AND, IN EACH SUCH CASE, IN COMPLIANCE WITH THE INDENTURE AND ALL
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
JURISDICTION. EACH PURCHASER OF THIS NOTE WILL BE REQUIRED TO EXECUTE A
PURCHASER'S LETTER CERTIFYING, AMONG OTHER THINGS, THAT SUCH PURCHASER IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT.

         4. It (i) has such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of its investment in
the Notes, and (ii) has the ability to bear the economic risks of its
prospective investment and can afford the complete loss of such investment.

         5. It understands that the Issuer, the Placement Agent and others will
rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that if any of the foregoing
acknowledgments, representations or agreements deemed to have been made by it
are no longer accurate, it will promptly notify the Issuer and the Placement
Agent. If it is acquiring any Notes as a fiduciary or agent for one or more
investor accounts, it represents that it has sole investment discretion with
respect to each such account and it has full power to make the foregoing
acknowledgments, representations and agreements on behalf of such account.

         6. It acknowledges that it has had the opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of the Notes
and to obtain additional information necessary to verify the accuracy and
completeness of any information furnished to it or to which it has had access.

         7. It will not sell, pledge or otherwise dispose of the Notes other
than by uncondiitonal sale of a principal amount not less than the minimum
denomination.

         The foregoing is a summary only and is not intended to be exhaustive.
Holders are advised to consult with their advisors concerning restrictions on
resale, and are further advised against reselling their securities until they
have determined that any such resale is in compliance with the requirements of
applicable legislation, including any holding period requirements thereunder.

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<PAGE>

                             SETTLEMENT AND CLEARING

RESTRICTED GLOBAL NOTES

         Upon the issuance of a Restricted Global Note, DTC or its custodian
will credit, on its internal system, the respective stated initial principal
amount of the individual beneficial interests represented by the Restricted
Global Notes to the accounts of persons who have accounts with DTC. Ownership of
beneficial interests in Restricted Global Notes will be limited to persons who
have accounts with DTC ("participants") or persons who hold interests through
participants. Ownership of beneficial interests in a Restricted Global Note will
be shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interest of
participants) and the records of participants (with respect to interests of
persons other than participants).

         So long as DTC, or its nominee, is the registered owner or holder of a
Restricted Global Note, DTC or the nominee, as the case may be, will be
considered the sole owner or holder of the Notes represented by a Restricted
Global Note for all purposes under the Indenture and such Notes. Unless DTC
notifies the Issuer that it is unwilling or unable to continue as depository for
a Restricted Global Note or ceases to be a "Clearing Agency" registered under
the Securities Exchange Act of 1934 (the "Exchange Act"), and except as
described under "DESCRIPTION OF THE NOTES - Definitive Notes" herein, owners of
a beneficial interest in a Restricted Global Note will not be entitled to have
any portion of a Restricted Global Note registered in their names, will not
receive or be entitled to receive physical delivery of Notes in certificated
form and will not be considered to be the owners or holders of any Notes under
the Indenture. In addition, no beneficial owner of an interest in a Restricted
Global Note will be able to transfer that interest except in accordance with
DTC's applicable procedures in addition to those under the Indenture referred to
herein.

         Investors may hold their interests in a Restricted Global Note directly
through DTC if they are participants in the system, or indirectly through
organizations which are participants in the systems. See "DESCRIPTION OF THE
NOTES - Book-Entry Registration".

         Payments on a Restricted Global Note will be made to DTC or its
nominee, as the registered owner thereof. None of the Issuer, the Indenture
Trustee or any Paying Agent will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in a Restricted Global Note or for maintaining, supervising
or reviewing any records relating to the beneficial ownership interests.

         The Issuer expects that DTC or its nominee, upon receipt of any
payments in respect of a Restricted Global Note representing any Class of Notes
held by it or its nominee, will immediately credit participants' accounts with
payments in amounts proportionate to their respective beneficial interests in
the stated initial principal amount of a Restricted Global Note for the Class of
Notes as shown on the records of DTC or its nominee. The Issuer also expects
that payments by participants to owners of beneficial interests in a Restricted
Global Note held through the participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers registered in the names of nominees for the
customers. The payments will be the responsibility of the participants.

                                       111
<PAGE>

         Transfers between the participants in DTC will be effected in the
ordinary way in accordance with DTC rules and will be settled in immediately
available funds. The laws of some states require that certain persons take
delivery of securities in definitive form. Consequently, the ability to transfer
beneficial interests in a global note to these persons may be limited. Because
DTC can only act on behalf of participants, who in turn act on behalf of
indirect participants and certain banks, the ability of a person having a
beneficial interest in a global note to pledge their interest to persons or
entities that do not participate in the DTC system or otherwise take actions in
respect of their interest, may be affected by the lack of a physical certificate
of interest.

         DTC has advised the Issuer that it will take any action permitted to be
taken by a holder of the Notes (including the presentation of the applicable
Notes for exchange as described below) only at the direction of one or more
participants to whose account with DTC interests in a Restricted Global Note is
credited and only in respect of that portion of the aggregate principal amount
of the Notes as to which the participant or participants has or have given
direction.

         DTC has advised the Issuer as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates. Participants include securities brokers and
dealers, banks, trust companies and clearing corporations and may include
certain other organizations. Indirect access to the DTC system is available to
others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a participant, either directly or
indirectly.

         Although DTC has agreed to the foregoing procedures in order to
facilitate transfers of interests in the Restricted Global Notes among
participants of DTC, it is under no obligation to perform or continue to perform
these procedures, and the procedures may be discontinued at any time. Neither
the Issuer nor the Indenture Trustee will have any responsibility for the
performance by DTC or its participants or indirect participants of its
obligations under the rules and procedures governing their operations.

                                PRIVATE PLACEMENT

         Subject to the terms and conditions set forth in the Private Placement
Agreement dated on or around the Closing Date relating to the Notes (the
"Private Placement Agreement"), among the Issuer, AMS and the Placement Agent
named below (the "Placement Agent"), relating to the Notes, the Placement Agent
has agreed to act as the exclusive placement agent for the Issuer in connection
with the initial placement of the Notes offered hereby. The Private Placement
Agreement provides that the Issuer will grant the Placement Agent the exclusive
right to offer to sell, as its agent, the Notes to institutional "accredited
investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act, which have sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of the Notes and are able and prepared to bear the economic risk of investing in

                                       112
<PAGE>
and holding the Notes. Pursuant to the Private Placement Agreement and subject
to certain conditions precedent contained therein, the Placement Agent will
agree to use its best efforts to secure subscriptions from investors to buy all
of the Notes.

         The Issuer reserves the right to withdraw, cancel or modify the offer
made hereby without notice and may reject orders in whole or in part placed
directly or through the Placement Agent. The Placement Agent will have the
right, in its discretion, to reject in whole or in part any offer received by it
to purchase any of the Notes from the Issuer.

         The Issuer proposes to offer the Notes to investors at a purchase price
equal to the principal amount thereof. The Issuer and AMS have agreed to pay the
Placement Agent a fee for its services under the Placement Agent Agreement. In
addition, the Issuer and AMS have agreed to indemnify the Placement Agent
against certain liabilities or to contribute to payments that the Placement
Agent may be required to make in respect thereof. The Issuer and AMS have also
agreed to reimburse the Placement Agent for certain expenses incurred by them in
connection with this offering. The Placement Agent will also act in Auctions as
a Broker-Dealer and receive fees in connection therewith.

         The Notes will be eligible for resale only to institutional "accredited
investors" within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D
under the Securities Act, which have sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and risks
of the Notes and are able and prepared to bear the economic risk of investing in
and holding the Notes.

         Any prospective investor desiring to acquire Notes will be deemed to
have made certain representations and warranties concerning its qualifications
to purchase Notes. Each prospective purchaser of the Notes will be required to
sign and deliver to Banc of America Securities LLC, as Broker-Dealer, a
Purchaser's Letter, a form of which is attached to this Offering Memorandum as
Exhibit A, in which such prospective purchaser will agree, among other things,
that:

                  (i) (A) any purchase of Notes made by it will be for its own
         account and (B) it will at the time of each acquisition of Notes be an
         institutional "accredited investor" within the meaning of Rule
         501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act,
         will have previously invested in similar types of instruments and will
         be able and prepared to bear the economic risk of investing in and
         holding the Notes;

                  (ii) transfers of Notes may be made only in authorized
         denominations;

                  (iii) ownership of the Notes will be maintained in book-entry
         form by DTC for the account of such prospective purchaser's DTC
         Participant, which in turn will maintain records of such prospective
         purchaser's beneficial ownership; and

                  (iv) (A) Notes may be transferred only to a person that has
         delivered a signed Purchaser's Letter to the Broker-Dealer and (B) so
         long as the ownership of the Notes is maintained in book-entry form by
         DTC, Notes may be transferred only in an Auction or to or through a
         Broker-Dealer, provided that in the case of all transfers of Notes
         other

                                       113
<PAGE>
         than those pursuant to Auctions, the Broker-Dealer of such Noteholder
         advises the Auction Agent of such transfer.

         Execution by a prospective purchaser of a Purchaser's Letter is not a
commitment to purchase Notes in any offering being made hereby or in a
subsequent transfer, but is a condition precedent to acquiring beneficial
ownership of Notes. See "TRANSFER RESTRICTIONS."

         Pursuant to the Private Placement Agreement, the Issuer and AMS extend
to each prospective investor the opportunity, prior to the consummation of the
sale of the Notes, to ask questions of, and receive answers from, the Issuer and
AMS concerning the Notes and the terms and conditions of this offering and to
obtain any additional information it may consider necessary in making an
informed investment decision and any information in order to verify the accuracy
of the information set forth herein, to the extent the Issuer or AMS possesses
the same or can acquire it without unreasonable effort or expense and can make
such information available without divulging information deemed by the Issuer or
AMS, in its absolute discretion, to be proprietary and confidential.

         No action is being taken or is contemplated by AMS or the Issuer that
would permit a public offering of the Notes or possession or distribution of any
preliminary offering memorandum, final offering memorandum or any amendment
thereof, any supplement thereto or any other offering material relating to the
Notes in any jurisdiction where, or in any other circumstances in which, action
for those purposes is required. The Placement Agent has agreed that it is solely
responsible for its own compliance with all laws applicable in each jurisdiction
in which it acts as placement agent or otherwise facilitates the initial
placement of the Notes offered hereby or distributes any preliminary offering
memorandum, final offering memorandum or any amendments thereof or supplements
thereto or any other material and it agrees to comply with all such laws.

         The Notes constitute a new issue of securities for which there is no
existing market, and resales of the Notes are further subject to the transfer
restrictions described herein. See "TRANSFER RESTRICTIONS". Accordingly, except
to the extent provided for the Notes through the Auction Procedures set forth
herein, there can be no assurance as to the development or liquidity, or of any
trading market, for the Notes at any time.

                                  LEGAL MATTERS

         Certain legal matters relating to the Notes will be passed upon for the
Seller, the Servicer and the Issuer by Hinckley, Allen & Snyder, counsel of the
Seller, and by Weil, Gotshal & Manges LLP, New York, New York, as special
counsel to the Seller, Servicer and Issuer. Mayer, Brown & Platt will act as
counsel to the Placement Agent.

                                       114
<PAGE>

OFFERING MEMORANDUM

                                 INDEX OF TERMS

         Set forth below is a list of the defined terms used in this Offering
Memorandum and the pages on which the definitions of such terms may be found
herein.

<Table>
<Caption>
TERMS                                                                    PAGE(s)
-----                                                                    -------
<S>                                                               <C>
1992 Amendments..........................................................37, 63
1993 Act.....................................................................20
1998 Amendments..............................................................38
1998 Reauthorization Bill....................................................37
91-Day T-Bill................................................................43
Acquisition Account...........................................................8
Acquisition Period........................................................7, 81
Act......................................................................17, 36
Additional Financed Student Loans.........................................3, 59
Add-on Federal Consolidation Loans...........................................49
American and Foreign.........................................................54
AMS ...........................................................i, iii, 1, 2, 32
AMS Eligible Lender Trustee..................................................33
Assets of the Issuer..........................................................2
Auction agent.................................................................2
Auction Agent Fee............................................................90
Auction Rate..................................................................9
Auto Advantage Repayment Plan................................................34
Available Funds..........................................................76, 88
Bank One......................................................................2
Blue Sky.....................................................................28
Broker-Dealer Fee............................................................90
Business Day..................................................................9
Class.........................................................................i
Class A Note Principal Amount................................................90
Class A-1 Auction Date...................................................ii, 65
Class A-1 Distribution Account................................................4
Class A-1 Note Principal Amount..............................................91
Class A-1 Note Rate.......................................................9, 66
Class A-1 Noteholders.........................................................9
Class A-1 Noteholders' Distribution Amount...................................91
Class A-1 Noteholders' Interest Basis Carryover..............................10
Class A-1 Noteholders' Interest Carryover Shortfall..........................91
Class A-1 Noteholders' Interest Distribution Amount..........................91
Class A-1 Notes...............................................................i
Class A-1 Original Note Principal Amount.....................................91
Class A-1 Payment Date...................................................ii, 65
Class A-2 Auction Date...................................................ii, 65
Class A-2 Distribution Account................................................4
Class A-2 Note Principal Amount..............................................91
</Table>

                                      115
<PAGE>

<Table>
<Caption>
TERMS                                                                    PAGE(S)
-----                                                                    -------
<S>                                                                    <C>
Class A-2 Note Rate.......................................................9, 66
Class A-2 Noteholders.........................................................9
Class A-2 Noteholders' Distribution Amount...................................92
Class A-2 Noteholders' Interest Basis Carryover..............................10
Class A-2 Noteholders' Interest Carryover Shortfall..........................92
Class A-2 Noteholders' Interest Distribution Amount..........................92
Class A-2 Notes...............................................................i
Class A-2 Original Note Principal Amount.....................................92
Class A-2 Payment Date...................................................ii, 65
Class A-3 Auction Date...................................................ii, 65
Class A-3 Distribution Account................................................4
Class A-3 Note Principal Amount..............................................92
Class A-3 Note Rate.......................................................9, 66
Class A-3 Noteholders.........................................................9
Class A-3 Noteholders' Distribution Amount...................................92
Class A-3 Noteholders' Interest Basis Carryover..............................10
Class A-3 Noteholders' Interest Carryover Shortfall..........................93
Class A-3 Noteholders' Interest Distribution Amount..........................93
Class A-3 Notes...............................................................i
Class A-3 Original Note Principal Amount.....................................93
Class A-3 Payment Date...................................................ii, 65
Class A-4 Auction Date...................................................ii, 65
Class A-4 Distribution Account................................................4
Class A-4 Note Principal Amount..............................................93
Class A-4 Note Rate.......................................................9, 66
Class A-4 Noteholders.........................................................9
Class A-4 Noteholders Interest Basis Carryover...............................10
Class A-4 Noteholders' Distribution Amount...................................93
Class A-4 Noteholders' Interest Carryover Shortfall..........................93
Class A-4 Noteholders' Interest Distribution Amount..........................94
Class A-4 Notes...............................................................i
Class A-4 Original Note Principal Amount.....................................94
Class A-4 Payment Date...................................................ii, 65
Clearing Agency........................................................111, 112
Closing Date..................................................................2
Code........................................................................102
Collection Account........................................................3, 82
Collection Period........................................................10, 88
Collections..................................................................88
Consolidated Appropriations Act..............................................41
CP Rate..................................................................41, 43
CUSIP Numbers................................................................15
Cutoff Date...................................................................2
DebtMinder...................................................................33
Deferral Period..............................................................46
Deficiency Amount............................................................76
</Table>

                                      116
<PAGE>

<Table>
<Caption>
TERMS                                                                    PAGE(S)
-----                                                                    -------
<S>                                                                    <C>
Definitive Notes............................................................69
Department.................................................................iii
Depository..................................................................64
Determination Date..........................................................88
Dividends Borrower Benefits.............................................26, 34
Dividends I.............................................................26, 34
Dividends II............................................................26, 34
DOL........................................................................107
DOL Regulation.............................................................107
DSLP........................................................................21
DTC.........................................................................14
Eligible Deposit Account....................................................83
Eligible Institution........................................................83
Eligible Investments........................................................83
Eligible Lender Trust Agreement..........................................1, 35
Eligible Lender Trustee..................................................1, 35
Eligible Lender Trustee's Fee...............................................94
ERISA......................................................................106
ERISA Considerations........................................................15
E-Sign Act..................................................................41
Event of Default............................................................71
Exchange Act...............................................................111
Expected Interest Collections...............................................10
Family Contribution.........................................................42
Federal Assistance..........................................................44
Federal Consolidation Loan..............................................36, 49
Federal Guarantor...........................................................63
Federal Origination Fee.....................................................23
Federal PLUS Loans..........................................................36
Federal SLS Loans...........................................................36
Federal Stafford Loans......................................................36
Federal Supplemental Loans to Students......................................36
Federal Tax Counsel........................................................102
Federal Unsubsidized Stafford Loans.........................................36
Fee Remittance Date..........................................................4
FFELP...............................................................i, iii, 36
FFELP Loans..................................................................1
Final Scheduled Payment Date...............................................iii
Financed Student Loans.............................................i, 2, 3, 59
Financial Institution......................................................104
Fitch.......................................................................15
Forbearance Period..........................................................47
Funding Account..........................................................7, 81
Funding Period...........................................................7, 81
GNIC........................................................................54
Grace Period................................................................46
</Table>

                                      117
<PAGE>

<Table>
<Caption>
TERMS                                                                    PAGE(S)
-----                                                                    -------
<S>                                                            <C>
Grad Advantage Program......................................................34
Graduated Phased In.........................................................33
Graduated Repayment.........................................................33
Guarantee Agreement.........................................................51
Guarantee Payments...........................................................3
Higher Education Act.................................................i, 17, 36
Indenture....................................................................8
Indenture Trustee............................................................2
Indenture Trustee's Fee.....................................................94
Index of Terms...............................................................i
Initial Cutoff Date..........................................................2
Initial Financed Student Loans...........................................2, 58
Initial Pool Balance........................................................14
Insolvency Event............................................................87
Insolvency Laws.............................................................27
Insurance Policy..........................................................i, 8
Insured Payment.............................................................76
Insurer........................................................1, 2, 8, 74, 77
Insurer Default.............................................................70
Insurer Reimbursement Amount................................................94
Interest.....................................................................9
Interest Only...............................................................33
Interest Period..............................................................9
Interest Subsidy Payments...................................................44
Investment Earnings.........................................................83
IRS........................................................................102
Issuer...................................................................i, 31
Landmark....................................................................54
Liquidated Financed Student Loans...........................................88
MBIA Inc....................................................................77
Monthly Rebate Fee..........................................................23
Moody's.....................................................................15
Non-U.S. Holder............................................................102
Note Distribution Account....................................................4
Note Rates...................................................................9
Noteholders.................................................................28
Noteholders' Distribution Amount............................................94
Noteholders' Interest Basis Carryover.......................................10
Noteholders' Interest Distribution Amount...................................95
Noteholders' Principal Carryover Shortfall..................................95
Noteholders' Principal Distribution Amount..................................95
Notes........................................................................i
Obligors....................................................................13
Offering Memorandum........................................................iii
OID........................................................................103
Optional Redemption.........................................................14
</Table>

                                      118
<PAGE>

<Table>
<Caption>
TERMS                                                                    PAGE(S)
-----                                                                    -------
<S>                                                                 <C>
Orion Auto..................................................................54
Owner.......................................................................77
Parity.......................................................................8
Parity Date.................................................................11
Participants...............................................................111
Payment Date............................................................ii, 65
PIA.................................................................... 26, 35
Placement Agent........................................................ii, 112
Plan.......................................................................107
Plan Fiduciary.............................................................106
Policy Premium..............................................................95
Pool Balance................................................................13
Portfolio Interest Exemption...............................................104
Preference Amount...........................................................77
Premium Percentage..........................................................82
Principal Distribution Amount.......................................11, 67, 95
Private Placement Agreement................................................112
PTCE.......................................................................109
Purchase Amount.............................................................82
Purchase and Contribution Agreement..........................................6
Purchaser's Letter..........................................................68
Qualified Student...........................................................41
Rating Agencies.............................................................30
Rating of the Securities....................................................15
Record Date..................................................................9
Related Documents...........................................................73
Required Distribution.......................................................77
Reserve Account..........................................................4, 96
Reserve Account Initial Deposit..........................................5, 96
Restricted Global Note..................................................14, 68
Rewards Letter..........................................................26, 34
RSA 421-B...................................................................vi
Securities Act......................................................i, 28, 110
Seller....................................................................i, 2
Servicer................................................................iii, 1
Servicer Default............................................................86
Servicing Agreement..........................................................1
Servicing Fee............................................................7, 85
Simplified Employee Pension Plans..........................................107
Special Allowance Payments..................................................43
Special Federal Tax Counsel.................................................15
Specified Reserve Account Balance........................................5, 96
Standards...................................................................41
Statistical Calculation Date.................................................2
Student Loan Rate............................................................9
Subservicer................................................................iii
</Table>

                                      119
<PAGE>

<Table>
<Caption>
TERMS                                                                    PAGE(S)
-----                                                                    -------
<S>                                                                    <C>
Swap Agreement..............................................................74
Swap Counterparty...........................................................74
Tax Considerations..........................................................15
Transfer Restrictions.......................................................69
Trust Accounts..............................................................83
Trustee Fees................................................................96
TuitionGard Program.........................................................54
U.S. Holder................................................................102
UCC........................................................................ 99
Unmet Need..................................................................43
</Table>

                                      120
<PAGE>

                                     ANNEX I

                               AUCTION PROCEDURES

         The following description of the Auction Procedures applies to the
Auction Rate Notes.

DEFINITIONS

         Capitalized terms used herein and not otherwise defined have the
meanings ascribed thereto in the accompanying Offering Memorandum. Additionally,
the following terms have the meanings ascribed to them:

         "All Hold Rate" means ninety percent (90%) of Three-Month LIBOR.

         "Auction" means the periodic implementation of the Auction Procedures
on an Auction Date.

         "Auction Agent" means the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.

         "Auction Agent Agreement" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.

         "Auction Agent Fee" has the meaning set forth in the Auction Agent
Agreement.

         "Auction Date" means in the case of the Class A-1 Notes initially March
11, 2002 and every fifth succeeding Monday thereafter, or if any such Monday is
not a Business Day, the next succeeding Business Day, in the case of the Class
A-2 Notes, initially March 13, 2002 and every fifth succeeding Wednesday
thereafter, or if any such Wednesday is not a Business Day, the next succeeding
Business Day, in the case of the Class A-3 Notes, initially March 18, 2002 and
every fifth succeeding Monday thereafter, or if any such Monday is not a
Business Day, the next succeeding Business Day, in the case of the Class A-4
Notes, initially March 20, 2002 and every fifth succeeding Wednesday thereafter,
or if any such Wednesday is not a Business Day, the next succeeding Business
Day, other than

                  (i) each Auction Period commencing after the ownership of the
         Class A-1 Notes, Class A-2 Notes, Class A-3 Notes or Class A-4 Notes,
         as the case may be, is no longer maintained in Book-Entry Form by the
         Depository;

                  (ii) each Auction Period commencing after and during the
         continuance of an Insurer Default; or

                  (iii) each Auction Period commencing less than two Business
         Days after the cure or waiver of an Insurer Default.

                                     A-I-1
<PAGE>

         "Auction Period" means after the Initial Period, the period during
which any Note Rate established for the Auction Rate Notes applies, which shall
be, in the case of the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and
Class A-4 Notes, the period commencing on each Payment Date and shall continue
through the day immediately preceding the next Payment Date.

         "Auction Period Adjustment" has the meaning set forth in the Indenture
(including the Appendices thereto).

         "Auction Procedures" means the procedures set forth herein.

         "Auction Rate" means each rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described herein.

         "Auction Rate Notes" means, collectively, the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes and Class A-4 Notes.

         "Authorized Denominations" means, with respect to the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, $100,000 and integral
multiples of $100,000 in excess thereof.

         "Available Notes" means the excess of the total principal amount of
Outstanding Auction Rate Notes over the sum of the aggregate principal amount of
Outstanding Auction Rate Notes subject to Submitted Hold Orders.

         "Bid" means an Order (a) where the principal amount of Outstanding
Auction Rate Notes, which an Existing Noteholder offers to sell if the Note Rate
for the next succeeding Auction Period shall be less than the rate per annum
specified by such Existing Noteholder or (b) where one or more Broker-Dealers
contacts Potential Noteholders to determine the principal amount of Auction Rate
Notes which each Potential Noteholder offers to purchase, if the Note Rate for
the next succeeding Auction Period shall not be less than the rate per annum
specified by such Potential Noteholder.

         "Bid Auction Rate" has the meaning set forth in the Indenture
(including the Appendices thereto).

         "Bidder" means each Existing Noteholder or Potential Noteholder placing
an order.

         "Book-Entry Form" or "Book-Entry System" means a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Depository or its nominee as registered owner, with the securities
"immobilized" to the custody of the Depository, and (iii) the book entry is the
record that identifies the owners of beneficial interests in that principal and
interest.

         "Broker-Dealers" means, with respect to the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes, Banc of America Securities LLC or,
in each case any other broker or dealer (each as defined in the Securities
Exchange Act of 1934, as amended), commercial bank or other entity permitted by
law to perform the functions required of the

                                     A-I-2
<PAGE>
Broker-Dealers set forth in the Auction Procedures that (a) is a Participant (or
an affiliate of a Participant), (b) has been appointed as such by the Issuer
with the prior consent of the Insurer and Banc of America Securities LLC and (c)
has entered into a Broker-Dealer Agreement that is in effect on the date of
reference.

         "Broker-Dealer Agreement" means each agreement between the Auction
Agent and the Broker-Dealers, and approved by the Issuer, pursuant to which the
Broker-Dealers agrees to participate in Auctions as set forth in the Auction
Procedures, as from time to time amended or supplemented. Each Broker-Dealer
Agreement shall be in substantially the form of the Broker-Dealer Agreement
dated as of the Closing Date between The Bank of New York, as Auction Agent, and
Banc of America Securities LLC, as Broker-Dealer.

         "Broker-Dealer Fees" means the fee specified in the Broker-Dealer
Agreement.

         "Class A Notes" means the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes issued pursuant to the Indenture.

         "Class A-1 Notes" means the Class A-1 Notes issued pursuant to the
Indenture.

         "Class A-2 Notes" means the Class A-2 Notes issued pursuant to the
Indenture.

         "Class A-3 Notes" means the Class A-3 Notes issued pursuant to the
Indenture.

         "Class A-4 Notes" means the Class A-4 Notes issued pursuant to the
Indenture.

         "Depository" means The Depository Trust Company, or any successor
thereto.

         "Existing Noteholder" means (i) with respect to and for the purpose of
dealing with the Auction Agent in connection with an Auction, a Person who is a
Broker-Dealer listed in the Existing Noteholder Registry at the close of
business on the Business Day immediately preceding such Auction and (ii) with
respect to and for the purpose of dealing with the Broker-Dealers in connection
with an Auction, a Person who is a beneficial owner of Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes or Class A-4 Notes, as the case may be.

         "Existing Noteholder Registry" means the registry of Persons who are
owners of the Notes, maintained by the Auction Agent as provided in the Auction
Agent Agreement.

         "Hold Order" has the meaning set forth in the Indenture (including the
Appendices thereto).

         "Index Maturity" means the number of calendar months in the related
Auction Period, or if no such maturity is available, the number of calendar
months for which a LIBOR quote is available that is nearest the actual number of
months of the related Auction Period.

         "Initial Auction Agent" means The Bank of New York, a New York banking
corporation, its successors and assigns.

                                     A-I-3
<PAGE>

         "Initial Auction Agent Agreement" means the Auction Agent Agreement
dated as of the Closing Date, between the Indenture Trustee, the Issuer and the
Initial Auction Agent, including any amendment thereof or supplement thereto.

         "Initial Period" means the period commencing on the Closing Date and
continuing through but not including the first Payment Date, in the case of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes.

         "Interest Period" means (i) with respect to the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes and any Payment Date, the period
commencing on and including the preceding Payment Date (or in the case of the
first Payment Date on the Closing Date) and ending on and not including such
Payment Date.

         "LIBOR" means the London interbank offered rate for deposits in U.S.
dollars for the applicable Index Maturity (rounded upward to the nearest
..015625%) commencing on the related LIBOR Determination Date which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR Determination
Date. If such rate does not appear on Telerate Page 3750, the rate for that day
will be determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of not less than U.S.
$1,000,000, are offered at approximately 11:00 a.m., London time, on such LIBOR
Determination Date to prime banks in the London interbank market by the
Reference Banks. The Auction Agent will request the principal London office of
each of such Reference Banks to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic mean
of the quotations. If fewer than two quotations are provided, the rate for that
day will be the arithmetic mean of the rates quoted by major banks in New York
City, selected by the Auction Agent, at approximately 11:00 a.m., New York City
time, on such LIBOR Determination Date for loans in U.S. dollars to leading
European banks having the Index Maturity and in a principal amount equal to an
amount of not less than U.S. $1,000,000; provided that if the banks selected as
aforesaid are not quoting as mentioned in this sentence, LIBOR in effect for the
applicable Interest Period will be LIBOR in effect for the previous Auction
Period.

         "LIBOR Determination Date" means, for any Auction Period, the first
date which is both a Business Day and a London Banking Day immediately prior to
the commencement of such Auction Period.

         "London Banking Day" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.

         "Market Agents" means, with respect to the Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and Class A-4 Notes, Banc of America Securities LLC, in
such capacity, or any successor to it in such capacity which is acceptable to
the Insurer.

         "Maximum Auction Rate" means in the case of the Class A-1 Notes, Class
A-2 Notes, Class A-3 Notes and Class A-4 Notes (i) Three-Month LIBOR plus 1.25%
( if the ratings assigned by the Rating Agencies to the Auction Rate Notes are
"AAA" and "Aaa" or better), (ii) Three-Month LIBOR plus 1.75% (if the ratings
assigned by Rating Agencies to the Auction Rate Notes are "AA" or "Aa" or
better) (iii) Three-Month LIBOR plus 2.25% (if the ratings

                                     A-I-4
<PAGE>
assigned by the Rating Agencies to the Auction Rate Notes are "A" or "A" or
better), (iv) Three-Month LIBOR plus 2.45% (if the ratings assigned by the
Rating Agencies to the Auction Rate Notes are "BBB" or "Baa2" or better) or (v)
Three-Month LIBOR plus 3.50% (if any one of the ratings assigned by the Rating
Agencies to the Auction Rate Notes is less than "BBB" or "Baa2"). For purposes
of the Auction Agent and the Auction Procedures as described herein, the ratings
in this definition shall be the last rating of which the Auction Agent and the
Indenture Trustee have been given notice by the Issuer pursuant to the Auction
Agent Agreement.

         "Note Rate" means with respect to each Class of Notes, the applicable
Note Rate for the Initial Period, and thereafter, each variable rate of interest
per annum for each Interest Period determined in accordance with the provisions
described herein, which in no event will exceed the Student Loan Rate.

         "Notes" means in the case of an Auction relating to the Class A-1
Notes, the Class A-1 Notes, or in the case of an Auction relating to the Class
A-2 Notes, the Class A-2 Notes, or in the case of an Auction relating to the
Class A-3 Notes, the Class A-3 Notes, or in the case of an Auction relating to
the Class A-4 Notes, the Class A-4 Notes.

         "Order" has the meaning set forth in the Indenture (including the
Appendices thereto).

         "Outstanding" means, as of the date of determination, Notes theretofore
authenticated and delivered under the Indenture except:

                  (i) Notes theretofore cancelled by the Note Registrar or
         delivered to the Note Registrar for cancellation;

                  (ii) Notes or portions thereof the payment for which money in
         the necessary amount has been theretofore deposited with the Indenture
         Trustee or any Paying Agent in trust for the Noteholders thereof;

                  (iii) Notes in exchange for or in lieu of other Notes which
         have been authenticated and delivered pursuant to the Indenture unless
         proof satisfactory to the Indenture Trustee is presented that any such
         Notes are held by a bona fide purchaser; and

                  (iv) Notes alleged to have been destroyed, lost or stolen and
         for which replacement Notes have been issued as provided in the
         Indenture.

         "Participant" means a broker, dealer, bank, other financial institution
or other Person for whom from time to time the Depository effects book-entry
transfers and pledges of securities deposited with the Depository.

         "Person" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
unincorporated association, joint venture, government or any agency or political
subdivision thereof or any other entity.

         "Potential Noteholder" means any Person (including an Existing
Noteholder that is (i) a Broker-Dealer when dealing with the Auction Agent and
(ii) a beneficial owner when dealing

                                     A-I-5
<PAGE>
with a Broker-Dealer) who may be interested in acquiring Auction Rate Notes (or,
in the case of an Existing Noteholder thereof, an additional principal amount of
Auction Rate Notes).

         "Rate Adjustment Date" means the date on which a Note Rate is
effective, and means, with respect to such Auction Rate Note, the date of
commencement of each Auction Period.

         "Rate Determination Date" means the Auction Date, or if no Auction Date
is applicable, the Business Day immediately preceding the date of commencement
of an Auction Period.

         "Reference Banks" means leading banks selected by the Auction Agent and
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market.

         "Sell Order" has the meaning set forth in the Indenture (including the
Appendices thereto).

         "Submitted Bid" has the meaning set forth in the Indenture (including
the Appendices thereto).

         "Submitted Hold Order" has the meaning set forth in the Indenture
(including the Appendices thereto).

         "Submitted Order" has the meaning set forth in the Indenture (including
the Appendices thereto).

         "Submitted Sell Order" has the meaning set forth in the Indenture
(including the Appendices thereto).

         "Submission Deadline" means 1:00 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.

         "Substitute Auction Agent" means the Person with whom the Indenture
Trustee enters into a Substitute Auction Agent Agreement upon the consent of the
Insurer.

         "Substitute Auction Agent Agreement" means an auction agent agreement
approved by the Insurer containing terms substantially similar to the terms of
the Initial Auction Agent Agreement, whereby a Person having the qualifications
required by these Auction Procedures agrees with the Indenture Trustee and the
Issuer to perform the duties of the Auction Agent under the Auction Agent
Agreement.

         "Sufficient Bids" has the meaning set forth in the Indenture (including
the Appendices thereto).

         "Telerate Page 3750" means the display page so designated on the Bridge
Telerate Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices).

         "Three-Month LIBOR" means LIBOR calculated for an Index Maturity of
three months.

                                     A-I-6
<PAGE>

EXISTING NOTEHOLDERS AND POTENTIAL NOTEHOLDERS

         Participants in each Auction may include Existing Noteholders and
Potential Noteholders. By purchasing a Note, whether in an Auction or otherwise,
each prospective purchaser of Notes or its Broker-Dealers must agree and will be
deemed to have agreed: (i) to participate in Auctions on the terms described
herein; (ii) so long as the beneficial ownership of the Notes is maintained in
Book-Entry Form to sell, transfer or otherwise dispose of the Notes only
pursuant to a Bid (as defined below) or a Sell Order (as defined below) in an
Auction, or to or through a Broker-Dealer, provided that in the case of all
transfers other than those pursuant to an Auction, the Existing Noteholder of
the Notes so transferred, its Participant or Broker-Dealers advises the Auction
Agent of such transfer; (iii) to have its beneficial ownership of Notes
maintained at all times in Book-Entry Form for the account of its Participant,
which in turn will maintain records of such beneficial ownership, and to
authorize such Participant to disclose to the Auction Agent such information
with respect to such beneficial ownership as the Auction Agent may request; (iv)
that a Sell Order placed by an Existing Noteholder will constitute an
irrevocable offer to sell the principal amount of the Auction Rate Note
specified in such Sell Order; (v) that a Bid placed by an Existing Noteholder
will constitute an irrevocable offer to sell the principal amount of the Auction
Rate Note specified in such Bid if the rate specified in such Bid is greater
than, or in some cases equal to the Note Rate of such Auction Rate Note,
determined as described herein; and (vi) that a Bid placed by a Potential
Noteholder will constitute an irrevocable offer to purchase the amount, or a
lesser principal amount, of the Auction Rate Note specified in such Bid if the
rate specified in such Bid is, respectively, less than or equal to the Note Rate
of the specified Note, determined as described herein.

         The principal amount of the Notes purchased or sold may be subject to
proration procedures on the Auction Date. Each purchase or sale of Notes on the
Auction Date will be made for settlement on the first day of the Interest Period
immediately following such Auction Date at a price equal to 100% of the
principal amount thereof, plus accrued but unpaid interest thereon. The Auction
Agent is entitled to rely upon the terms of any Order submitted to it by the
Broker-Dealers.

         Auction Agent

         The Bank of New York will be appointed as Auction Agent to serve as
agent for the Issuer in connection with Auctions. The Indenture Trustee and the
Issuer will enter into the Auction Agreement with the Auction Agent. Any Auction
Agent or Substitute Auction Agent will be (i) a bank, national banking
association or trust company duly organized under the laws of the United States
of America or any state or territory thereof having its principal place of
business in the Borough of Manhattan, New York, or such other location as
approved by the Indenture Trustee and the Market Agent in writing and having a
combined capital stock or surplus of at least $50,000,000, or (ii) a member of
the National Association of Securities Dealers, Inc. having a capitalization of
at least $50,000,000, and, in either case, authorized by law to perform all the
duties imposed upon it under the related Agreement and under the Auction Agent
Agreement. The Auction Agent may at any time resign and be discharged of the
duties and obligations created by the Auction Agent Agreement by giving at least
90 days' notice to the Indenture Trustee, the Insurer, the Issuer and the Market
Agent. Any successor to the Auction Agent shall be subject to the approval of
the Insurer which approval shall not be unreasonably

                                     A-I-7
<PAGE>
withheld. The Auction Agent may be removed at any time by the Indenture Trustee
upon the written direction of the Insurer (if no Insurer Default is existing)
or, with the consent of the Insurer (if no Insurer Default is existing), by the
Noteholders holding 66-2/3% of the aggregate principal amount of the Notes then
outstanding, by an instrument signed by the Insurer (if no Insurer Default is
existing), and/or such Noteholders or their attorneys and filed with the Auction
Agent, the Issuer, the Insurer, the Indenture Trustee and the Market Agent upon
at least 90 days' notice. Neither resignation nor removal of the Auction Agent
pursuant to the preceding two sentences will be effective until and unless a
Substitute Auction Agent has been appointed and has accepted such appointment.
If required by the Issuer or by the Market Agent, with the Issuer's and
Indenture Trustee's consent, a Substitute Auction Agent Agreement shall be
entered into with a Substitute Auction Agent. Notwithstanding the foregoing, the
Auction Agent may terminate the Auction Agent Agreement without further notice
if, within 30 days after notifying in writing the Issuer, the Insurer, the
Indenture Trustee and the Market Agent that it has not received payment of any
Auction Agent Fee due it in accordance with the terms of the Auction Agent
Agreement, the Auction Agent does not receive such payment; provided that if the
Auction Agent has not received payment within the 30 day period referred to
above, the Auction Agent must notify in writing the Insurer that it has not
received payment, and the Insurer shall have 15 days after the receipt of such
notice to pay the Auction Agent Fee due in accordance with the terms of the
Auction Agent Agreement, and if such payment is not received within such 15 day
period, the Auction Agent may terminate the Auction Agent Agreement.

         If the Auction Agent should resign or be removed or be dissolved, or if
the property or affairs of the Auction Agent shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for any other reason, the Issuer, at the direction of the
Indenture Trustee (after receipt of a certificate from the Market Agent
confirming that any proposed Substitute Auction Agent meets the requirements
described in the immediately preceding paragraph above), shall use its best
commercial efforts to appoint a Substitute Auction Agent.

         The Auction Agent is acting as agent for the Issuer in connection with
Auctions. In the absence of willful misconduct, grossly negligent failure to act
or gross negligence on its part, the Auction Agent will not be liable for any
action taken, suffered or omitted or any error of judgment made by it in the
performance of its duties under the Auction Agent Agreement and will not be
liable for any error of judgment made in good faith unless the Auction Agent
will have been grossly negligent in ascertaining (or failing to ascertain) the
pertinent facts.

         The Indenture Trustee will pay the Auction Agent the Auction Agent Fee
monthly on each Fee Remittance Date from amounts available in the Collection
Account and the Reserve Account as described in the Indenture. The Issuer will
reimburse the Auction Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Auction Agent in accordance
with any provision of the Auction Agent Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and counsel) from
amounts available therefor in the Collection Account. The Issuer will indemnify
and hold harmless the Auction Agent for and against any loss, liability or
expense incurred without gross negligence or willful misconduct on the Auction
Agent's part, arising out of or in connection with the acceptance or
administration of its agency under the Auction Agent Agreement and the
Broker-Dealer Agreement including the reasonable costs and expenses (including
the reasonable

                                     A-I-8
<PAGE>
fees and expenses of its counsel) of defending itself against any such claim or
liability in connection with its exercise or performance of any of its
respective duties thereunder and of enforcing this indemnification provision;
provided that the Issuer will not indemnify the Auction Agent as described in
this paragraph for any fees and expenses incurred by the gross negligence or
willful misconduct of the Auction Agent.

         Broker-Dealers

         Existing Noteholders and Potential Noteholders may participate in
Auctions only by submitting orders (in the manner described below) through the
applicable Broker-Dealers.

         The Broker-Dealers are entitled to Broker-Dealer Fees, which is payable
monthly on the Fee Remittance Date from monies available in the Collection
Account and Reserve Account as described in the Indenture.

         Market Agent

         In connection with each the Notes, the "Market Agent," will act solely
as agent of the Issuer and will not assume any obligation or relationship of
agency or trust for or with any of the Noteholders.

AUCTION PROCEDURES

         General

         During the Initial Period, the Auction Rate Notes shall bear interest
at the Note Rate for such Initial Period. Thereafter, each Class of Auction Rate
Notes shall bear interest at the Note Rate for such Class, as determined
hereunder. In all cases, the Auction Procedures for the Auction Rate Notes set
forth herein shall be understood to refer to and mean the separate Auction
governed hereby for each Class of Auction Rate Notes pursuant to which a
separate Note Rate for each Class of Auction Rate Notes shall be established for
each Auction Period.

         For the Initial Period and each Auction Period thereafter, interest at
the Note Rate shall accrue daily and shall be computed for the actual number of
days elapsed on the basis of a year consisting of 360 days.

         Pursuant to the Agreement, Auctions to establish the Auction Rate after
such Initial Period for each Auction Rate Note issued by the Issuer will be held
on each applicable Auction Date, except as described below, by application of
the Auction Procedures described herein.

         The Auction Agent will calculate the Maximum Auction Rate, the All Hold
Rate and Three-Month LIBOR, as the case may be, on each Auction Date. The
Indenture Trustee will calculate and, no later than the Business Day preceding
each Auction Date, will report to the Auction Agent in writing, the Student Loan
Rate. If the ownership of a Auction Rate Note is no longer maintained in
Book-Entry Form, the Indenture Trustee will calculate the Maximum Auction Rate,
and the Indenture Trustee will report to the Issuer in writing the Student Loan
Rate, on the Business Day immediately preceding the first day of each Interest
Period commencing after delivery of such Auction Rate Note. The Auction Agent
will determine

                                     A-I-9
<PAGE>
Three-Month LIBOR, as applicable, for each Interest Period other than the
Initial Period for a Auction Rate Note; provided, that if the ownership of the
Auction Rate Notes is no longer maintained in Book-Entry Form, or if an Event of
Default has occurred, then the Indenture Trustee will determine the Three-Month
LIBOR, as applicable for each such Interest Period. The determination by the
Indenture Trustee or the Auction Agent, as the case may be, of the Three-Month
LIBOR, as applicable, will (in the absence of manifest error) be final and
binding upon the Noteholders and all other parties. If calculated or determined
by the Auction Agent, the Auction Agent will promptly advise the Indenture
Trustee of the Three-Month LIBOR, as applicable.

         Submission of Orders

         So long as the ownership of the Auction Rate Notes is maintained in
Book-Entry Form, an Existing Noteholder may sell, transfer or otherwise dispose
of such Auction Rate Notes only pursuant to a Bid or Sell Order (as hereinafter
defined) placed in an Auction or through the Broker-Dealers, provided that, in
the case of all transfers other than pursuant to Auctions, such Existing
Noteholder, its Broker-Dealer or its Participant advises the Auction Agent of
such transfer. Auctions for the Auction Rate Notes will be conducted on each
applicable Auction Date, if there is an Auction Agent on such Auction Date, in
the following manner (such procedures to be applicable separately to each (Class
of Notes).

         Prior to 1:00 p.m., eastern time, on any Auction Date or such other
time on any Auction Date by which Broker-Dealers are required to submit Orders
to the Auction Agent as specified by the Auction Agent from time to time (the
"Submission Deadline") on each Auction Date relating to a Auction Rate Note:

         (a) each Existing Noteholder of the applicable Auction Rate Note may
submit to the Broker-Dealers by telephone or otherwise information as to: (i)
the principal amount of outstanding Auction Rate Notes, if any, held by such
Existing Noteholder which such Existing Noteholder desires to continue to hold
without regard to the Note Rate for such Auction Rate Notes for the next
succeeding Auction Period (a "Hold Order"); (ii) the principal amount of
outstanding Auction Rate Notes, if any, which such Existing Noteholder offers to
sell if the Note Rate for such Auction Rate Notes for the next succeeding
Auction Period will be less than the rate per annum specified by such Existing
Noteholder (a "Bid"); and/or (iii) the principal amount of outstanding Auction
Rate Notes, if any, held by such Existing Noteholder which such Existing
Noteholder offers to sell without regard to the Note Rate for such Auction Rate
Notes for the next succeeding Auction Period (a "Sell Order"); and

         (b) The Broker-Dealers may contact Potential Noteholders to determine
the principal amount and Class of Auction Rate Notes which each such Potential
Noteholder offers to purchase, if the Note Rate for such Auction Rate Notes for
the next succeeding Auction Period will not be less than the rate per annum
specified by such Potential Noteholder (also a "Bid").

         Each Hold Order, Bid and Sell Order will be an "Order." Each Existing
Noteholder and each Potential Noteholder placing an Order is referred to as: a
"Bidder."

                                     A-I-10
<PAGE>

         Subject to the provisions described below under "Validity of Orders," a
Bid by an Existing Noteholder will constitute an irrevocable offer to sell: (i)
the principal amount of the outstanding Auction Rate Notes specified in such Bid
if the Note Rate for such Auction Rate Notes will be less than the rate
specified in such Bid, (ii) such principal amount or a lesser principal amount
to be determined as described below in "Acceptance and Rejection of Orders," if
the Note Rate for such Auction Rate Notes will be equal to the rate specified in
such Bid or (iii) such principal amount or a lesser principal amount of
Outstanding Auction Rate Notes to be determined as described below under
"Acceptance and Rejection of Orders," if the rate specified therein will be
higher than the Note Rate for such Auction Rate Notes and Sufficient Bids (as
defined below) have not been made.

         Subject to the provisions described below under "Validity of Orders," a
Sell Order by an Existing Noteholder will constitute an irrevocable offer to
sell: (i) the principal amount of the Auction Rate Note specified in such Sell
Order or (ii) such principal amount or a lesser principal amount of outstanding
Auction Rate Notes as described below, under "Acceptance and Rejection of
Orders," if Sufficient Bids have not been made.

         Subject to the provisions described below under "Validity of Orders," a
Bid by a Potential Noteholder will constitute an irrevocable offer to purchase:
(i) the principal amount of the Auction Rate Note specified in such Bid if the
Note Rate for such Auction Rate Notes will be higher than the rate specified in
such Bid or (ii) such principal amount or a lesser principal amount of such
Auction Rate Notes as described below in "Acceptance and Rejection of Orders,"
if the Note Rate is equal to the rate specified in such Bid.

         Each Broker-Dealer will submit in writing to the Auction Agent prior to
the Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and will specify with respect to each such Order: (i) the
aggregate principal amount and Class of Auction Rate Notes that are the subject
of such Order; (ii) to the extent that such Bidder is an Existing Noteholder:
(a) the principal amount of Auction Rate Notes, if any, subject to any Hold
Order placed by such Existing Noteholder; (b) the principal amount of Auction
Rate Notes, if any, subject to any Bid placed by such Existing Noteholder and
the rate specified in such Bid; and (c) the principal amount of Auction Rate
Notes, if any, subject to any Sell Order placed by such Existing Noteholder, and
(iii) to the extent such Bidder is a Potential Noteholder, the rate specified in
such Potential Noteholder's Bid.

         If any rate specified in any Bid contains more than three figures to
the right of the decimal point; the Auction Agent will round such rate up to the
next highest one-thousandth (.001) of one percent.

         If an Order or Orders covering all Notes held by any Existing
Noteholder are not submitted to the Auction Agent prior to the Submission
Deadline, the Auction Agent will deem a Hold Order to have been submitted on
behalf of such Existing Noteholder covering the principal amount of Notes held
by such Existing Noteholder and not subject to an Order submitted to the Auction
Agent.

                                     A-I-11
<PAGE>

         Neither the Issuer, the Indenture Trustee nor the Auction Agent will be
responsible for any failure of the Broker-Dealers to submit an Order to the
Auction Agent on behalf of any Existing Noteholder or Potential Noteholder.

         Validity of Orders

         If any Existing Noteholder submits through the Broker-Dealers to the
Auction Agent one or more Orders covering in the aggregate more than the
principal amount of the Class of Notes held by such Existing Noteholder, such
Orders will be considered valid as follows and in the order of priority
described below.

         Hold Orders. All Hold Orders will be considered valid, but only up to
the aggregate principal amount of the Notes held by such Existing Noteholder,
and if the aggregate principal amount of the Notes subject to such Hold Orders
exceeds the aggregate principal amount of the Notes held by such Existing
Noteholder, the aggregate principal amount of the Notes subject to each such
Hold Order will be reduced pro rata so that the aggregate principal amount of
the Notes subject to all such Hold Orders equals the aggregate principal amount
of the Notes held by such Existing Noteholder.

         Bids. Any Bid will be considered valid up to an amount equal to the
excess of the principal amount of the Notes held by such Existing Noteholder
over the aggregate principal amount of such Note, subject to any Hold Orders
referred to above. Subject to the preceding sentence, if multiple Bids with the
same rate are submitted on behalf of such Existing Noteholder and the aggregate
principal amount of Notes subject to such Bids is greater than such excess, such
Bids will be considered valid up to an amount equal to such excess. Subject to
the two preceding sentences, if more than one Bid with different rates are
submitted on behalf of such Existing Noteholder, such Bids will be considered
valid first in the ascending order of their respective rates until the highest
rate is reached at which such excess exists and then at such rate up to the
amount of such excess. In any event, the aggregate principal amount of Notes, if
any subject to Bids not valid under the provisions described above will be
treated as the subject of a Bid by a Potential Noteholder at the rate therein
specified.

         Sell Orders. All Sell Orders will be considered valid up to an amount
equal to the excess of the aggregate principal amount of Notes of the Class held
by such Existing Noteholder over the aggregate principal amount of Notes subject
to valid Hold Orders and valid Bids as referred to above.

         If more than one Bid for a Class of Note is submitted on behalf of any
Potential Noteholder, each Bid submitted will be a separate Bid with the rate
and principal amount therein specified. Any Bid or Sell Order submitted by an
Existing Noteholder covering an aggregate principal amount of Notes not equal to
an Authorized Denomination or an integral multiple thereof will be rejected and
will be deemed a Hold Order. Any Bid submitted by a Potential Noteholder
covering an aggregate principal amount of Notes not equal to an Authorized
Denomination or an integral multiple thereof will be rejected. Any Order
submitted in an Auction by the Broker-Dealers to the Auction Agent prior to the
Submission Deadline on any Auction Date will be irrevocable.

                                     A-I-12
<PAGE>

         A Hold Order, a Bid or a Sell Order that has been determined valid
pursuant to the procedures described above is referred to as a "Submitted Hold
Order," a "Submitted Bid" and a "Submitted Sell Order," respectively
(collectively, "Submitted Orders").

         Determination of Sufficient Bid and Bid Auction Rate

         Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent will assemble all valid Submitted Orders and will determine:

         (a) the excess of the total principal amount of such Notes over the sum
of the aggregate principal amount of such Notes subject to Submitted Hold Orders
(such excess being hereinafter referred to as the "Available Notes"); and

         (b) from such Submitted Orders whether the aggregate principal amount
of Notes subject to Submitted Bids by Potential Noteholders specifying one or
more rates equal to or lower than the Maximum Auction Rate exceeds or is equal
to the sum of (i) the aggregate principal amount of Outstanding Notes subject to
Submitted Bids by Existing Noteholders specifying one or more rates higher than
the Maximum Auction Rate and (ii) the aggregate principal amount of Notes
subject to Submitted Sell Orders (in the event such excess or such equality
exists other than because all of the Notes are subject to Submitted Hold Orders,
such Submitted Bids by Potential Noteholders above will be hereinafter referred
to collectively as "Sufficient Bids"); and

         (c) if Sufficient Bids exist, the "Bid Auction Rate," which will be the
lowest rate specified in such Submitted Bids such that if

                  (i) each such Submitted Bid from Existing Noteholders of such
         Auction Rate Note specifying such lowest rate and all other Submitted
         Bids from Existing Noteholders of such Auction Rate Note specifying
         lower rates were rejected (thus entitling such Existing Noteholders to
         continue to hold the principal amount of Notes subject to such
         Submitted Bids); and

                  (ii) each such Submitted Bid from Potential Noteholders of
         such Auction Rate Note specifying such lowest rate and all other
         Submitted Bids from Potential Noteholders specifying lower rates, were
         accepted, the result would be that such Existing Noteholders described
         in subparagraph (c)(i) above would continue to hold an aggregate
         principal amount of Notes which, when added to the aggregate principal
         amount of Notes to be purchased by such Potential Noteholders described
         in this subparagraph (ii) would equal not less than the Available
         Notes.

         Determination of Auction Rate and Note Rate, Notice

         Promptly after the Auction Agent has made the determinations described
above, the Auction Agent is to advise the Indenture Trustee and the Issuer of
the Student Loan Rate, the Maximum Auction Rate, the All Hold Rate and the
components thereof on the Auction Date, and based on such determinations, the
Auction Rate for the next succeeding Interest Period for the applicable Auction
Rate Note as follows:

                                     A-I-13
<PAGE>

         (a) if Sufficient Bids exist, that the Auction Rate for the next
succeeding Interest Period will be equal to the Bid Auction Rate so determined;

         (b) if Sufficient Bids do not exist (other than because all of the
Notes of the applicable Auction Rate Note are subject to Submitted Hold Orders),
that the Auction Rate for the next succeeding Interest Period will be equal to
the Maximum Auction Rate; or

         (c) if all Notes of the applicable Auction Rate Note are subject to
Submitted Hold Orders, that the Auction Rate for the next succeeding Interest
Period will be equal to the All Hold Rate.

         Promptly after the Auction Agent has determined the Auction Rate, the
Auction Agent will determine and advise the Indenture Trustee of the Note Rate
for each applicable Auction Rate Note, which rate will be the lesser of (a) the
Auction Rate for each such Auction Rate Note and (b) the Student Loan Rate.

         Acceptance and Rejection of Orders

         Existing Noteholders of the applicable Auction Rate Note will continue
to hold the principal amount of Notes of such Class that are subject to
Submitted Hold Orders. If, with respect to a Auction Rate Note, the Student Loan
Rate is equal to or greater than the Bid Auction Rate and if Sufficient Bids, as
described above under "Determination of Sufficient Bids and Bid Auction Rate,"
have been received by the Auction Agent, the Bid Auction Rate will be the Note
Rate, and Submitted Bids and Submitted Sell Orders will be accepted or rejected
and the Auction Agent will take such other action as provided in the related
Agreement and described below under "Sufficient Bids."

         If the Student Loan Rate is less than the Auction Rate, the Student
Loan Rate will be the Note Rate. If the Auction Rate and the Student Loan Rate
are both greater than be Maximum Auction Rate, the Note Rate for each series
shall be equal to the Maximum Auction Rate. If the Auction Agent has not
received Sufficient Bids as described above under "Determination of Sufficient
Bids and Bid Auction Rate" (other than because all of the Notes are subject to
Submitted Holds Orders), the Note Rate will be the lesser of the Maximum Auction
Rate or the Student Loan Rate. In any of the cases described above in this
paragraph, Submitted Orders will be accepted or rejected and the Auction Agent
will take such other action as described below under "Insufficient Bids."

         Sufficient Bids. If Sufficient Bids have been made with a respect to a
Auction Rate Note and the Student Loan Rate is equal to or greater than the Bid
Auction Rate (in which case the Note Rate shall be the Bid Auction Rate), all
Submitted Sell Orders will be accepted and, subject to the denomination
requirements described below, Submitted Bids will be accepted or rejected as
follows in the following order of priority and all other Submitted Bids will be
rejected:

         (a) Existing Noteholders' Submitted Bids specifying any rate that is
higher than the Note Rate will be accepted, thus requiring each such Existing
Noteholder to sell the aggregate principal amount of Notes subject to such
Submitted Bids;

                                     A-I-14
<PAGE>

         (b) Existing Noteholders' Submitted Bids specifying any rate that is
lower than the Note Rate will be rejected, thus entitling each such Existing
Noteholder to continue to hold the aggregate principal amount of Notes subject
to such Submitted Bids;

         (c) Potential Noteholders' Submitted Bids specifying any rate that is
lower than the Note Rate will be accepted;

         (d) Each Existing Noteholder's Submitted Bid specifying a rate that is
equal to the Note Rate will be rejected, thus entitling such Existing Noteholder
to continue to hold the aggregate principal amount of Notes subject to such
Submitted Bid, unless the aggregate principal amount of Notes subject to such
Submitted Bids will be greater than the principal amount of Notes (the
"remaining principal amount") equal to the excess of the Available Notes over
the aggregate principal amount of Notes subject to Submitted Bids described in
subparagraphs (b) and (c) above, in which event such Submitted Bid of such
Existing Noteholder will be rejected in part and such Existing Noteholder will
be entitled to continue to hold the principal amount of Notes subject to such
Submitted Bid, but only in an amount equal to the aggregate principal amount of
Notes obtained by multiplying the remaining principal amount by a fraction, the
numerator of which will be the principal amount of Notes held by such Existing
Noteholder subject to such Submitted Bid and the denominator of which will be
the sum of the principal amount of Notes subject to such Submitted Bids made by
all such Existing Noteholders that specified a rate equal to the Note Rate; and

         (e) Each Potential Noteholder's Submitted Bid specifying a rate that is
equal to the Note Rate will be accepted, but only in an amount equal to the
principal amount of Notes obtained by multiplying the excess of the aggregate
principal amount of Available Notes over the aggregate principal amount of Notes
subject to Submitted Bids described in subparagraphs (b), (c) and (d) above by a
fraction, the numerator of which will be the aggregate principal amount of Notes
subject to such Submitted Bid and the denominator of which will be the sum of
the principal amount of Notes subject to Submitted Bids made by all such
Potential Noteholders that specified a rate equal to the Note Rate.

         Insufficient Bids. If Sufficient Bids have not been made with respect
to a Auction Rate Note (other than because all of the Notes of such Class are
subject to Submitted Hold Orders) or if the Student Loan Rate is less than the
Bid Auction Rate (in which case the Note Rate shall be the Student Loan Rate),
subject to the denomination requirements described below, Submitted Orders will
be accepted or rejected as follows in the following order of priority and all
other Submitted Bids will be rejected:

         (a) Existing Noteholders' Submitted Bids specifying any rate that is
equal to or lower than the Note Rate will be rejected, thus entitling such
Existing Noteholders to continue to hold the aggregate principal amount of Notes
subject to such Submitted Bids;

         (b) Potential Noteholders' Submitted Bids specifying any rate that is
equal to or lower than the Note Rate will be accepted, and specifying any rate
that is higher than the Note Rate will be rejected; and

                                     A-I-15
<PAGE>

         (c) each Existing Noteholder's Submitted Bid specifying any rate that
is higher than the Note Rate and the Submitted Sell Order of each Existing
Noteholder will be accepted, thus entitling each Existing Noteholder that
submitted any such Submitted Bid or Submitted Sell Order to sell the Notes
subject to such Submitted Bid or Submitted Sell Order, but in both cases only in
an amount equal to the aggregate principal amount of Notes obtained by
multiplying the aggregate principal amount of Notes subject to Submitted Bids
described in subparagraph (b) above by a fraction, the numerator of which will
be the aggregate principal amount of Notes held by such Existing Noteholder
subject to such Submitted Bid or Submitted Sell Order and the denominator of
which will be the aggregate principal amount of Notes subject to all such
Submitted Bids and Submitted Sell Orders.

         All Hold Orders. If all Notes of a Class are subject to Submitted Hold
Orders, all Submitted Bids will be rejected.

         Authorized Denominations Requirement. If, as a result of the procedures
described above regarding Sufficient Bids and Insufficient Bids, any Existing
Noteholder would be entitled or required to sell, or any Potential Noteholder
would be entitled or required to purchase, a principal amount of Notes that is
not equal to an Authorized Denomination or an integral multiple thereof, the
Auction Agent will, in such manner as in its sole discretion it will determine,
round up or down the principal amount of Notes to be purchased or sold by any
Existing Noteholder or Potential Noteholder so that the principal amount of
Notes purchased or sold by each Existing Noteholder or Potential Noteholder will
be equal to an Authorized Denomination or an integral multiple of $100,000 in
excess thereof. If, as a result of the procedures described above regarding
Insufficient Bids, any Potential Noteholder would be entitled or required to
purchase less than a principal amount of Notes equal to an Authorized
Denomination or any integral multiple thereof, the Auction Agent will, in such
manner as in its sole discretion it will determine, allocate Notes for purchase
among Potential Noteholders so that only Notes in an Authorized Denomination or
any integral multiples in excess thereof are purchased by any Potential
Noteholder, even if such allocation results in one or more of such Potential
Noteholders not purchasing any Notes.

         Based on the results of each Auction, the Auction Agent is to determine
the aggregate principal amount of Notes of each Class to be purchased and the
aggregate principal amount of Notes of each Class to be sold by Potential
Noteholders and Existing Noteholders on whose behalf each Broker-Dealer
submitted Bids or Sell Orders and, with respect to each Broker-Dealer, to the
extent that such aggregate principal amount of Notes to be sold differs from
such aggregate principal amount of Notes to be purchased, determine to which
other Broker-Dealer or Broker-Dealers acting for one or more purchasers such
Broker-Dealer will deliver, or from which Broker-Dealers acting for one or more
sellers such Broker-Dealer will receive, as the case may be, Notes.

         Any calculation by the Auction Agent, the Servicer or the Indenture
Trustee, as applicable, of the Note Rate, Three-Month LIBOR, the Maximum Auction
Rate, the All Hold Rate and the Student Loan Rate will, in the absence of
manifest error, be binding on all other parties.

                                     A-I-16
<PAGE>

         Settlement Procedures

         The Auction Agent is required to advise each Broker-Dealers that
submitted an Order in an Auction of the Note Rate for a Auction Rate Note for
the next Interest Period and, if such Order was a Bid or Sell Order, whether
such Bid or Sell Order was accepted or rejected, in whole or in part, by
telephone not later than 3:00 p.m., eastern time, on the Auction Date if the
Rate is the Auction Rate at not later than 4:00 p.m. eastern time on the Auction
Date if the Rate is the Student Loan Rate. Each Broker-Dealer that submitted an
Order on behalf of a Bidder is required to then advise such Bidder of the
applicable Note Rate for the next Interest Period and, if such Order was a Bid
or a Sell Order, whether such Bid or Sell Order was accepted or rejected, in
whole or in part, confirm purchases and sales with each Bidder purchasing or
selling Notes as a result of the Auction and advise each Bidder purchasing or
selling Notes as a result of the Auction to give instructions to its Participant
to pay the purchase price against delivery of such Notes or to deliver such
Notes against payment therefor, as appropriate. Pursuant to the Auction Agent
Agreement, the Auction Agent is to record each transfer of Notes on the Existing
Noteholders and maintain the Registry.

         In accordance with DTC's normal procedures, on the Business Day after
the Auction Date, the transactions described above will be executed through DTC,
so long as DTC is the depository, and the accounts of the respective
Participants at DTC will be debited and credited and Notes delivered as
necessary to effect the purchases and sales of Notes as determined in the
Auction. Purchasers are required to make payment through their Participants in
same-day funds to DTC against delivery through their Participants. DTC will
make, payment in, accordance with its normal procedures, which now provide for
payment against delivery by its Participants in immediately available hinds.

         If any Existing Noteholder selling Notes in an Auction fails to deliver
such Notes, the Broker-Dealers of any person that was to have purchased Notes in
such Auction may deliver to such person, on behalf of which it submitted a Bid
that was accepted, a principal amount of Notes that is less than the principal
amount of Notes that otherwise, was to be purchased by such person but in any
event equal to an Authorized Denomination or any integral multiple thereof. In
such event, the principal amount of Notes to be delivered will be determined by
such Broker-Dealer. Delivery of such lesser principal amount of Notes will
constitute good delivery. Neither the Indenture Trustee nor the Auction Agent
will have any responsibility or liability with respect to the failure of a
Potential Noteholder, Existing Noteholder or their respective Broker-Dealers or
Participant to deliver the principal amount of Notes or to pay for the Notes
purchased or sold pursuant to an Auction or otherwise.

INDENTURE TRUSTEE NOT RESPONSIBLE FOR AUCTION AGENT, MARKET AGENT AND
BROKER-DEALERS

         The Indenture Trustee shall not be liable or responsible for the
actions of or failure to act by the Auction Agent, Market Agent or any
Broker-Dealer under the Auction Agent Agreement, the Market Agent Agreement or
any Broker-Dealer Agreement. The Indenture Trustee may conclusively rely upon
any information required to be furnished by the Auction Agent, the Market Agent
or any Broker-Dealer without undertaking any independent review or investigation
of the truth or accuracy of such information.

                                     A-I-17
<PAGE>

CHANGES IN AUCTION TERMS

         Changes in Auction Period or Periods

         While any of the Notes are outstanding, the Issuer, may, from time to
time change the length of the one or more Auction Periods in order to conform
with then current market practice with respect to similar Notes or to
accommodate economic and financial factors that may affect or be relevant to the
length of the Auction Period and Note Rate (an "Auction Period Adjustment"). The
Issuer will not initiate such change in the length of the Auction Period unless
it shall have received the written consent from the Market Agent and the
Insurer, which consent will not be unreasonably withheld, not less than three
days nor more than 20 days prior to the effective date of an Auction Period
Adjustment. The Issuer will initiate an Auction Period Adjustment by giving
written notice to the Indenture Trustee, the Auction Agent, the Market Agent,
the Insurer and DTC in substantially the form of, or containing substantially
the information contained in, the related Agreement at least 10 days prior to
the Auction Date for such Auction Period.

         Any such Auction Period Adjustment shall not result in an Auction
Period of more than 185 days or less than 35 days.

         An Auction Period Adjustment will take effect only if (A) the Indenture
Trustee, the Auction Agent and the Insurer receive, by 11:00 a.m., eastern time,
on the Business Day before the Auction Date for the first such Auction Period, a
certificate from the Issuer authorizing an Auction Period Adjustment specified
in such certificate, the certificate of the Market Agent described above and the
consent of the Insurer and (B) Sufficient Bids exist at the Auction on the
Auction Date for such first Auction Period. If the condition referred to in (A)
is not met, the Note Rate applicable for the next Auction Period will be
determined pursuant to the Auction Procedures and the Auction Period will be the
Auction Period determined without reference to the proposed change. If the
condition referred to in (A) is met, but the condition referred to in (B) above
is not met, the Note Rate applicable for the next Auction Period will be the
lesser of the Maximum Auction Rate and the Student Loan Rate and the Auction
Period will, after a failed Auction Period Adjustment, be 35 days.

         Changes in the Auction Date

         The Market Agent, at the written direction of the Issuer with the
consent of the Insurer, may specify an earlier Auction Date (but in no event
more than five Business Days earlier) than the Auction Date that would otherwise
be determined in accordance with be definition of "Auction Date" with respect to
one or more specified Auction Periods in order to conform with then current
market practice with respect to similar Notes or to accommodate economic and
financial factors that may affect or be relevant to the day of the week
constituting an Auction Date and the Note Rate. The Issuer will not consent to
such change in the Auction Date unless the Issuer will have received from the
Market Agent not less than three days nor more than 20 days prior to the
effective date of such change a written request for consent together with a
certificate demonstrating the need for change in reliance on such factors. The
Market Agent will provide notice of its determination to specify an earlier
Auction Date for one or more Auction

                                     A-I-18
<PAGE>
Periods by means of a written notice delivered at least 10 days prior to the
proposed changed Auction Date to the Indenture Trustee, the Auction Agent, the
Insurer, the Issuer and DTC.

         In connection with any change in Auction Terms described above, the
Auction Agent is to provide such further notice to such parties as is specified
in the Auction Agent Agreement.

                                     A-I-19

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