PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY LENDER AGREEMENT FOR GUARANTEE OF STUDENT LOANS
NATIONAL GUARANTY AGREEMENT WITH FEDERAL REINSURANCE (for loans to students
and parents of students pursuant to the Higher
Education Act of 1965, as amended)
WHEREAS The First National Bank of Chicago, not in its individual
capacity but solely as Eligible Lender Trustee on behalf of the
First Union Student Loan Trust 1997-1 pursuant to the Trust
Agreement dated as of June __, 1997, between First Union
National Bank and the Eligible Lender Trustee, as the same may
be amended, including by way of amendment and restatement, from
time to time (the "Trust Agreement") (Corporate Name)
Located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇: Corporate Trust
Administration
(Street Address)
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(City) (State) (Zip Code)
hereinafter referred to as the "Lender," wishes to be able to
secure guarantee of loans made to students pursuing programs of
higher or vocational education at eligible institutions, and to
parents of such students pursuant to the aforementioned federal
legislation, hereinafter referred to as the "Act;" and
WHEREAS, the Pennsylvania Higher Education Assistance Agency, hereinafter
referred to as the "Agency," was created by the Act of August 7, 1963, P.L. 549
for the purpose of improving higher educational opportunities and to that end
the Agency is empowered to guarantee loans; and
WHEREAS, the Lender wishes to participate in the Agency's National Guaranty
Program.
NOW THEREFORE, it is mutually agreed that:
1. Within such limits as may be set by it, the Agency shall guarantee the
full amount of all loans made by the Lender, or for loans with a first
disbursement on or after October 1, 1993, no less than 98% of the full
amount of all loans, including principal and interest, made by the
Lender, except that all loans continue to be 100% guaranteed in the
event of death, disability or bankruptcy regardless of disbursement
date, which are eligible for such guarantee under the Act, the
regulations issued under the Act and the Rules and Regulations and
policies of the Agency with the exception of those pertaining to
Pennsylvania Residency/Domicile, which Act, regulations, Rules and
Regulations and policies as they may be from time to time amended are
made part of this Agreement.
2. The Agency shall guarantee loans without regard to sex, age, race,
color, religion, handicapped status, income, national origin or any
other basis prohibited by applicable law and the Lender will not
discriminate in the making of loans to eligible borrowers or in the
treatment of such borrowers on any prohibited basis.
3. On all loans guaranteed, the Agency agreed to obtain maximum
reinsurance by means of an agreement with the Federal Government
pursuant to the Act.
4. The Lender authorizes the Agency to act as its representative with
respect to retaining the school's statement of the student's
enrollment and need. This document will be retained for the five-year
period as required of the Lender by federal regulations.
5. The Lender shall designate its Servicer to maintain for all loans
guaranteed a system of records and accounts, shall afford access
thereto, and shall furnish such periodic and separate reports as may
reasonably be required by the U.S. Secretary of Education and the
Agency, under the Act, regulations, Rules and Regulations and policies
identified above. For loans paid in full or otherwise discharged, the
records shall be retained by the Lender as required by the Act,
regulations, Rules and Regulations, and policies identified above.
6. The Agency agrees to purchase eligible loans made by the Lender
provided that such loans are in default (as defined by the Act,
regulations, Rules and Regulations and policies identified above); the
loan was made in accordance with the Act, regulations, Rules and
Regulations and policies identified above; the Lender has otherwise
exercised due diligence in the making, servicing, and collection of
such loans; and, title to the loan note has been subrogated to the
Agency by the Lender.
7. Failure of the Lender to comply with the terms hereof with respect to
an individual loan shall not invalidate the guarantee of the Agency to
the Lender with respect to other loans held in compliance with the
terms of this Agreement.
8. In making loans under the Act, the Lender will undertake to secure
such reductions in borrowers' obligations to pay interest on loans
held by the Lender as they may be eligible to receive under the Act
and regulations. The Lender further agrees to comply with all
applicable Federal and State laws in originating guaranteed student
loans.
9. The Agency agrees to maintain at all times reserve levels which comply
with Section 428(c)(10) of the Higher Education Act, as amended.
10. This Agreement may be terminated by the Lender upon sixty (60) days
written notice. The Agency may limit, suspend or terminate this
Agreement in the manner provided for by the Agency Rules and
Regulations. All rights, duties and obligations hereunder shall
immediately cease upon termination, except the rights and obligations
of the parties which existed as of the date of termination.
11. The Lender wishes to participate in the following programs: (Please
check all applicable programs)
|_| ▇▇▇▇▇▇▇▇
|_| PLUS
|_| SLS
|_| Consolidation
12. The Agency agrees to reimburse the Lender for any federal special
allowance payments lost with respect to an individual loan as a result
of a delay in payment of a claim under this Agreement by the Agency to
the Lender with respect to such loan.
13. The Agency agrees upon written request to furnish a copy of its most
recent audited financial statements to any holder of record of Notes
or Certificates (each as defined in Appendix A to the Indenture) of
First Union Student Loan Trust 1997-1.
IN WITNESS WHEREOF, the Lender and the Agency have caused this Agreement to be
duly executed and delivered this __ day of June, 1997.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY
By:__________________________________
Title
THE FIRST NATIONAL BANK OF CHICAGO, NOT IN ITS
INDIVIDUAL CAPACITY BUT SOLELY AS ELIGIBLE LENDER
TRUSTEE ON BEHALF OF FIRST UNION STUDENT LOAN
TRUST 1997-1
By:____________________________________
Authorized Signature
Title:
D.E. Lender Code Number: 833220
Federal Tax Identification Number
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Approved as to form and legality this _____ day of Approved as to form and legality this _____ day of
__________, 1997 __________, 1997
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PHEAA Chief Counsel Deputy Attorney General