$40,694,000* IOWA STUDENT LOAN LIQUIDITY CORPORATION

Transcription

1 This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be an sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. PRELIMINARY OFFICIAL STATEMENT DATED APRIL 24, 2015 NEW ISSUE BOOK-ENTRY ONLY Expected Ratings: S&P: A(sf) Fitch: Asf See RATINGS herein In the opinion of Bond Counsel, interest on the Series 2015-A Bonds is excludable from gross income for purposes of federal income tax under existing laws as enacted and construed on the date of initial delivery of the Series 2015-A Bonds, assuming the accuracy of the certifications of the Corporation and continuing compliance by the Corporation with the requirements of the Internal Revenue Code of 1986, as amended. Interest on the Series 2015-A Bonds is a tax preference item that is subject to individual and corporate federal alternative minimum tax. Bond Counsel is also of the opinion that interest on the Series 2015-A Bonds is not excluded from income for State of Iowa income tax purposes. See TAX MATTERS herein. $40,694,000* IOWA STUDENT LOAN LIQUIDITY CORPORATION (An Iowa corporation organized pursuant to the nonprofit laws of the State of Iowa) Student Loan Revenue Bonds, Senior Series 2015-A (AMT) Dated: Date of Delivery Due: December 1, as shown on the inside front cover The Iowa Student Loan Liquidity Corporation s Student Loan Revenue Bonds, Senior Series 2015-A (the Series 2015-A Bonds ), when issued, will be issued as registered bonds and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York ( DTC ), which will act as securities depository for the Series 2015-A Bonds. Individual purchases may be made in book-entry-only form, in the principal amount of $5,000 or integral multiples thereof. Purchasers will not receive certificates representing their interest in the Series 2015-A Bonds purchased. So long as DTC is the registered owner of the Series 2015-A Bonds, payments of the principal of, redemption premium, if any, and interest on the Series 2015-A Bonds will be made directly to DTC. Disbursement of such payments to DTC Participants is the responsibility of DTC and disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants and Indirect Participants. See THE SERIES 2015-A BONDS Book-Entry-Only System herein. Wells Fargo Bank, National Association will act as trustee (the Trustee ), paying agent and bond registrar for the Series 2015-A Bonds. The Series 2015-A Bonds will be dated the date of delivery thereof and will mature on December 1 in the years and in the principal amounts set forth on the inside front cover hereof. The Series 2015-A Bonds will bear interest at the rates per annum set forth on the inside front cover, payable December 1, 2015* and semiannually thereafter on each June 1 and December 1. The Series 2015-A Bonds are the initial Series of Bonds being issued pursuant to the Trust Indenture, dated as of May 1, 2015 (the General Indenture ), as amended and supplemented by a First Supplemental Trust Indenture, dated as of May 1, 2015 (the First Supplemental Trust Indenture ), between the Iowa Student Loan Liquidity Corporation (the Corporation ) and the Trustee. The General Indenture, as amended and supplemented (including by the First Supplemental Trust Indenture), is herein referred to as the Indenture. The Series 2015-A Bonds are being issued by the Corporation to (i) provide moneys to finance Eligible Loans, (ii) fund the Reserve Fund, (iii) make an initial deposit to the Capitalized Interest Fund, and (iv) pay certain costs related to the issuance of the Series 2015-A Bonds. Pursuant to the Indenture, the Series 2015-A Bonds are secured by a pledge of and security interest in a portion of the proceeds of the sale of the Series 2015-A Bonds (until expended for the purposes for which the Series 2015-A Bonds were issued), the Eligible Loans Financed under the Indenture, all Revenues, the moneys and securities held in certain Funds established under the Indenture and certain other assets constituting the Trust Estate in each case subject to the provisions of the Indenture. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS General herein. Upon the satisfaction of certain conditions, additional Bonds may be issued under the Indenture and Other Obligations may be entered into from time to time on a parity basis with the Series 2015-A Bonds or on a basis subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Series of Bonds; Priority herein. The Series 2015-A Bonds are subject to redemption prior to maturity. See THE SERIES 2015-A BONDS Redemption Provisions herein. Investors must read this entire Official Statement to obtain information essential to the making of an informed investment decision with respect to the Series 2015-A Bonds. Attention should be given to certain investment considerations described in this Official Statement which could affect the ability of the Corporation to pay Debt Service on the Series 2015-A Bonds and which could have an effect on the market price of the Series 2015-A Bonds to an extent that cannot be determined. See CERTAIN RISK FACTORS herein. THE SERIES 2015-A BONDS ARE LIMITED OBLIGATIONS OF THE CORPORATION AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF. THE CORPORATION HAS NO TAXING POWER. The Series 2015-A Bonds will be offered, subject to prior sale, when, as and if issued by the Corporation and accepted by the Underwriter, and are subject to the final approving opinion of Ahlers & Cooney, P.C., Des Moines, Iowa, Bond Counsel, and certain other conditions described herein. Certain additional legal matters will be passed upon for the Corporation by its corporate counsel, Ahlers & Cooney, P.C., Des Moines, Iowa, and for the Underwriter by Dorsey & Whitney LLP, Des Moines, Iowa. It is expected that the Series 2015-A Bonds will be available for delivery through the facilities of DTC in New York, New York on or about May 13, * Morgan Stanley May, 2015 * Preliminary, subject to change.

2 $40,694,000 * IOWA STUDENT LOAN LIQUIDITY CORPORATION STUDENT LOAN REVENUE BONDS, SENIOR SERIES 2015-A (AMT) MATURITY SCHEDULE * Maturity Date (December 1) Serial Bonds Principal Amount Interest Rate Price Yield CUSIP 1 $ * % Term Bond due December 1, 20, priced to yield % CUSIP Number 1 * Preliminary, subject to change. 1 CUSIP data herein are provided by Standard & Poor s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. The CUSIP numbers listed above are being provided solely for the convenience of Bondowners only at the time of issuance of the Series 2015-A Bonds and the Corporation does not make any representation with respect to such numbers or undertake any responsibility for their accuracy now or at any time in the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series 2015-A Bonds as a result of procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2015-A Bonds.

3 Information set forth herein has been furnished by the Iowa Student Loan Liquidity Corporation (the Corporation ) and other sources that are believed to be reliable. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the parties referred to above or that the other information or opinions are correct as of any time subsequent to the date hereof. References in this Official Statement to the Indenture (as hereinafter defined) do not purport to be complete and potential purchasers are referred to the Indenture for full and complete details of the provisions thereof. No dealer, broker, salesperson or other person has been authorized by the Corporation to give any information or to make any representations with respect to the Series 2015-A Bonds, other than those contained in this Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute any offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2015-A Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The Underwriter listed on the front cover of this Official Statement (the Underwriter ) has provided the following statement for inclusion in this Official Statement. The Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applicable to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information. The information in this Official Statement concerning The Depository Trust Company, New York, New York ( DTC ) and DTC s book-entry-only system has been obtained from DTC. None of the Corporation, any of its advisors or the Underwriter has independently verified, makes any representation regarding or accepts any responsibility for the accuracy, completeness or adequacy of such information. THE ORDER AND PLACEMENT OF MATERIALS IN THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES ATTACHED HERETO, ARE NOT TO BE DEEMED TO BE A DETERMINATION OF RELEVANCE, MATERIALITY OR IMPORTANCE, AND THIS OFFICIAL STATEMENT, INCLUDING THE APPENDICES ATTACHED HERETO, MUST BE CONSIDERED IN ITS ENTIRETY. THE OFFERING OF THE SERIES 2015-A BONDS IS MADE ONLY BY MEANS OF THIS ENTIRE OFFICIAL STATEMENT. IN CONNECTION WITH THE OFFERING OF THE SERIES 2015-A BONDS, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SERIES 2015-A BONDS AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

4 Upon issuance, the Series 2015-A Bonds will not be registered under the Securities Act of 1933, as amended, and will not be listed on any stock or other securities exchange, nor has the Indenture been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon certain exemptions contained in such federal laws. In making an investment decision, investors must rely upon their own examination of the Series 2015-A Bonds and the security therefor, including an analysis of the risks involved. The Series 2015-A Bonds have not been recommended by any federal or state securities commission or regulatory authority. The registration, qualification or exemption of the Series 2015-A Bonds in accordance with applicable provisions of securities laws of the various jurisdictions in which the Series 2015-A Bonds have been registered, qualified or exempted cannot be regarded as a recommendation thereof. Neither such jurisdictions nor any of their agencies have passed upon the merits of the Series 2015-A Bonds or the adequacy, accuracy or completeness of this Official Statement. Any representation to the contrary may be a criminal offense. Neither the Securities and Exchange Commission nor any other federal, state, municipal or other governmental entity has passed upon the accuracy or adequacy of this Official Statement or approved the Series 2015-A Bonds for sale. There follows in this Official Statement certain information concerning the Corporation, together with descriptions of the terms of the Indenture, the Series 2015-A Bonds, the Backup Servicing Agreement, certain other documents related to the security for the Series 2015-A Bonds and certain applicable laws. All references herein to laws and documents are qualified in their entirety by reference to such laws, as in effect, and to each such document as such document has been or will be executed and delivered on or prior to the date of issuance of the Series 2015-A Bonds, and all references to the Series 2015-A Bonds are qualified in their entirety by reference to the definitive form thereof and the information with respect thereto contained in the Indenture. This Official Statement is submitted in connection with the sale of the Series 2015-A Bonds referred to herein and may not be reproduced or used, in whole or in part, for any other purpose. The information and expressions of opinion herein are subject to change without notice and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circumstance, create any implication that there has been no change in the affairs of the Corporation since the date hereof. FORWARD-LOOKING STATEMENTS This Official Statement, including APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto, contains statements which should be considered forward-looking statements, meaning they refer to possible future events or conditions. Such statements are generally identifiable by the words such as plan, expect, estimate, budget or similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Corporation does not expect or intend to issue any updates or revisions to those forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur, or fail to occur.

5 TABLE OF CONTENTS Page SUMMARY STATEMENT... i INTRODUCTION...1 PURPOSE OF THE SERIES 2015-A BONDS...3 SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS...4 General...4 Reserve Fund...4 Capitalized Interest Fund...5 Additional Series of Bonds; Priority...5 Overcollateralization and Initial Parity Percentage...6 Program Expenses, Servicing Fees and Trustee Fees...6 Rating Agency Notification...6 Certain Risk Factors...7 THE SERIES 2015-A BONDS...7 General Terms of the Series 2015-A Bonds...7 Redemption Provisions...8 Book-Entry Only System...11 CERTAIN RISK FACTORS...14 THE CORPORATION...30 General...30 Board of Directors...30 Corporate Administration...31 Outstanding Indebtedness of the Corporation...33 Financial and Other Information...34 ESTIMATED SOURCES AND USES OF PROCEEDS...35 THE FINANCED LOANS...35 The FFELP Loans...36 The Private Loans...45 Borrower Benefits...53 THE CORPORATION S FEDERAL LOAN PROGRAMS...53 FFELP Program...53 DESCRIPTION OF THE GUARANTY AGENCIES...54 General...54 Great Lakes Higher Education Guaranty Corporation...55 Pennsylvania Higher Education Assistance Agency...57 THE CORPORATION S PRIVATE LOAN PROGRAMS...59 General...59 Private Loan Program Loan Statistics...81 SERVICING OF THE FINANCED LOANS...86 Financed FFELP Loans...86 Servicing of Financed Loans...87 Backup Servicer and Backup Servicing Agreement...88 LEGALITY FOR INVESTMENT AND DEPOSIT...91

6 TAX MATTERS...91 ABSENCE OF CERTAIN LITIGATION...94 LEGALITY...94 UNDERWRITING...94 RATINGS...95 MUNICIPAL ADVISOR...96 CONTINUING DISCLOSURE...96 MISCELLANEOUS...96 APPENDIX A: SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE APPENDIX B: FORM OF OPINION OF BOND COUNSEL APPENDIX C: FORM OF CONTINUING DISCLOSURE AGREEMENT APPENDIX D: FINANCIAL STATEMENTS OF THE CORPORATION

7 SUMMARY STATEMENT This Summary Statement is subject in all respects to more complete information contained in this Official Statement and no conclusion should be drawn from the order of material or information presented in this Official Statement. The offering of the Iowa Student Loan Liquidity Corporation s Student Loan Revenue Bonds, Senior Series 2015-A (the Series 2015-A Bonds ) to potential investors is made only by means of this entire Official Statement. The Series 2015-A Bonds, together with any other bonds hereafter issued under the Indenture, are herein referred to as the Bonds. No person is authorized to detach this Summary Statement from this Official Statement or to otherwise use it without this entire Official Statement. All terms capitalized, but not defined, in this Summary Statement shall have the meaning set forth elsewhere in this Official Statement. The Corporation Iowa Student Loan Liquidity Corporation (the Corporation ) is a private nonprofit corporation incorporated on August 17, 1979, authorized under the Code of Iowa and the Iowa Partnership Loan Program Agreement, dated May 19, 1992, between the Corporation and the Iowa College Student Aid Commission, an Iowa state agency, to provide an alternative educational loan program. Pursuant to such authority, the Corporation established its Iowa Partnership Loan Program. In addition, the Corporation launched its Medical Loan Program to assist students in health related fields, its National Alternative Loan Program for students outside the State of Iowa, and its Canadian Alternative Loan Program to assist Canadian students attending Iowa colleges. The Iowa Partnership Loan Program, the Medical Loan Program, the National Alternative Loan Program and the Canadian Alternative Loan Program are collectively referred to herein as the Private Loan Programs. Educational loans made under the Private Loan Programs are to be financed pursuant to certain underwriting or credit criteria and are to bear interest at rates determined by the Corporation. See THE CORPORATION S FEDERAL LOAN PROGRAMS and THE CORPORATION S PRIVATE LOAN PROGRAMS herein. Financing of Eligible Loans The Indenture permits the financing only of Eligible Loans from moneys in the Student Loan Fund established pursuant to the Indenture. The Eligible Loans expected to be Financed under the Indenture consist of FFELP Loans and other private loans to borrowers for post-secondary education authorized to be originated or purchased by the Corporation pursuant to the Private Loan Programs; provided that, upon a Rating Agency Notification, loans originated under other private loan programs may also constitute Eligible Loans. Notwithstanding the foregoing, the First Supplemental Trust Indenture prescribes that Eligible Loans that may be Financed with proceeds of the Series 2015-A Bonds, or any other moneys in the Accounts and Subaccounts established pursuant to the First Supplemental Trust Indenture, consist of FFELP Loans and Private Loans, unless there has been a Rating Agency Notification with respect to other types of Eligible Loans. See THE CORPORATION S FEDERAL LOAN PROGRAMS and THE CORPORATION S PRIVATE LOAN PROGRAMS herein for a further description of the Corporation s loan programs. See, also, ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. i

8 On the Closing Date, the Corporation will cause $12,000,000 * of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate Eligible Loans during the Acquisition Period (the Prefunded Loans ). Also on the Closing Date, the Corporation will contribute $34,802,953 of Eligible Loans (the Contributed Loans and, together with the Prefunded Loans, the Series 2015-A Loans ) to the 2015-A Account of the Student Loan Fund, which Contributed Loans shall be part of the Trust Estate under the Indenture. The Series 2015-A Loans, together with all other Eligible Loans financed with proceeds of other Bonds issued under the Indenture or certain other available moneys under the Indenture, are referred to herein, collectively, as the Financed Loans. See ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS. No more than $7,800,000 * (or such greater amount as to which a Rating Agency Notification has been given), of the Prefunded Loans may have deferred principal and interest payments while the student is attending school. No more than $5,400,000 * (or such greater amount as to which a Rating Agency Notification has been given) of the Prefunded Loans may be to borrowers that have FICO scores in the 670 to 759 category. The Series 2015-A Bonds The Series 2015-A Bonds is the first Series of Bonds being issued under the Trust Indenture, dated as of May 1, 2015 (the General Indenture ), as amended and supplemented by a First Supplemental Trust Indenture, dated as of May 1, 2015 (the First Supplemental Trust Indenture ), between the Corporation and Wells Fargo Bank, National Association, as trustee (the Trustee ), paying agent and bond registrar. The General Indenture, as amended and supplemented (including by the First Supplemental Trust Indenture), is herein referred to as the Indenture. The Series 2015-A Bonds constitute Senior Bonds under the Indenture and will be on a parity with any other Series of Senior Bonds issued under the Indenture. The Series 2015-A Bonds will mature on the dates and in the principal amounts and bear interest at the rates set forth on the inside front cover hereof. The Series 2015-A Bonds are being issued by the Corporation to (i) provide the Corporation with moneys to finance Eligible Loans, (ii) fund the Reserve Fund, (iii) make an initial deposit to the Capitalized Interest Fund, and (iv) pay certain costs related to the issuance of the Series 2015-A Bonds. The Corporation may hereafter issue Senior Bonds under the Indenture on a parity with the Series 2015-A Bonds, and may issue Bonds under the Indenture payable on a basis subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Series of Bonds; Priority herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto. Preliminary, subject to change ii

9 Sources of Payment and Security for the Series 2015-A Bonds The Series 2015-A Bonds are limited obligations of the Corporation, secured by and payable solely from: (i) a portion of the proceeds derived from the sale of the Series 2015-A Bonds (until expended for the purposes for which the Series 2015-A Bonds were issued); (ii) Financed Loans; (iii) all Revenues (including, without limitation, payments of principal of and interest on Financed Loans); (iv) the moneys and securities in certain Funds established under the Indenture; and (v) certain other assets pledged under the Indenture (collectively, the Trust Estate ). See ESTIMATED SOURCES AND USES OF PROCEEDS herein. The Trust Estate will include the Series 2015-A Loans, together with all other Eligible Loans financed with proceeds of other Bonds issued under the Indenture or certain other available moneys under the Indenture. Upon the satisfaction of certain conditions, additional Bonds may be issued under the Indenture and Other Obligations may be entered into from time to time on a parity basis with the Series 2015-A Bonds or on a basis subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Bonds; Priority herein. Redemption The Series 2015-A Bonds are subject to mandatory non-origination redemption, optional redemption, cumulative mandatory sinking fund redemption, and special optional and special mandatory redemption from Excess Revenue. See THE SERIES 2015-A BONDS Redemption Provisions herein. Release of Revenues to Corporation. Pursuant to the terms of the Indenture, and to the extent the Corporation elects not to exercise its right to Special Optional Redemption from Excess Revenue, on each Interest Payment Date, after taking into account certain payments required under the Indenture, the Revenues maybe released to the Corporation free and clear of the lien and pledge of the Indenture if, as certified in a Corporation Certificate, the Parity Percentage exceeds * %, in such amount as set forth in the Corporation s order and to the extent that the payment of such amount would not cause the Parity Percentage to fall below such percentage, or such lower percentage for which a Rating Agency Notification has been given. Origination of Financed Loans On the Closing Date, the Corporation will cause $12,000,000 * of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate Eligible Loans during the Acquisition Period. Also on the Closing Date, the Corporation will contribute $34,802,953 of Eligible Loans to the 2015-A Account of the Student Loan Fund, which Contributed Loans, together with the Prefunded Loans, as originated and acquired, shall be part of the Trust Estate under the Indenture. See ESTIMATED SOURCES AND USES OF PROCEEDS herein. Preliminary, subject to change iii

10 With respect to the proceeds of the Series 2015-A Bonds deposited into the 2015-A Subaccount of the Acquisition Account, the Acquisition Period begins on the Closing Date and ends on July 1, 2016 *, provided this period may be extended upon a Rating Agency Notification with respect to such extension. If uncommitted proceeds remain in the 2015-A Subaccount of the Acquisition Account at the expiration of the Acquisition Period (as the same may have been extended), such amounts are required to be used to redeem Series 2015-A Bonds. See THE SERIES 2015-A BONDS Redemption Provisions herein. No more than $7,800,000 * (or such greater amount as to which a Rating Agency Notification has been given), of the Prefunded Loans may have deferred principal and interest payments while the student is attending school. No more than $5,400,000 * (or such greater amount as to which a Rating Agency Notification has been given) of the Prefunded Loans may be to borrowers that have FICO scores in the 670 to 759 category. Overcollateralization and Initial Parity Percentage Upon the issuance of the Series 2015-A Bonds, the initial Parity Percentage will be at least * %, which reflects (1) the receipt of proceeds of the Series 2015-A Bonds (net of the portion thereof in the approximate amount of $ to be transferred immediately to the Corporation outside of the Indenture, and any proceeds to be used to pay costs of issuance of the Series 2015-A Bonds), (2) the receipt by the Trustee of the Contributed Loans from the Corporation on the Closing Date, and (3) the reduction in the value of such Eligible Loans by accrued Excess Earnings associated therewith. See ESTIMATED SOURCES AND USES OF PROCEEDS and SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Overcollateralization and Initial Parity Percentage herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Revenue Fund attached hereto. Ratings Prior to the issuance and delivery of the Series 2015-A Bonds, Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc. ( S&P ), and Fitch, Inc. ( Fitch ) are expected to assign their bond rating of A(sf) and Asf, respectively, to the Series 2015-A Bonds. See RATINGS herein. Rating Agency Notification The Indenture provides that the Rating Agencies have various notice rights and further requires as a condition of certain actions, inactions or other events that there be a Rating Agency Notification, including, but not limited to, issuance of Additional Bonds; determinations of the types of Private Loans to be included as Eligible Loans in the future; entry into Derivative Product Agreements; changes in the Servicer or Backup Servicer; changes in the amount and timing of Program Expenses, the Servicing Fees and the Trustee Fees; changes in the Reserve Fund Requirement; types of Investment Securities; certain amendments or supplements to the Indenture; substitution or replacement of the Trustee; establishment of, and changes in, the Parity Percentage with respect to the release of moneys from the Trust Estate; and extension of the Acquisition Period. The Indenture also requires that the Corporation make any Rating Agency Notification publicly available in the manner applicable to post-issuance disclosures under Rule iv

11 15c2-12. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Rating Agency Notification and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Certain Risk Factors Attention should be given to certain investment considerations described in this Official Statement which could affect the ability of the Corporation to pay Debt Service on the Series 2015-A Bonds and which could have an effect on the market price of the Series 2015-A Bonds to an extent that cannot be determined. See CERTAIN RISK FACTORS herein. An investment in the Series 2015-A Bonds involves an element of risk. Each prospective purchaser of Series 2015-A Bonds should read this entire Official Statement, including the front cover page and Appendices attached hereto, in order to make a judgment as to whether the Series 2015-A Bonds are an appropriate investment. Backup Servicer The Corporation has entered into an agreement with the Pennsylvania Higher Education Assistance Agency ( PHEAA ) pursuant to which PHEAA has agreed to act as a backup servicer with respect to the Financed Loans. In such role, PHEAA will act as successor Servicer with respect to the Financed Loans serviced by the Corporation upon the occurrence of certain events described herein under SERVICING OF THE FINANCED LOANS Backup Servicer and Backup Servicing Agreement. [Remainder of Page Intentionally Left Blank] v

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13 OFFICIAL STATEMENT Relating to IOWA STUDENT LOAN LIQUIDITY CORPORATION $40,694,000 * Student Loan Revenue Bonds, Senior Series 2015-A INTRODUCTION This Official Statement, including the front cover page and inside front cover page hereof, the Summary Statement and the Appendices attached hereto, sets forth information regarding the issuance by the Iowa Student Loan Liquidity Corporation (the Corporation ) of its Student Loan Revenue Bonds, Senior Series 2015-A (the Series 2015-A Bonds ). The Series 2015-A Bonds, together with any other bonds hereafter issued under the Indenture, are herein referred to as the Bonds. Terms capitalized in the body of this Official Statement and not otherwise defined therein shall have the meaning set forth in APPENDIX A attached hereto. The Corporation is an Iowa private nonprofit corporation, was incorporated on August 17, 1979, for the purpose of providing a statewide student loan program through which the Corporation could finance student loan notes originated under the Higher Education Act of 1965, as amended (the Higher Education Act ). Pursuant to State of Iowa (the State ) legislation enacted in 1992, and the Iowa Partnership Loan Program Agreement, dated May 19, 1992, as amended to the date hereof (the Iowa Partnership Loan Program Agreement ), between the Corporation and the Iowa College Student Aid Commission, the Corporation is also authorized to finance private education loans other than those originated under the Higher Education Act, and in accordance with such legislation and the Iowa Partnership Loan Program Agreement, corresponding changes have been made to the Corporation s articles of incorporation and bylaws. The Corporation has the ability to make further amendments to its articles of incorporation and bylaws without State legislative action to enable the Corporation to finance other undertakings. However, the Indenture does not provide that the proceeds of Series 2015-A Bonds could be used to finance undertakings other than the purchase and origination of Eligible Loans. There is no limitation in any State law or in the articles of incorporation or bylaws of the Corporation as to the aggregate amount of debt which the Corporation may incur. In reliance on the foregoing State legislative authority, the Corporation has established its Iowa Partnership Loan Program, Medical Loan Program, National Alternative Loan Program and Canadian Alternative Loan Program (collectively, the Private Loan Programs ). See THE CORPORATION S PRIVATE LOAN PROGRAMS herein. In order to finance educational loans made under its Private Loan Programs, the Corporation is authorized to borrow money and to issue bonds payable from specified sources, including the revenues derived from such loans. The Series 2015-A Bonds are being issued under a Trust Indenture, dated as of May 1, 2015 (the General Indenture ), as amended and supplemented by a First Supplemental Trust * Preliminary, subject to change. 1

14 Indenture, dated as of May 1, 2015 (the First Supplemental Trust Indenture ), between the Corporation and Wells Fargo Bank, National Association, as trustee (the Trustee ), registrar (the Registrar ) and paying agent (the Paying Agent ). The General Indenture, as amended and supplemented (including by the First Supplemental Trust Indenture), is herein referred to as the Indenture. The Series 2015-A Bonds constitute Senior Bonds under the Indenture. The Indenture permits the financing only of Eligible Loans from moneys in the Student Loan Fund established under the Indenture. The Eligible Loans expected to be Financed under the Indenture consist of FFELP Loans and other loans to borrowers for post-secondary education authorized, originated or purchased by the Corporation pursuant to the Higher Education Act and the Private Loan Programs; provided that, upon a Rating Agency Notification, loans originated under other private loan programs may also constitute Eligible Loans. See THE CORPORATION S PRIVATE LOAN PROGRAMS herein for a further description of the Private Loan Programs. See, also, ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. On the Closing Date, the Corporation will cause $12,000,000 * of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate Eligible Loans during the Acquisition Period (the Prefunded Loans ). Also on the Closing Date, the Corporation will contribute $34,802,953 of Eligible Loans (the Contributed Loans and, together with the Prefunded Loans, the Series 2015-A Loans ) to the 2015-A Account of the Student Loan Fund, which Contributed Loans shall be part of the Trust Estate under the Indenture. The Series 2015-A Loans, together with all other Eligible Loans financed with proceeds of other Bonds issued under the Indenture or certain other available moneys under the Indenture, are referred to herein, collectively, as the Financed Loans. See ESTIMATED SOURCES AND USES OF PROCEEDS, and THE FINANCED LOANS. No more than $7,800,000 * (or such greater amount as to which a Rating Agency Notification has been given), of the Prefunded Loans may have deferred principal and interest payments while the student is attending school. No more than $5,400,000 * (or such greater amount as to which a Rating Agency Notification has been given) of the Prefunded Loans may be to borrowers that have FICO scores in the 670 to 759 category. The Series 2015-A Bonds are being issued as fixed rate bonds and will bear interest at the rates shown on the inside front cover page hereof. The Series 2015-A Bonds are secured by and payable solely from payments, proceeds, charges and other income received by the Corporation from or on account of the Financed Loans, from amounts payable under any Derivative Product Agreements (to the extent in excess of amounts payable to the Derivative Product Counterparty thereunder (excluding, in any event, Replacement Counterparty Upfront Payments)) and from amounts on deposit in certain Funds established in the Indenture, subject to the provisions of the Indenture permitting the application or exercise thereof for or to the purposes and on the terms and conditions set forth therein, including the payment of Program Expenses, Servicing Fees and Trustee Fees as described in Preliminary, subject to change 2

15 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto, under the headings TERMS OF BONDS Limited Obligation and PLEDGE OF INDENTURE; FUNDS. Such income includes, without limitation, payments of interest on such Financed Loans (whether regularly scheduled, delinquent or advance) and income on investments and principal payments on such Financed Loans (whether regularly scheduled, delinquent or advance). Bonds other than the Series 2015-A Bonds ( Additional Bonds ) may be issued under the Indenture, and Derivative Product Agreements may be entered into by the Corporation, upon satisfaction of certain conditions specified in the Indenture. Such Bonds and the Corporation s obligations under any such Derivative Product Agreement may be payable and secured on a parity with or subordinate to the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Additional Series of Bonds; Priority; Subordinated Bonds herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto under the headings TERMS OF BONDS Limited Obligation and PLEDGE OF INDENTURE; FUNDS. THE SERIES 2015-A BONDS ARE LIMITED OBLIGATIONS OF THE CORPORATION AND DO NOT CONSTITUTE A DEBT, LIABILITY OR OBLIGATION OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF OR A PLEDGE OF THE FAITH AND CREDIT OF THE STATE OF IOWA OR OF ANY AGENCY OR POLITICAL SUBDIVISION THEREOF. THE CORPORATION HAS NO TAXING POWER. There can be no assurance that relevant State or federal laws will not be changed in a manner which might adversely affect the availability and flow of funds of the Corporation. There can be no assurances that any future law will not prospectively or retroactively affect the terms and conditions under which Eligible Loans are made in a manner that might adversely affect the ability of the Corporation to pay the principal of and interest on the Series 2015-A Bonds when due. See CERTAIN RISK FACTORS herein. The descriptions of the Series 2015-A Bonds, the documents authorizing and securing the Series 2015-A Bonds, and the pertinent State legislation and Corporation administrative rules contained herein do not purport to be comprehensive or definitive. All references herein to such documents or legislation and rules are qualified in their entirety by reference to such documents or legislation and rules. A reasonable number of copies of certain of such documents may be obtained from the Iowa Student Loan Liquidity Corporation, 6775 Vista Drive, West Des Moines, Iowa 50266, Attention: Executive Vice President and Treasurer, or from the Trustee, Wells Fargo Bank, National Association, 625 Marquette Avenue, MAC: N , Minneapolis, Minnesota 55479, Attention: Corporate Trust Services. PURPOSE OF THE SERIES 2015-A BONDS The Series 2015-A Bonds are being issued to provide funds to the Corporation which will be used to (i) provide the Corporation with moneys to finance Eligible Loans, (ii) fund the Reserve Fund, (iii) make an initial deposit to the Capitalized Interest Fund, and (iv) pay certain costs related to the issuance of the Series 2015-A Bonds. See ESTIMATED SOURCES AND USES OF PROCEEDS herein. 3

16 General SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS The Series 2015-A Bonds are limited obligations of the Corporation, payable solely from the Trust Estate pledged pursuant to the Indenture as described herein. None of the Corporation s assets or funds pledged and held in its general account or under its Prior Indentures (as hereinafter defined) are pledged as security for the Series 2015-A Bonds under the Indenture. The Series 2015-A Bonds will be secured by and payable, subject to the terms of the Indenture, solely from: (i) a portion of the proceeds derived from the sale of the Series 2015-A Bonds (net of the portion thereof in the approximate amount of $ to be transferred immediately to the Corporation outside of the Indenture, and proceeds to be used to pay costs of issuance of the Series 2015-A Bonds); (ii) Financed Loans (including the Contributed Loans and the Prefunded Loans); (iii) all Revenues (including, without limitation, payments of principal of and interest on Financed Loans); (iv) the moneys and securities in certain Funds established under the Indenture; and (v) certain other assets pledged under the Indenture, including, without limitation, any Derivative Product Agreement (collectively, the Trust Estate ). See ESTIMATED SOURCES AND USES OF PROCEEDS herein. The Corporation will Finance only Eligible Loans through application of the proceeds of the Bonds. For a discussion of certain of the terms applicable to the Eligible Loans, see THE CORPORATION S PRIVATE LOAN PROGRAMS Loan Terms herein. For a more detailed description of the Funds established under the Indenture, certain accounts established therein under the Indenture, and the purposes to which moneys in such Funds and Accounts may be applied, see APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS attached hereto. Reserve Fund On the Closing Date, $813,880 of the proceeds of the Series 2015-A Bonds will be deposited into the Reserve Fund, as described under USE OF PROCEEDS herein (which is equal to the Series 2015-A Reserve Requirement as of the date of issuance of the Series 2015-A Bonds). The Series 2015-A Reserve Requirement at any time shall be an amount equal to the greater of (i) an amount equal to two percent (2%) of the aggregate principal amount of Bonds then Outstanding, or (ii) one percent (1%) of the principal balance of the Series 2015-A Bonds as of the Closing Date, unless a Rating Agent Notification has been given for a lesser amount. The Reserve Fund is to be maintained at the Reserve Fund Requirement. Amounts on deposit in the Reserve Fund shall be transferred to the Revenue Fund to the extent the funds on deposit in the Revenue Fund, after taking into account any transfers from the Capitalized Interest Fund and the Student Loan Fund, are insufficient to make required transfers to the Rebate Fund; to pay, on each Monthly Payment Date, Servicing Fees, Trustee Fees and Program Expenses, if any; and to pay, on each Interest Payment Date and Principal Payment Date, (i) the interest and principal (at Stated Maturity) due on Bonds and (ii) Other Obligations (except, with respect to Derivative Preliminary, subject to change 4

17 Product Agreements, Termination Payments that are not Priority Termination Payments). The Indenture provides that upon the issuance of any Additional Bonds, there will be deposited into the Reserve Fund, if necessary, an amount sufficient to increase the amount therein to be equal to the Reserve Fund Requirement, calculated after such issuance. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Reserve Fund attached hereto. Capitalized Interest Fund On the Closing Date, $1,221,000 of the proceeds of the Series 2015-A Bonds will be deposited into the Capitalized Interest Fund, as described under USE OF PROCEEDS herein. Amounts on deposit in the 2015-A Account of the Capitalized Interest Fund shall be transferred to the Revenue Fund to the extent the funds on deposit in the Revenue Fund are insufficient to make required transfers to the Rebate Fund; to pay, on each Monthly Payment Date, Servicing Fees, Trustee Fees and Program Expenses, if any; and to pay, on each Interest Payment Date, (i) the interest due on Senior Bonds and (ii) Other Senior Obligations (except, with respect to Senior Derivative Product Agreements, Termination Payments that are not Priority Termination Payments). Funds in excess of $610,500 * remaining on deposit in the Capitalized Interest Fund after the June 1, 2016 Interest Payment Date will be immediately transferred to the Revenue Fund on such date. If, after giving effect to any transfer to be made from the Capitalized Interest Fund on the June 1, 2017, * Monthly Payment Date, any funds remain therein on such Monthly Payment Date, all such remaining funds shall be transferred to the Revenue Fund on such Monthly Payment Date. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Capitalized Interest Fund attached hereto. Additional Series of Bonds; Priority Pursuant to the provisions of the Indenture, Additional Bonds may be issued on a parity basis with the Series 2015-A Bonds (such Additional Bonds being referred to herein, together with the Series 2015-A Bonds, as Senior Bonds ), or on a basis subordinate to the Series A Bonds (such Additional Bonds, which include senior subordinate and subordinate Bonds, being referred to herein collectively as Subordinate Bonds ). In addition, the Corporation may enter into Derivative Product Agreements with one or more Derivative Product Counterparties. The Corporation s obligations under any such Derivative Product Agreements may be parity obligations with the Senior Bonds (such obligations being referred to herein as Other Senior Obligations and, together with the Senior Bonds, Senior Obligations ), or parity obligations with the Subordinate Bonds (such obligations being referred to herein as Other Subordinate Obligations and, together with the Subordinate Bonds, Subordinate Obligations ). See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE TERMS OF BONDS; Derivative Product Payments attached hereto. The Series 2015-A Bonds will be the first series of Bonds issued under the Indenture. It is a condition to the issuance of any Additional Bonds that they be rated the same as any Preliminary, subject to change. 5

18 Outstanding Bonds of the same seniority. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE TERMS OF BONDS and TERMS OF BONDS; General Limitations; Issuable in Series; Purposes and Conditions for Issuance; Payment of Principal and Interest attached hereto. Overcollateralization and Initial Parity Percentage Upon the issuance of the Series 2015-A Bonds, the initial Parity Percentage will be at least * %, which reflects (1) the receipt of a portion of the proceeds of the Series 2015-A Bonds (net of the portion thereof in the approximate amount of $ to be transferred immediately to the Corporation outside of the Indenture, and proceeds to be used to pay costs of issuance of the Series 2015-A Bonds), (2) the receipt by the Trustee of the Contributed Loans from the Corporation on the Closing Date, and (3) the reduction in the value of such Eligible Loans by accrued Excess Earnings associated therewith. See ESTIMATED SOURCES AND USES OF PROCEEDS and SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Overcollateralization and Initial Parity Percentage herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Revenue Fund attached hereto. Program Expenses, Servicing Fees and Trustee Fees The Program Expenses (including fees and expenses paid to others) of the Corporation incurred in carrying out and administering the portion of the Private Loan Programs financed through Bonds issued under the Indenture, the Servicing Fees to be paid or reimbursed to the Corporation with respect to the servicing of Financed Loans, and the Trustee Fees to be paid to the Trustee shall be provided for, if not from other sources of the Corporation, from Revenues. Such Program Fees, Servicing Fees and Trustee Fees will be paid out of the Revenue Fund on each Monthly Payment Date prior to the payment of principal and interest on the Series 2015-A Bonds. As provided in the First Supplemental Trust Indenture, with respect to the Series 2015-A Bonds, (i) such Program Expenses shall be $28,500 (reflecting the rating agency surveillance fees), (ii) such Servicing Fees shall not exceed 0.75 * % of the Financed Loans that are FFELP Loans as of the end of the preceding calendar month and such Servicing Fees shall not exceed 1.10 * % of the Financed Loans that are Private Loans as of the end of the preceding calendar month, subject to a minimum of $2.50 per borrower and to 3.00% inflation per annum, and (iii) such Trustee Fees shall not exceed 1/12 th of 0.01% of the Outstanding Bonds as of the end of the preceding calendar month. The Indenture permits the Corporation to change the amount of such fees after a Rating Agency Notification. See CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Rating Agency Notification The Indenture provides that the Rating Agencies have various notice rights and further requires as a condition of certain actions, inactions or other events that there be a Rating Agency Notification, including, but not limited to, issuance of Additional Bonds; determinations of the types of Private Loans to be included as Eligible Loans in the future; entry into Derivative * Preliminary, subject to change. 6

19 Product Agreements; changes in the Servicer or Backup Servicer; changes in the amount and timing of Program Expenses, the Servicing Fees and the Trustee Fees; changes in the Reserve Fund Requirement; types of Investment Securities; certain amendments or supplements to the Indenture; substitution or replacement of the Trustee; and establishment of, and changes in, the Parity Percentage with respect to the release of moneys from the Trust Estate. The Indenture also requires that the Corporation make any Rating Agency Notification publicly available in the manner applicable to post-issuance disclosures under Rule 15c2-12. Rating Agency Notification means, with respect to a Proposed Action, that the Corporation shall have given written notice of such Proposed Action to each Rating Agency then rating the Bonds at least twenty Business Days prior to the proposed effective date thereof. Proposed Action means any proposed action, failure to take an action or other event which, under the terms of the Indenture, is conditional on a Rating Agency Notification. The Corporation is required to give a Rating Agency Notification prior to any Proposed Action. In connection with any such Rating Agency Notification, the Corporation is required to use commercially reasonable efforts to provide each Rating Agency such factual data and cash flow analyses as such Rating Agency may reasonably request in order to review the Proposed Action. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Certain Risk Factors Attention should be given to certain investment considerations described in this Official Statement which could affect the ability of the Corporation to pay Debt Service on the Series 2015-A Bonds and which could have an effect on the market price of the Series 2015-A Bonds in the future to an extent that cannot be determined at the present time. See CERTAIN RISK FACTORS herein. Each prospective purchaser of Series 2015-A Bonds should read this entire Official Statement, including the Appendices attached hereto. General Terms of the Series 2015-A Bonds THE SERIES 2015-A BONDS The Series 2015-A Bonds will initially be dated and will bear interest from the date of delivery. Interest will be payable on June 1 and December 1 of each year, commencing December 1, 2015 *, to the registered owners (the Owners ) of the Series 2015-A Bonds as of the record date, which is the May 15 or November 15 immediately preceding each regularly scheduled interest payment date. The Series 2015-A Bonds will bear interest at the interest rates per annum, and will mature on December 1 in each of the years and in the principal amounts, shown on the inside front cover of this Official Statement. The Series 2015-A Bonds will be issued in fully registered form, without coupons, in the denomination of $5,000 or any integral multiple thereof. Individual purchases of the Series 2015-A Bonds will be made in book-entry form only. Purchasers of the Series 2015-A Bonds * Preliminary, subject to change. 7

20 will not receive certificates representing their interest in the Series 2015-A Bonds purchased. See Book-Entry Only System below. Redemption Provisions * The Indenture sets forth the provisions for the redemption of the Series 2015-A Bonds prior to maturity, as described below. The Trustee shall provide notice of the redemption of Series 2015-A Bonds in accordance with the provisions described below under Notice and Effect of Redemption and as described in APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE GENERAL TERMS AND PROVISIONS OF THE BONDS Redemption of Bonds attached hereto. Mandatory Non-Origination Redemption. * The Series 2015-A Bonds are subject to special mandatory redemption prior to their respective Stated Maturities, in whole or in part in any Authorized Denomination, on any date within sixty (60) days after the end of the Acquisition Period, at a Redemption Price equal to 100% of the principal amount of the Series 2015-A Bonds to be redeemed, plus (1) accrued interest to the Redemption Date; and (2) in the case of the redemption of the Series 2015-A Premium Bonds, the Unamortized Premium with respect to such Bonds, from moneys to be applied to such redemption at the direction of the Corporation consisting of or corresponding to proceeds of the Series 2015-A Bonds remaining in the 2015-A Subaccount of the Acquisition Account at the expiration of Acquisition Period. The amount to be applied to the redemption of Series 2015-A Bonds shall be equal to the amount designated to be expended by the expiration of the Acquisition Period less the amount committed to be used to originate or purchase Eligible Loans by the expiration of the Acquisition Period. Optional Redemption. * The Series 2015-A Bonds maturing on and after December 1, 2026 are subject to redemption at the option of the Corporation from moneys in the Revenue Fund and any other source available therefor in accordance with the Indenture, in whole or in part, at any time, commencing December 1, 2025 *, at a Redemption Price equal to 100% of the principal amount of the Series 2015-A Bonds to be redeemed, plus accrued interest to the Redemption Date with respect to such Bonds. Such redemption shall only be permitted if, as of the Monthly Payment Date preceding such redemption, all payments and transfers required to be made on such Monthly Payment Date pursuant to the Indenture have been made, or will be provided for. If any portion or all of the Redemption Price is to be paid from moneys in the Revenue Fund, such payment shall be made only to the extent moneys are available therefor after taking into account amounts necessary to (1) make all payments and transfers required to be made on or prior to the next succeeding Interest Payment Date pursuant to the Indenture, and (2) if such Interest Payment Date is a June 1, payment of one-half of the principal due and payable on the next succeeding December 1. Any such redemption will be applied to each such maturity on a pro-rata basis (or in such other manner as the Corporation may direct). Any such redemption of Series 2015-A Bonds of a maturity that is subject to cumulative mandatory sinking fund redemption is to be credited against Sinking Fund Installments applicable to such maturity as described in the last paragraph under Cumulative Mandatory Sinking Fund Redemption below. Preliminary, subject to change 8

21 Cumulative Mandatory Sinking Fund Redemption. * The Series 2015-A Bonds maturing on (the Term Bonds ) are subject to cumulative sinking fund redemption from moneys in the Revenue Fund and any other source available therefor in accordance with the Indenture, at a Redemption Price equal to 100% of the principal amount thereof, plus accrued interest to the Redemption Date, in the amounts set forth below and on December 1 of each of the years set forth below. Year Sinking Fund Installment $ $ $ * $ *Stated Maturity If on the second to last Business Day of the second calendar month preceding the date due of any sinking fund installment, prior to the scheduled maturity of the Term Bonds subject to such sinking fund installment, the amounts available to make the sinking fund installment are less than the scheduled sinking fund installment, the amount of the insufficiency will be due on the next sinking fund installment due date, to the extent funds are available therefor, until paid in full. A failure to make a sinking fund installment prior to the scheduled maturity of the Term Bonds to which such sinking fund installment applies that results from insufficient Revenues being available to fund such payment in accordance with the Indenture is not a default and will not give rise to an Event of Default under the Indenture. The amounts which would otherwise be available for a sinking fund installment may be applied, prior to notice of cumulative mandatory sinking fund redemption, to the purchase, for cancellation, of the Term Bonds to which such sinking fund installments applies at prices not exceeding par, plus accrued interest to the date of purchase, in which event the principal amount of Series 2015-A Bonds scheduled to be redeemed on the immediately succeeding sinking fund installment due date will be reduced by the principal amount of Term Bonds so purchased. Any redemption of Terms bonds, other than by operation of cumulative mandatory sinking fund redemption, and any delivery by the Corporation to the Trustee for cancellation of Term Bonds purchased by the Corporation, shall result in the reduction of the remaining sinking fund installments of such Term Bonds of such maturity on a pro-rata basis (or in such other manner as the Corporation, consistent with a Projection of Revenues, may direct). No such reduction, however, shall cause any sinking fund installment to be in an amount other than an Authorized Denomination and reductions shall be increased or decreased as directed by the Corporation to avoid such a result. Special Optional Redemption From Excess Revenue. * Unless the Corporation directs a release of Revenues in accordance with the Indenture and the Parity Percentage equals or 9

22 exceeds % (after giving effect to said release or redemption), the Series 2015-A Bonds (excluding Series 2015-A Premium Bonds, if any) are subject to redemption prior to Stated Maturity, in whole or in part, in any Authorized Denomination, at the option of the Corporation, on each Interest Payment Date, at a Redemption Price equal to 100% of the principal amount of such Series 2015-A Bonds to be redeemed without premium, plus accrued interest to the Redemption Date with respect to such Bonds, from moneys in the Revenue Fund constituting Excess Revenue. Excess Revenue means, as of the next-to-last Monthly Payment Date preceding each Interest Payment Date, any funds remaining in the 2015-A Account of the Revenue Fund, after taking into account amounts necessary to pay all amounts required to be paid from, or set aside in, the Revenue Fund on such Monthly Payment Date prior to any redemption from Excess Revenue in accordance with the provisions of the Indenture described in Appendix A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PLEDGE OF INDENTURE; FUNDS Revenue Fund attached hereto. Special Mandatory Redemption From Excess Revenue. * To the extent the Parity Percentage is less than % * or the aggregate principal balance of all Bonds Outstanding under the Indenture is equal to or less than 10% of the aggregate principal balance of all Bonds Outstanding under the Indenture as of the then most recent date of issuance, then the Series 2015-A Bonds (excluding Series 2015-A Premium Bonds, if any) are subject to mandatory redemption prior to Stated Maturity, in whole or in part, in any Authorized Denomination, on each Interest Payment Date, at a Redemption Price equal to 100% of the principal amount of such Series 2015-A Bonds to be redeemed without premium, plus accrued interest to the Redemption Date with respect to such Bonds, from moneys in the Revenue Fund constituting Excess Revenue. Notice and Effect of Redemption. The Corporation shall give the Trustee written notice of any optional redemption of Series 2015-A Bonds at least 30 days prior to the date set for redemption, or such lesser period as to which the Trustee shall agree. The Trustee shall give notice of any such redemption by mailing a copy of the notice by first class mail not less than 15 days, and not more than 30 days, prior to the date fixed for redemption, to the Owner of any Series 2015-A Bond at the address of such Owner as shown on the Bond Register; provided, however, that failure to give such notice by mailing, or any defect therein, with respect to any Series 2015-A Bond shall not affect the validity of the proceedings with respect to any other Series 2015-A Bonds. With respect to book entry bonds, if the Trustee sends notice of redemption to the Securities Depository pursuant to the Letter of Representations, the Trustee shall not be required to give the notice set forth in the immediately preceding sentence. In the case of an optional redemption, the notice may state (1) that it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the Redemption Date or (2) that the Corporation retains the right to rescind such notice on or prior to the scheduled Redemption Date, and such notice and optional Preliminary, subject to change 10

23 redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in the Indenture. Selection of Series 2015-A Bonds to be Redeemed. If less than all outstanding Series 2015-A Bonds are to be so redeemed, Series 2015-A Bonds redeemed as described above in the paragraphs Special Optional Redemption From Excess Revenue or Special Mandatory Redemption From Excess Revenue shall be selected from each Stated Maturity of the Series 2015-A Bonds on a pro rata basis (or such other manner as the Corporation, consistent with a Projection of Revenues, may direct). If less than all of the Series 2015-A Bonds of a given Stated Maturity are to be redeemed, the Trustee shall select the Series 2015-A Bonds to be redeemed by lot or by such other method deemed fair and reasonable by the Trustee. No redemption, however, shall cause the Series 2015-A Bonds of any Stated Maturity that remain outstanding to be in an amount other than an Authorized Denomination and the amount to be so redeemed shall be increased or decreased as directed by the Corporation to avoid such a result. No Redemption of Subordinate Bonds. As long as the Series 2015-A Bonds remain Outstanding, no Subordinate Bonds hereafter issued under the Indenture shall be redeemed. Release of Revenues to Corporation. Pursuant to the terms of the Indenture, and to the extent the Corporation elects not to exercise its right to Special Optional Redemption from Excess Revenue, on each Interest Payment Date, after taking into account certain payments required under the Indenture, the Revenues maybe released to the Corporation free and clear of the lien and pledge of the Indenture if, as certified in a Corporation Certificate, the Parity Percentage exceeds %, in such amount as set forth in the Corporation s order and to the extent that the payment of such amount would not cause the Parity Percentage to fall below such percentage, or such lower percentage for which a Rating Agency Notification has been given. Book-Entry Only System The following description of the procedures and record keeping with respect to beneficial ownership interests in the Series 2015-A Bonds, payment of principal, redemption premium, if any, and interest and other payments with respect to the Series 2015-A Bonds to Direct Participants (as defined below) or Beneficial Owners (as defined below), confirmation and transfer of beneficial ownership interests in such Series 2015-A Bonds and other related transactions by and among The Depository Trust Company, New York, New York ( DTC ), the Direct Participants and Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the Direct Participants nor the Beneficial Owners should rely on the following information with respect to such matters, but should instead confirm the same with DTC or the Direct Participants, as the case may be. Information concerning DTC and the Book-Entry Only System has been obtained from DTC and is not guaranteed as to accuracy or completeness by, and is not to be construed as a representation by, the Corporation. Preliminary, subject to change 11

24 DTC will act as securities depository for the Series 2015-A Bonds. The Series 2015-A Bonds will be issued as fully-registered Bonds registered in the name of Cede & Co. (DTC s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Bond certificate will be issued for each maturity of the Series 2015-A Bonds, each in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a banking organization within the meaning of the New York Banking Law, a member of the Federal Reserve System, a clearing corporation within the meaning of the New York Uniform Commercial Code, and a clearing agency registered pursuant to the provisions of Section 17A of the Securities Exchange Act of DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-u.s. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC s participants ( Direct Participants ) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( DTCC ). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-u.s. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ( Indirect Participants ). DTC has a Standard & Poor s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at Purchases of the Series 2015-A Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2015-A Bonds on DTC s records. The ownership interest of each actual purchaser of each Series 2015-A Bond ( Beneficial Owner ) is in turn to be recorded on the Direct and Indirect Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series 2015-A Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in the Series 2015-A Bonds, except in the event that use of the book-entry system for the Series 2015-A Bonds is discontinued. To facilitate subsequent transfers, all Series 2015-A Bonds deposited by Direct Participants with DTC are registered in the name of DTC s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Series 2015-A Bonds with DTC and their registration in the name of Cede & Co. or such other 12

25 DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series 2015-A Bonds; DTC s records reflect only the identity of the Direct Participants to whose accounts such Series 2015-A Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series 2015-A Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series 2015-A Bonds, such as redemptions, tenders, defaults and proposed amendments to the security documents. For example, Beneficial Owners of the Series 2015-A Bonds may wish to ascertain that the nominee holding the Series 2015-A Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the Registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Series 2015-A Bonds within a Series are being redeemed, DTC s practice is to determine by lot the amount of the interest of each Direct Participant in such Series to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to the Series 2015-A Bonds unless authorized by a Direct Participant in accordance with DTC s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Corporation as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co. s consenting or voting rights to those Direct Participants to whose accounts the Series 2015-A Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Redemption proceeds, distributions and dividend payments on the Series 2015-A Bonds will be made to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC). DTC s practice is to credit Direct Participants accounts, upon DTC s receipt of funds and corresponding detail information from the Corporation or the Paying Agent on the payable date in accordance with their respective holdings shown on DTC s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in street name, and will be the responsibility of such Participant and not of DTC, the Paying Agent or the Corporation, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Corporation or the Paying Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants. DTC may discontinue providing its services as depository with respect to the Series 2015-A Bonds at any time by giving reasonable notice to the Corporation or the Paying Agent. 13

26 Under such circumstances, in the event that a successor securities depository is not obtained, Series 2015-A Bond certificates are required to be printed and delivered. The Corporation may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Series 2015-A Bond certificates will be printed and delivered to DTC. The Trustee and the Corporation will recognize DTC or its nominee as the Series 2015-A Bondowner for all purposes, including notices and voting, and so long as a book-entry-only system is used, will send any notice of redemption or other notices to Series 2015-A Bondowners only to DTC. Any failure of DTC to advise any DTC Participants, or of any DTC Participant to notify the Beneficial Owner, of any such notice and its content or effect will not affect the validity of the redemption of the Series 2015-A Bonds called for redemption or of any other action premised on such notice. The Corporation and the Trustee shall have no responsibility or obligation with respect to (a) the accuracy of the records of DTC or any DTC Participant with respect to any beneficial ownership interest in the Series 2015-A Bonds, (b) the delivery to any Beneficial Owner of the Series 2015-A Bonds or other person, other than DTC, of any notice with respect to the Series 2015-A Bonds or (c) the payment to any Beneficial Owner of the Series 2015-A Bonds or other person, other than DTC, of any amount with respect to the principal of or interest on the Series 2015-A Bonds. Neither the Corporation nor the Trustee shall have any responsibility with respect to obtaining consents from anyone other than the Owners. The Trustee and the Corporation cannot and do not give any assurance that DTC will distribute payments of Debt Service to DTC Participants or that the DTC Participants or others will distribute payments of Debt Service on the Series 2015-A Bonds paid to DTC or its nominee, as the registered owner thereof, or any redemption or other notices, to the Beneficial Owners, or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Official Statement. The information in this section concerning DTC and DTC s book-entry system has been obtained from sources that the Corporation believes to be reliable, but the Corporation takes no responsibility for the accuracy thereof. CERTAIN RISK FACTORS Attention should be given to the investment considerations described below which, among others, could affect the ability of the Corporation to pay Debt Service on the Series A Bonds, and which could also affect the market price of the Series 2015-A Bonds to an extent that cannot be determined. An investment in the Series 2015-A Bonds involves an element of risk. This section of this Official Statement does not include all risk factors, but is an attempt to summarize certain of such matters. Each prospective purchaser of the Series 2015-A Bonds should read this Official Statement in its entirety, including the Appendices attached hereto, in order to make a judgment as to whether the Series 2015-A Bonds are an appropriate investment. 14

27 General Federal Law Changes There can be no assurance that any future federal law will not prospectively or retroactively affect the terms and conditions under which student loans are made in a manner that might adversely affect the ability of the Corporation to pay the principal of and interest on the Series 2015-A Bonds when due. There are from time to time proposed changes at the federal level, which if pursued, could have an adverse effect on student loan issuers, such as the Corporation. Such proposed changes currently being considered in the Congress include, but are not limited to, the following: a student loan borrower s ability to discharge a student loan under the federal bankruptcy code; legislation that would increase borrowing availability under federal programs which could potentially reduce borrowing under private student loan programs or create new opportunities for borrowers to refinance their private student loans; changes to the Health Care and Education Reconciliation Act of 2010 (the Reconciliation Act ); changes to the Higher Education Act and various tax and budgetary changes which could impact the Corporation. Additionally, administrative agencies charged with implementation of laws previously passed have the ability to adversely impact the Corporation through the provision allowing nonprofit student lenders to service federal loans; and through the Consumer Finance Protection Bureau s use of authority to regulate student lending, among others. There is no assurance that any or all of these proposals will become effective any some manner. Furthermore, there can be no assurance that any future federal law or regulation will not prospectively or retroactively affect the terms and conditions under which student loans are made in a manner that might adversely affect the ability of the Corporation to pay the principal of and interest on the Series 2015-A Bonds when due. Competition from the Direct Loan Program The Direct Loan Program was established under the Student Loan Reform Act of Under the Direct Loan Program, approved institutions of higher education, or alternative loan originators approved by the Department, make loans to students or parents without application to or funding from outside lenders or guarantors. The Department provides the funds for such loans, and the program provides for a variety of flexible repayment plans. As a result of the enactment of the Reconciliation Act, FFELP loans were no longer originated after June 30, 2010, and since that date, all loans made under the Higher Education Act have been originated under the Direct Loan Program. The Direct Loan Program also results in a reduced volume and variety of student loans available to be purchased by the Corporation. Further, as a result of the enactment of the Reconciliation Act and new federal student loans being originated under the Direct Loan Program, the Corporation may experience increased costs due to reduced economies of scale. Consumer Lending Laws and Regulations. Numerous federal consumer protection laws and related regulations impose substantial requirements upon lenders and servicers involved in consumer finance. These requirements impose specific statutory liabilities upon creditors who 15

28 fail to comply with their provisions. In some cases, this liability could affect an assignee s ability to enforce consumer finance contracts such as the Eligible Loans. Dodd-Frank. The Dodd-Frank Wall Street Reform and Consumer Protection Act (as may be amended from time to time, the Dodd-Frank Act ) which was enacted in July 2010, represented a comprehensive overhaul of the financial services industry within the United States. The Dodd-Frank Act resulted in comprehensive changes to the regulations of most financial institutions operating in the United States. It has also fostered new regulation in the business and the markets in which the Corporation operates. Specifically, significant new regulation is anticipated and/or underway in many areas of consumer financial products and services and in particular private education loans. Under this Act, entities including the Corporation are subject to regulations developed by the Consumer Financial Protection Bureau (the CFPB ). The CFPB is an independent agency housed within the Federal Reserve Board but not subject to Federal Reserve Board jurisdiction or to the Congressional appropriations process. It has substantial power to regulate financial products and services received by consumers from both banks and non-bank lenders. The CFPB will be developing and has developed rules in enumerated areas of federal law traditionally applicable to consumer lending such as Truth in Lending, Fair Credit Reporting and Fair Debt Collection. Further, the CFPB is and will be utilizing new, untested standards to ensure that consumers are protected from unfair, deceptive, or abusive acts and practices and from discrimination. The addition of statutory protection for consumers from abusive acts or practices was a new consumer protection standard added by the Dodd-Frank Act. In addition to its rulemaking authority for consumer protection laws that had been applicable to banks and bank holding companies, the CFPB was provided with specific authority to regulate non-depository entities engaged in areas such as private education lending. Each area is subject to significant new rulemaking and introduces, for the first time, federal oversight of non-depository entities engaged in educational lending. Another factor that could impact the costs associated with the Corporation s lending activities is the change in federal law preemption enacted as part of the Dodd-Frank Act. Specifically, significant new enforcement authority was provided to state governments including the authority of states attorneys general to bring lawsuits under federal consumer protection laws with the consent of the CFPB. It is unclear what the operational impact of these developments will be on the Corporation but it is likely, however, that operational expenses will increase as new or additional compliance requirements and risk of enforcement activities are imposed on operations. In addition, on March 1, 2014, the CFPB issued a rule that authorizes it to federally supervise certain non-bank student loan servicers that service more than 1 million borrower accounts, to ensure that bank and non-bank servicers follow the same rules in the student loan servicing market. The rule covers both federal and private student loans. The Corporation does not currently meet this threshold. The effects of the Dodd-Frank Act will depend significantly upon the content and implementation of the rules and regulations issued pursuant to its provisions. It is not yet clear 16

29 how the Dodd-Frank Act and its associated rules and regulations will affect the asset-backed securities market generally, or the Corporation and the Series 2015-A Bonds, in particular. No assurance can be given that the new regulations will not have an adverse effect on the value or liquidity of the Series 2015-A Bonds. Currently, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ( BAPCPA ) preserves the changes made in the 1998 amendments to the Bankruptcy Code which had removed one of the two exceptions to non-dischargeability of student loans making it more difficult to discharge a student loan in bankruptcy. Bankruptcy reform legislative proposals to alter the non-dischargeability of student loans have been discussed and/or introduced in the Congress of the United States among which include proposals to allow private student loans to be dischargeable in bankruptcy. No assurance can be given as to whether these or any alternative bankruptcy reform legislative proposals will be enacted at the federal level. Servicemembers Civil Relief Act. The Servicemembers Civil Relief Act (the Relief Act ), 50 U.S.C. App. 501 et seq. updates and replaces the Soldiers and Sailors Civil Relief Act of The Relief Act provides persons in military service with certain legal protections and benefits, such as a reduction of interest on debts incurred prior to entering military service, protection from court actions and default judgments, and stays on proceedings such as garnishments. Pursuant to the Relief Act, Eligible Loan borrowers who enter military service shall not incur interest in excess of 6% per year during their military service. Any interest greater than 6% is forgiven by the Corporation. As of March 31, 2015, less than 0.43% of the Financed Loans by principal balance involve borrowers who have entered into military service and whose Eligible Loans are currently accruing interest at a rate of 6% per year. Higher Education Relief Opportunities for Students Act of 2003 The Higher Education Relief Opportunities for Students Act of 2003 ( HEROES Act of 2003 ) authorizes the Secretary to waive or modify any statutory or regulatory provisions applicable to student financial aid programs under Title IV of the Higher Education Act as the Secretary deems necessary for the benefit of affected individuals who: are serving on active military duty or performing qualifying national guard duty during a war or other military operation or national emergency; reside or are employed in an area that is declared by any federal, state or local office to be a disaster area in connection with a national emergency; or suffered direct economic hardship as a direct result of war or other military operation or national emergency, as determined by the Secretary. The Secretary is authorized to waive or modify any provision of the Higher Education Act to ensure that: such recipients of student financial assistance are not placed in a worse financial position in relation to that assistance; 17

30 administrative requirements in relation to that assistance are minimized; calculations used to determine need for such assistance accurately reflect the financial condition of such individuals; provision is made for amended calculations of overpayment; and institutions of higher education, eligible lenders, Guaranty Agencies and other entities participating in such student financial aid programs that are located in, or whose operations are directly affected by, areas that are declared to be disaster areas by any federal, state or local official in connection with a national emergency may be temporarily relieved from requirements that are rendered infeasible or unreasonable. The number and aggregate principal balance of student loans that may be affected by the application of the HEROES Act of 2003 is not known at this time. Accordingly, payments received on student loans made to a borrower who qualifies for such relief may be subject to certain limitations. If a substantial number of borrowers become eligible for the relief provided under the HEROES Act of 2003, there could be an adverse effect on the total collections on the trust s Financed Loans and our ability to pay principal and interest on the Bonds. Possible Future Changes in State Law and Regulations A number of State of Iowa governmental officials or agencies have a direct role in the oversight of the Corporation. These officials and agencies include the following: The Governor of Iowa appoints the Corporation s board of directors and under federal law must approve the issuance of federally tax-exempt bonds issued by the Corporation under Section 147 of the Internal Revenue Code of 1986, as amended (the Code ). The State of Iowa Division of Banking, where the superintendent of banking may investigate the loans and business and examine the books, accounts, records, and files of a licensee. Moreover, the superintendent shall make an examination of the affairs, place of business, and records of each licensed place of business at least once each year. The Corporation is a licensed lender pursuant to chapter 536 of the Iowa Code. The State of Iowa Auditor, who is to receive a copy of annual financial reports for his independent review. The Iowa General Assembly, primarily through their Government Oversight Committee, which from time to time conducts hearings and requests reports on the Corporation and other public purpose organizations; the Corporation is required to submit an annual report to the Iowa General Assembly. The Iowa Attorney General, who has broad authority for investigations and some specific authority in state law relative to student lender operations and disclosures. 18

31 The Corporation is also governed by applicable consumer credit laws and regulations at the state level. Some state laws impose finance charge ceilings and other restrictions on certain consumer transactions and require contract disclosures. There can be no assurance that a future governor via direct action, the Iowa General Assembly as the result of legislation or an agency of the state using oversight and regulatory powers will not take action prospectively or retroactively that may affect the terms and conditions under which the Corporation is governed or funds Eligible Loans. Furthermore, such changes may have the result of adversely affecting the ability of the Corporation to pay the principal of and interest on the Series 2015-A Bonds when due. General Economic Conditions. A downturn in the economy resulting in increasing unemployment either regionally or nationally may result in increased defaults by borrowers in repaying eligible loans. Failures by borrowers to pay timely the principal of and interest on the Financed Loans or an increase in deferments or forbearances could affect the timing and amount of available funds for any monthly collection period and the ability to pay principal of and interest on the Series 2015-A Bonds. The effect of these factors, including the effect on the timing and amount of available funds for any monthly collection period and the ability to pay principal of and interest on the Series 2015-A Bonds, is impossible to predict. Market Disruptions. There can be no guarantee that there will be a secondary market for the Series 2015-A Bonds or, if a secondary market exists, that such Series 2015-A Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of an adverse history of economic prospects connected with a particular issue, secondary marketing practices in connection with a particular bond issue may be suspended or terminated. Additionally, prices of bond or note issues for which a market is being made will depend upon then prevailing circumstances. Such prices could subsequently be substantially different from the original purchase price of the Series 2015-A Bonds. Additionally, in light of possible future market disruption, the Corporation may not be able to obtain financing for its programs. If the Corporation is unable to procure financing for its future needs, the Corporation would be limited in its ability to fund new student loans. These limitations could result in students and educational institutions borrowing from other sources, such as private entities and, with respect to students, directly from the U.S. Department of Education through its Direct Loan Program. These circumstances may adversely impact the long-term viability of the Corporation s programs. Potential Risks Relating Specifically to the Servicer or Backup Servicer The Corporation will initially be the Servicer of all Financed Loans. The Corporation is dependent on PHEAA to provide certain equipment, software, training and related support with respect to the Financed Loans serviced by it. PHEAA will also be engaged as of the closing date to act as the Backup Servicer with respect to the Financed Loans serviced by the Corporation and will also agree to act as successor Servicer for such Financed Loans upon the occurrence of certain events. The cash flow projections relied upon by the Corporation in structuring the issuance of the Series 2015-A Bonds were based upon assumptions with respect to servicing costs which the Corporation based upon the Corporation s costs of servicing the Financed Loans 19

32 that it services, together with the costs of PHEAA to act as Backup Servicer. No assurance can be made that the costs for servicing or causing the servicing of the Financed Loans will not increase, or that the Corporation would be successful in entering into servicing agreements with other servicers that would be acceptable to the rating agencies at the assumed level of servicing cost. Although the Corporation is obligated to service the Financed Loans serviced by it in accordance with the Higher Education Act and the Indenture, the timing of payments to be actually received with respect to the Financed Loans will be dependent upon the ability of the Corporation to adequately service the Financed Loans serviced by it. In addition, the Bondowners will be relying on the Servicer s (or, to the extent there is a Backup Servicer, if applicable, the Backup Servicer s) compliance with applicable federal and state laws and regulations. These include the need for the Servicer to proactively contest any attempt by a borrower to release their loan in bankruptcy. Repurchase Obligations. Under certain circumstances, the Corporation may be required to purchase or provide a substitute for, or may have the right to require a Servicer (other than the Corporation) to purchase, a Financed Loan. This right against the Corporation arises generally if (i) a Financed Loan is determined to be encumbered by a lien other than the lien of the Indenture and the same is not cured within the applicable cure period, or (ii) there is a breach of certain representations and warranties with respect to a Financed Loan. See APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PARTICULAR COVENANTS; Corporation Representations and Warranties attached hereto. This right against a Servicer (other than the Corporation) arises generally as the result of a breach of certain covenants with respect to such student loan, in the event such breach materially adversely affects the interests of the Corporation in that Financed Loan and is not cured within the applicable cure period. There is no guarantee that the Corporation or the applicable Servicer will have the financial resources to make a purchase or substitution, and if the Corporation or the applicable Servicer is unable to make a required purchase or substitution, investors in the Series 2015-A Bonds will bear any resulting loss. With respect to all of the Financed Loans, the Corporation has been the servicer of such loans for a significant period of time. In addition, the Corporation performed origination services with respect to substantially all of the Financed Loans. Therefore, the Corporation does not expect that any third parties will have any significant obligation to repurchase any of the Financed Loans under any origination, servicing or student loan purchase agreement. There is no guarantee that the Corporation will have the financial resources to honor any repurchase obligations with respect to the Financed Loans. If the Corporation is unable to honor such repurchase obligations, it may impair the Corporation s ability to pay principal and interest on the Series 2015-A Bonds. Bankruptcy Could Result in Accelerated Prepayment. The Corporation is a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, and is not a moneyed, business or commercial corporation. As such, the Corporation cannot be the subject of an involuntary bankruptcy proceeding under the United States Bankruptcy Code. The Corporation is, however, eligible to file a voluntary bankruptcy proceeding under the United States Bankruptcy Code. Also, if the Corporation were to convert to a taxable organization or 20

33 lose its tax-exempt status for any reason, the Corporation would become eligible to be the subject of an involuntary bankruptcy proceeding. Risks Relating to Commingling of Payments on Student Loans. Payments received on the Financed Loans generally are deposited into an account in the name of the Corporation or the applicable Servicer each business day. Payments received on the Financed Loans may not always be segregated from payments the Corporation or the applicable Servicer receives on other student loans it owns (with respect to the Corporation) or services, and payments received on the Financed Loans that are part of the Trust Estate may not be segregated from payments received on the Corporation s other student loans that are not part of the Trust Estate. Such amounts that relate to the Financed Loans are required by the Indenture to be forwarded to the Trustee for deposit into the Revenue Fund within two Business Days of receipt. If the Corporation or applicable Servicer fails to transfer such funds to the Trustee, Bondowners may suffer a loss. Iowa Student Loan Armed Forces Interest Reduction Program. Under the Iowa Partnership Loan Program and other Private Loan Programs, Eligible Loan borrowers who have entered military service and have been actively deployed shall not incur any interest during up to 24 months of such deployment. All such interest is forgiven by the Corporation. As of February 28, 2015, less than 0.01% of Financed Loans by principal balance involve borrowers who have entered into military service, who have been actively deployed and whose Eligible Loans are currently accruing no interest. Limited Obligations. The Series 2015-A Bonds are limited, not general, obligations of the Corporation payable solely from the Trust Estate, including all Revenues and moneys and securities on deposit in any of the Funds and Accounts or subaccounts thereof established by the Indenture (other than the Rebate Fund), including the investments, if any, thereof (other than earnings and income derived from amounts on deposit in the Rebate Fund), subject to the application thereof to the purposes and on the conditions permitted by the Indenture. The Series 2015-A Bonds do not constitute a debt, liability, or obligation of the State of Iowa or of any agency or political subdivision thereof or a pledge of the faith and credit of the State of Iowa or of any agency or political subdivision thereof. The Corporation has no taxing power. Payment of principal of and interest on the Bonds is primarily dependent upon collections on the Financed Loans. If the combined payment of principal and interest on the Financed Loans (together with any payments made to the Corporation pursuant to the Series 2015-A Interest Rate Swap) does not at least equal the amounts necessary to pay, when due, interest with respect to the Bonds (including any payments to the Series 2015-A Swap Counterparty), principal of the Bonds, payment of all related Rebate Amounts and Excess Earnings to the U.S. Treasury and expenses relating to the servicing of Financed Loans and administration of the Indenture, the Corporation may have insufficient funds to repay the Bonds. Private Loans Not Insured or Guaranteed. A portion of the Eligible Loans designated as Private Loans to be Financed under the Indenture will not be insured or guaranteed by the Corporation or by any third party (except to the extent an Eligible Loan has a cosigner). The Corporation currently does not intend to obtain any such insurance or guarantee for the Private Loans. 21

34 Factors Affecting Sufficiency and Timing of Receipt of Revenues. Upon issuance of the Series 2015-A Bonds, the Corporation will make an additional contribution and pledge of Eligible Loans into the Student Loan Fund sufficient to increase the initial Parity Percentage to at least %. See ESTIMATED SOURCES AND USES OF PROCEEDS herein. The Corporation expects that the Revenues to be received under the Indenture will be sufficient to pay principal of and interest on the Series 2015-A Bonds when due and also to pay all Servicing Fees and Program Expenses until the final maturity of the Series 2015-A Bonds. This expectation is based upon an analysis of cash flow assumptions, which the Corporation believes are reasonable, regarding the timing of the financing of such Financed Loans to be held pursuant to the Indenture, the future composition of and yield on the Financed Loan portfolio, the rate of return on moneys to be invested in various Funds and Accounts under the Indenture, and the occurrence of future events and conditions. For a description of the anticipated composition of the Financed Loan portfolio, see THE FINANCED LOANS herein. These assumptions are derived from the Corporation s experience in the administration of its Private Loan Programs and the servicing of the FFELP Loans. There can be no assurance, however, that the Financed Loans will be financed as anticipated, that interest and principal payments from Financed Loans will be received as anticipated or that the reinvestment rates assumed on the amounts in various Funds and Accounts will be realized. Furthermore, future events over which the Corporation has no control may adversely affect the Corporation s actual receipt of Revenues pursuant to the Indenture. Receipt of principal of and interest on Financed Loans may be accelerated due to various factors, including, without limitation: (i) actual principal amortization periods which are shorter than those assumed based upon the current analysis of the Corporation s loan portfolio expected to be held pursuant to the Indenture; (ii) the commencement of principal repayment by borrowers on earlier dates than are assumed based upon the current analysis of the Corporation s loan portfolio expected to be held pursuant to the Indenture; and (iii) economic conditions that induce borrowers to refinance or repay their loans prior to maturity. Existing participants, including the Corporation, and new market entrants, have begun marketing student loan refinancing options, and this risk will increase if the marketing of these programs intensifies. Delay in the receipt of principal of and interest on Financed Loans may adversely affect payment of the principal of and interest on the Series 2015-A Bonds when due. Principal of and interest on Financed Loans may be delayed due to numerous factors, including, without limitation: (i) borrowers entering deferment periods due to a return to school or other eligible purposes; (ii) forbearance being granted to borrowers; (iii) loans becoming delinquent for periods longer than assumed; (iv) actual loan principal amortization periods which are longer than those assumed based upon the current analysis of the Corporation s loan portfolio expected to be held pursuant to the Indenture; and (v) the commencement of principal repayment by borrowers at dates later than those assumed based upon the current analysis of the loan portfolio expected to be held pursuant to the Indenture. If actual receipt of Revenues under the Indenture or actual expenditures vary materially from those projected, the Corporation may be unable to pay the principal of and interest on the Preliminary, subject to change 22

35 Series 2015-A Bonds and other amounts owing on other obligations when due. In the event that Revenues to be received under the Indenture are insufficient to pay the principal of and interest on the Series 2015-A Bonds and amounts owing on other obligations when due, the Indenture authorizes, and under certain circumstances requires, the Trustee to declare an Event of Default and to enforce the rights of the Bondowners, including selling the Financed Loans and other assets comprising the Trust Estate and acceleration of the payment of the Series 2015-A Bonds. It is possible that the Trustee would not be able to sell the Financed Loans and the other assets comprising the Trust Estate in a timely manner or for an amount sufficient to permit payment of the principal of and accrued interest on all Outstanding Bonds then due and all amounts due with respect to other obligations. Redemption of the Series 2015-A Bonds. The Series 2015-A Bonds are subject to optional, sinking fund and mandatory redemption upon non-origination prior to maturity as described under THE SERIES 2015-A BONDS Redemption Provisions herein. If the Series 2015-A Bonds are redeemed prior to their respective Stated Maturities, Bondowners may not be able to reinvest their funds at the same yield as the yield on the Series 2015-A Bonds and may suffer adverse effects if such Bonds were purchased at a premium. The Corporation cannot predict the prepayment rate of any Series 2015-A Bonds, and reinvestment risks or reductions in yield resulting from prepayment will be borne entirely by the affected Bondowners. The rate of prepayments may be influenced by economic and other factors, such as interest rates, the availability of other financing options available to the loan recipients and the general job market. Prepayment of Financed Loans. Financed Loans may be prepaid by borrowers at any time. For this purpose, the term prepayments include repayments in full or in part and liquidations due to default. The rate of prepayments on the loans may be influenced by a variety of economic, social and other factors affecting borrowers, including interest rates, the availability of alternative financing and the general job market for graduates of institutions of higher education. In addition, refinancing opportunities for borrowers, including those offered by the Corporation, may accelerate prepayments. To the extent that Financed Loans are prepaid or liquidated, the proceeds of such prepayments or liquidations may be used to redeem Series 2015-A Bonds which would otherwise not have been redeemed or which would have been redeemed at a later date. See THE SERIES 2015-A BONDS Redemption Provisions herein. Redemption of the Series 2015-A Bonds May Create Reinvestment Risks. Financed Loans may be prepaid by borrowers at any time without penalty and the Corporation may use, or may be required to use, such prepayments to prepay the Series 2015-A Bonds. See THE SERIES 2015-A BONDS Redemption Provisions herein. If the Series 2015-A Bonds are redeemed prior to their respective Stated Maturities, Bondowners may not be able to reinvest their funds at the same yield as the yield on the Series 2015-A Bonds and may suffer adverse effects if such Bonds were purchased at a premium. The Corporation cannot predict the prepayment rate of any Series 2015-A Bonds, and reinvestment risks or reductions in yield resulting from prepayment will be borne entirely by the affected Bondowners. The rate of prepayments may be influenced by economic and other factors, such as interest rates, the availability of other financing options available to the loan recipients and the general job market. 23

36 Principal Amount of Bonds Outstanding May Exceed Value of Assets in the Trust Estate; Possible Loss After an Event of Default. The principal amount of Bonds Outstanding at any time may exceed the Value of Financed Loans and other assets in the Trust Estate held by the Trustee under the Indenture. If an Event of Default occurs and the assets in the Trust Estate are liquidated, the Financed Loans might have to be sold at a premium in order for the Bondowners to avoid a loss. The Corporation cannot predict the rate or timing of accelerated payments of principal or the occurrence of an Event of Default or when the aggregate principal amount of the Bonds may be reduced to the Value of the Financed Loans and other assets in the Trust Estate. The Composition and Characteristics of the Loan Portfolio Will Continually Change, and Loans That Bear a Lower Rate of Return or Have a Greater Risk of Loss May Be Acquired. The Eligible Loans the Corporation intends to finance with the proceeds of the Series 2015-A Bonds on the Closing Date are described in this Official Statement. A portion of the proceeds of the Series 2015-A Bonds (not expected to exceed $12,000,000 ) is expected to be used to finance Eligible Loans during the Acquisition Period. See ESTIMATED SOURCES AND USES OF PROCEEDS and THE FINANCED LOANS herein. Additional Bonds may be issued and the proceeds used to acquire other Financed Loans. The characteristics of the Financed Loan portfolio included in the Trust Estate will change from time to time due to the acquisition of new Financed Loans, changes in terms of the Corporation s Private Loan Programs, sales or exchanges of loans and scheduled amortization, prepayments, delinquencies and defaults on the Financed Loans. The characteristics of the pool of student loans expected to be pledged to the Trustee are described herein as of the Statistical Cut-off Date. In the event that the principal amount of student loans required to provide collateral for the Series 2015-A Bonds varies from the amounts anticipated herein, whether by reason of a change in the collateral requirement necessary to obtain the expected rating the Series 2015-A Bonds from each Rating Agency, the pricing of the interest rate on the Series 2015-A Bonds, the principal amount of Series 2015-A Bonds to be offered, the rate of amortization or prepayment on the portfolio of student loans from the Statistical Cut-off Date to the Closing Date varying from the rates that were anticipated, or otherwise, the portfolio of student loans to be pledged to the Trustee may consist of a subset of the pool of student loans described herein or may include additional student loans not described herein. The aggregate characteristics of the entire pool of Financed Loans may vary from the information presented herein, since the information presented herein is as of the Statistical Cut-off Date, and the date that the Financed Loans will be pledged to the Trustee under the Indenture will occur after that date. The aggregate characteristics may also vary as a result of the inclusion of student loans not described herein or the exclusion of student loans that are described herein, in each case for the reasons described in the preceding paragraph. The information as of the Statistical Cut-off Date set forth herein is with respect to student loans expected to be pledged to the Trustee under the Indenture. The Corporation Preliminary, subject to change 24

37 believes that the characteristics of the Financed Loans described herein are representative of the pool of Financed Loans that will ultimately be pledged to the Trustee under the Indenture. Prospective investors in the Series 2015-A Bonds should consider potential variances when making an investment decision concerning the Series 2015-A Bonds. Certain Actions May be Permitted Without Bondowner Approval. The Indenture permits the Corporation to issue Additional Bonds pursuant to a Supplemental Trust Indenture without Bondowner consent and further permits the Corporation to take a wide range of actions in connection with its administration of the assets comprising the Trust Estate without either an amendment or supplement to the Indenture or Bondowner consent, but requires that the Corporation satisfy certain other conditions prior to undertaking, or in conjunction with, certain of such actions. The Indenture requirements applicable to such actions may include satisfaction of the requirements of a Rating Agency Notification, but do not condition the implementation of such actions upon any response, or absence thereof, of any Rating Agency. The Indenture requires that the Corporation make any notice relating to a Rating Agency Notification publicly available in the manned applicable to post-issuance disclosures under Rule 15c2-12. To the extent such actions are taken, investors in the Series 2015-A Bonds will be relying primarily upon the evaluation by the Corporation of the potential impact of such actions upon the ability of the assets comprising the Trust Estate to provide for the full and timely payment of scheduled principal and interest on the Bonds (including the Series 2015-A Bonds), payment of all Rebate Amounts and Excess Earnings to the U.S. Treasury and payment of all Program Expenses and Servicing Fees. In addition, to the extent that such actions are taken, a resulting adverse rating action by any Rating Agency in response to such Corporation action could materially decrease the market value or existence of a secondary market for the Series 2015-A Bonds. Moreover, the market price or marketability of the Series 2015-A Bonds could be adversely affected by such actions even in the absence of such an adverse rating action. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Rating Agency Notification herein and APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE attached hereto. Uncertainty of Available Remedies. The remedies available to the Trustee, the Corporation or Bondowners upon an Event of Default under the Indenture are in many respects dependent upon judicial actions which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including specifically Title 11 of the United States Code (Federal Bankruptcy Code), the remedies provided in the Indenture may not be readily available or may be limited. The various legal opinions delivered concurrently with the delivery of the Series 2015-A Bonds and the Indenture will be qualified as to the enforceability of the various legal instruments by limitations imposed by bankruptcy, reorganization, moratorium, insolvency or other laws affecting the rights or remedies of creditors generally and by limitations on the availability of equitable remedies. Suitability of Investments for All Investors. The Series 2015-A Bonds are complex investments that should only be considered by investors who, either alone or with their financial, tax and legal advisors, have the expertise to analyze the prepayment, reinvestment, default and market risk, the tax consequences of such an investment, and the interaction of these factors. 25

38 Loss of Tax Exemption. As discussed under the heading TAX MATTERS herein, failure to comply with certain legal requirements may cause the interest on the Series 2015-A Bonds to become included in gross income of the recipients thereof for federal income tax purposes. The bond documents do not provide for the payment of any additional interest or penalty in the event the interest on the Series 2015-A Bonds is determined to be includible in gross income for federal income tax purposes. A Secondary Market for the Series 2015-A Bonds May Not Develop. There currently is no secondary market for the Series 2015-A Bonds. There is no assurance that any market will develop or, if it does develop, that it continue or will provide investors with a sufficient level of liquidity of investment. If a secondary market for the Series 2015-A Bonds does develop, the spread between the bid price and the asked price for the Series 2015-A Bonds may widen, thereby reducing the net proceeds to an investor from the sale of an investor s Series 2015-A Bonds. The Corporation does not intend to list the Series 2015-A Bonds on any exchange, including any exchange in either Europe or the United States. Under current market conditions, holders may not be able to sell their Series 2015-A Bonds when they want to do so (they may be required to bear the financial risks of an investment in the Series 2015-A Bonds for an indefinite period of time) or they may not be able to obtain the price that they wish to receive. The market values of the Series 2015-A Bonds may fluctuate and movements in price may be significant. Certain Factors Relating to Security. The Corporation has covenanted in the Indenture that the assets constituting the Trust Estate pledged by the Corporation under the Indenture are and will be owned by the Corporation free and clear of any pledge, lien, charge or encumbrance thereon or with respect thereto prior to, of equal rank with or subordinate to the respective pledges created by the Indenture, and that all action on the part of the Corporation to that end has been duly and validly taken. The Corporation acquires most of its student loans by purchasing such loans from other lenders. When purchasing student loans, the Corporation customarily obtains warranties from the sellers as to certain matters, including that the loans will be transferred to the Corporation free of any liens and that all filings (including UCC filings) necessary in any jurisdiction to give the Trustee, on behalf of the Corporation, ownership of the Financed Loans have been made. Notwithstanding the foregoing, under applicable law, security interests in such loans may exist and may not be ascertained by the Corporation. Therefore, no absolute assurance can be given that liens other than the lien of the Indenture do not and will not exist. Incentive or Borrower Benefit Programs. A portion of the Financed Loans are subject to borrower incentive programs, which may vary. Any incentive program that effectively reduces borrower payments on Financed Loans may result in the principal amount of Financed Loans amortizing faster than anticipated. The Corporation cannot accurately predict the number of borrowers that will utilize the borrower benefits provided under the rate relief programs currently offered by the Corporation. The greater the number of borrowers that utilize such benefits with respect to Financed Loans, the lower the total loan receipts on such Financed Loans. See THE FINANCED LOANS Borrower Benefits and THE CORPORATION S PRIVATE LOAN PROGRAMS Borrower Benefit Programs herein. Risks Relating to Book-Entry Registration. The Series 2015-A Bonds will be represented by one or more certificates registered in the name of Cede & Co., the nominee for 26

39 The Depository Trust Company, and will not be registered in an individual investor s name or the name of its nominee. Unless and until definitive securities are issued, holders of the Series 2015-A Bonds will not be recognized by the Trustee as registered owners as that term is used in the Indenture. Until definitive securities are issued, holders of the Series 2015-A Bonds will only be able to exercise the rights of registered owners indirectly through The Depository Trust Company and its participating organizations. See THE SERIES 2015-A BONDS Book-Entry Only System. A rating agency will rate each class of the Series 2015-A Bonds. A rating is not a recommendation to buy or sell Series 2015-A Bonds or a comment concerning suitability for any investor. A rating only addresses the likelihood of the ultimate payment of principal and stated interest and does not address the likelihood of prepayments on the Series 2015-A Bonds or the market liquidity of the Series 2015-A Bonds. A rating may not remain in effect for the life of the Series 2015-A Bonds. See RATINGS. Ratings of the Series 2015-A Bonds. It is a condition to issuance of the Series 2015-A Bonds that they be rated as indicated under RATINGS. Ratings are based primarily on the creditworthiness of the underlying Financed Loans, the amount of credit enhancement and the legal structure of the transaction. The ratings are not a recommendation to investors to purchase, hold or sell the Series 2015-A Bonds inasmuch as the ratings do not comment as to the market price or suitability for individual investors. An additional rating agency may rate the Series 2015-A Bonds, and that rating may not be equivalent to the initial rating described in this Official Statement. Ratings may be increased, lowered or withdrawn by any rating agency at any time if in the rating agency s judgment circumstances so warrant. A downgrade in the rating of a class of Series 2015-A Bonds is likely to decrease the price a subsequent purchaser will be willing to pay for Series 2015-A Bonds of such class. Certain actions affecting the Financed Loans and the Trust Estate may be taken upon a Rating Agency Notification. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS Rating Agency Notification and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. The giving of a Rating Agency Notification would not limit the ability of S&P or Fitch to downgrade its ratings on the Series 2015-A Bonds on the basis of the related Proposed Action. There can be no assurance that the ratings of the Series 2015-A Bonds will not be downgraded or placed on negative watch by a rating agency in the future. Amendments of the Indenture and Waivers of Defaults, Voting Rights. Under the Indenture, holders of specified percentages of the aggregate principal amount of Series 2015-A Bonds may amend or supplement provisions thereof, direct remedies upon the occurrence of an Event of Default and waive Events of Default and compliance provisions without the consent of the other holders. A holder of the Series 2015-A Bonds may have no recourse if other holders of Series 2015-A Bonds vote and such holder disagrees with the vote on these matters. The holders may vote in a manner that impairs our ability to pay principal and interest on the Series 2015-A bonds from the assets in the Trust Estate. 27

40 Different rates of change in interest rate indexes may affect Trust Estate cash flow. The Student Loans that will secure the Series 2015-A Bonds bear interest either at fixed rates or at rates which are generally based upon the prime rate or three-month LIBOR. In addition, the Financed FFELP Loans may be entitled to receive special allowance payments from the Department of Education. The special allowance payments for loans disbursed on or after January 1, 2000 were previously based upon a three-month commercial paper rate, but as a result of the affirmative election made by the Corporation under Public Law , the Corporation permanently changed the index for special allowance payment calculations on all of the FFELP loans in its portfolio disbursed on or after January 1, 2000 (including all of the Financed FFELP Loans with such disbursement dates) from the three-month commercial paper rate to the onemonth LIBOR index, commencing with the special allowance payment calculations for the calendar quarter beginning on April 1, If there is a decline in the rates payable on Financed FFELP Loans, the amount of funds representing interest may be reduced, and the Corporation may not have sufficient funds to pay interest on the Series 2015-A Bonds when due. Sufficient funds may not be available in future periods to make up for any shortfalls in the current payments of interest on the Series 2015-A Bonds or expenses of the Trust Estate. For loans disbursed prior to April 1, 2006, lenders are entitled to retain interest income in excess of the Special Allowance Payment support level in instances when the loan rate exceeds the Special Allowance Payment support level. However, lenders are not allowed to retain interest income in excess of the Special Allowance Payment support level on loans disbursed on or after April 1, 2006, and are required to rebate any such excess interest to the federal government on a quarterly basis. This modification effectively limits lenders returns to the Special Allowance Payment support level and could require a lender to rebate excess interest accrued but not yet received. For fixed rate loans, the excess interest owed to the federal government will be greater when the applicable one-month LIBOR rate is relatively low, causing the Special Allowance Payment support level to fall below the loan rate. There can be no assurance that such factors or other types of factors will not occur or that, if they occur, such occurrence will not materially adversely affect the sufficiency of the Trust Estate to pay the principal of and interest on the Series 2015-A Bonds, as and when due. Failure to comply with loan origination and servicing procedures for Financed FFELP Loans may result in loss of Guarantee and other benefits. The Corporation must meet various requirements in order to maintain the Guarantee on the Financed FFELP Loans. These requirements establish servicing requirements and procedural guidelines and specify school and borrower eligibility criteria. A Guaranty Agency may reject a loan for claim payment due to a violation of the FFELP due diligence collection and servicing requirements. In addition, a Guaranty Agency may reject claims under other circumstances, including, for example, if a claim is not timely filed or adequate documentation is not maintained. Once a Financed FFELP Loan ceases to be Guaranteed, it is ineligible for federal Interest Benefit and Special Allowance Payments. If a Financed FFELP Loan is rejected for claim payment by a Guaranty Agency, the Corporation continues to pursue the borrower for payment or institutes a process to reinstate the Guarantee. Guaranty agencies may reject claims as to portions of interest for certain violations of the due 28

41 diligence collection and servicing requirements even though the remainder of a claim may be paid. Examples of errors that cause claim rejections include isolated missed collection calls, or failures to send collection letters as required. Violations of due diligence collection and servicing requirements can result from human error. Violations can also result from computer processing system errors, or from problems arising in connection with the implementation of a new computer platform or the conversion of additional loans to a servicing system. Payment offsets by a Guaranty Agency or the Department of Education could prevent the Corporation from paying the full amount of the principal and interest due on the Series 2015-A Bonds. The Corporation will use the same Department of Education lender identification number for the Financed FFELP Loans to be included in the Trust Estate as it uses for certain other FFELP loans it holds (most of which are included in other trust estates and under other indentures). As a consequence, the billings submitted to the Department of Education and the claims submitted to Guaranty Agencies for the Financed FFELP Loans will be consolidated with the billings and claims for payments for FFELP loans that are not included in the Trust Estate using the same lender identification number. Payments on those billings by the Department of Education as well as claim payments by the applicable Guaranty Agencies will be made to the Corporation, or to a Servicer on behalf of the Corporation, in lump sum form. Those payments must be allocated by the Corporation to the Trust Estate and to other trust estates, indentures or bond resolutions of the Corporation or other FFELP loans held by the Corporation that use the same lender identification number. If the Department of Education or a Guaranty Agency determines that the Corporation owes it a liability on any FFELP loan held by it under a lender identification number, the Department of Education or the applicable Guaranty Agency may seek to collect that liability by offsetting it against any payments due to the Corporation under that lender identification number. If the amount of any such offset exceeds the amount owed to the Trust Estate or other holder of such FFELP loan, the offset could reduce the amounts otherwise available for payment in respect of FFELP loans in the other trust estates and indentures, including the Financed FFELP Loans pledged to secure the Series 2015-A Bonds. Any offsetting or shortfall of payments due to the Corporation could adversely affect the amount of funds available to the Trust Estate and the Corporation s ability to pay the principal and interest on the Series 2015-A Bonds. LIBOR manipulation claims. The indices for calculating the interest rates on a portion of the Private Loans and on the Special Allowance Payments on a portion of the student loans expected to be financed under the Indenture are LIBOR indices. Certain financial institutions have announced settlements with certain regulatory authorities with respect to, among other things, allegations of manipulating LIBOR, or have announced that they are involved in investigations by regulatory authorities relating to, among other things, the manipulation of LIBOR. In addition to the ongoing investigations, several plaintiffs have filed lawsuits against various banks in federal court seeking damages arising from alleged LIBOR manipulation. Pursuant to rules and regulations that became effective on April 1, 2013, the Financial Conduct Authority of the United Kingdom assumed regulatory oversight and supervision of LIBOR, removing it from the control of the British Bankers Association and, on February 1, 2014, the administration of LIBOR was transferred from the British Bankers Association to the 29

42 Intercontinental Exchange Group. The Corporation cannot predict what effect, if any, these events will have on the use of LIBOR as a global benchmark going forward, or on Special Allowance Payments. General THE CORPORATION The Corporation is a private, nonprofit corporation established on August 17, 1979, at the request of the Governor of Iowa pursuant to the general nonprofit laws of the State of Iowa for the purpose of ensuring that funds would be available to finance student loans. The Corporation is the only state-designated entity in the State of Iowa that has the ability to finance student loans guaranteed and reinsured or directly insured in accordance with the Higher Education Act. Pursuant to Iowa legislation enacted in 1992 and the Iowa Partnership Loan Program Agreement, the Corporation is also authorized to finance student loans other than those originated under the Higher Education Act. The Corporation launched the Iowa Partnership Loan Program as an alternative educational loan program, the Medical Loan Program to assist students in health-related fields, the National Alternative Loan Program for students outside the State of Iowa and the Canadian Alternative Loan Program to assist Canadian students attending Iowa colleges. These four programs are collectively referred to herein as the Private Loan Programs and are detailed in THE CORPORATION S PRIVATE LOAN PROGRAMS herein. Board of Directors The Corporation s articles of incorporation provide for a board of directors composed of 11 members appointed by the Governor of Iowa. Of these members, four represent the general public, two represent Iowa banking institutions and one director represents each of the following: Iowa savings and loan institutions, Iowa credit unions, Iowa regent institutions, Iowa private colleges and universities and Iowa community colleges. As of the date hereof, the members of the board of directors of the Corporation, their principal occupations and the constituencies they represent are as follows: [Remainder of Page Intentionally Left Blank] 30

43 Board Member Profession/Employer Term Representation Chris Hensley, Chair Vice President, Retired, Bank of the West State Banking Institutions Tammy Bramley Manager, Community Bank, General Public Soldier 2015 Dan Clute Senior Vice President, General Public Federal Home Loan Bank of Des Moines 2016 Rob Denson President of Des Moines Area Community College Iowa Community Colleges Lorraine Groves Manager at The Municipal Iowa Credit Unions Laurie Hempen Tahira Hira John O Byrne Bill Sackett Scott Schneidermann Adam Voigts Credit Union, Sioux City Director of Human Resource, Burlington Community School District Senior Policy Advisor to the President and Professor of Personal Finance and Consumer Economics, Iowa State University President, Retired, Cresco Union Savings Bank Attorney, Retired, Sackett & Sackett PC Executive Vice President, Frontier Bank Vice President for Administration and Finance, Grand View University General Public Regent Institutions Banking Institutions General Public Savings & Loan Institutions Private Colleges & Universities Corporate Administration As of February 28, 2015, the staff of the Corporation consisted of 321 full-time employees and 9 part-time employees. The management team of the Corporation includes the following officers of the Corporation: Steven W. McCullough, President and Chief Executive Officer. Steven W. McCullough joined Iowa Student Loan in 1989 as the director of fiscal operations, and he became chief executive officer in In his current role, McCullough is responsible for carrying out strategic plans and policies as established by the board of directors. He has ultimate management authority for Iowa Student Loan and appoints the management team of the organization. He became a certified public accountant in 1986 and is a member of The 31

44 American Institute of Certified Public Accountants. McCullough has also served on the board of directors of the Education Finance Council; the National Advisory Committee on Institutional Quality and Integrity; the Iowa College Student Aid Commission s Advisory Council for Student Aid Programs; and the Iowa Dollars for Scholars board. He holds a master s degree in business administration from the University of Iowa. Erin Lacey, Executive Vice President and Corporate Treasurer. Erin Lacey, with direction and oversight from the CEO and board of directors, leads the finance and accounting teams. She oversees accounting activities, including budgeting, financial statement preparation, accounts receivable, accounts payable, payroll, U.S. Department of Education 799 processing, payment processing and disbursement of all student loan funds. She also coordinates multiple audits that the Corporation adheres to, including the financial and SAS 70 audits. While an accounting major at Iowa State University, Lacey began her career with Iowa Student Loan in 1992 as an accounting intern and was later promoted to several positions within the department. She became the CFO in Lacey, who holds a bachelor's degree in financial management from Upper Iowa University, was named executive vice president in Cindy Bartz, Vice President of Project Management and Chief Information Officer. As a member of the executive team, Cindy Bartz oversees all program and project management activities for Iowa Student Loan s products and services, including corporate programs and initiatives, software development projects, system requirements and contingency planning. She also administers the system development lifecycle process and business impact analysis for contingency planning. As Chief Information Officer, Bartz is responsible for information security, network, Internet services, databases, programming, commercial software, and communication services. Bartz joined Iowa Student Loan in 1990 as a loan operations assistant and became vice president of project management in early She holds an associate degree from the American Institute of Business and a bachelor s degree from Upper Iowa University. Joe Bird, Senior Vice President of Business Development and Client Relations. Joe Bird, with direction and oversight from the CEO and board of directors, provides leadership in working with colleges and universities, banks and credit unions, professional associations, and others utilizing Iowa Student Loan products and services. Bird joined Iowa Student Loan as director of business development in 2010 with nearly 25 years of experience in sales and marketing in the higher education industry, and he was promoted to his current position in His work experience includes management-level positions at a guaranty agency, secondary market, loan servicer and college access organization. Bird earned a bachelor's degree in education at Morningside College and a master's degree in higher education administration at Iowa State University. Mary Kay DeBolt, Senior Vice President of Operations and Corporate Secretary. Mary Kay DeBolt is senior vice president of operations and corporate secretary for Iowa Student Loan. With oversight and direction by the CEO and board of directors, she provides leadership to the largest portion of Iowa Student Loan employees those engaged in loan origination, student loan servicing, counseling, collections and other direct communications and services for individual customers. DeBolt joined the corporation in 1982 and is the longest tenured employee on the management team. She is a graduate of Grand View University and Des Moines Area Community College, and a member of the Student Loan Servicing Alliance. 32

45 Greg Nichols, Senior Vice President of Public Affairs and Community Relations. Greg Nichols, with direction and oversight from the CEO and the board community relations committee, provides leadership to efforts involving corporate partnerships with community groups and professional associations, public relations and governmental relations, educational research and community service activities. Additionally, his role encompasses the supervision of corporate communications and publications regarding Iowa Student Loan products and services. Prior to joining Iowa Student Loan in 2006, Nichols served as special assistant to the president at Iowa State University. His previous professional experience includes serving as executive director of the Board of Regents, State of Iowa; as policy director for Iowa Gov. Tom Vilsack; and as senior assistant to the Iowa Senate Democratic leader. In addition to his duties at Iowa Student Loan, Nichols holds a collaborating adjunct faculty appointment with the educational leadership and policy studies department at Iowa State University. A past chairman of the boards of the Des Moines Pastoral Counseling Center, Iowa Dollars for Scholars, the First Unitarian Church, and the State Employees Credit Union, he is currently a member of the workforce development/education committee of The Greater Des Moines Partnership. Nichols earned his doctorate in education and bachelor s degree at Iowa State University and a master s degree in public policy from Rutgers University. Walter Witthoff, Senior Vice President and Chief Compliance Officer. Walter Witthoff began his career with Iowa Student Loan in 1990, and he currently directs and oversees its corporate regulatory and legal compliance efforts. He also serves as a board member of Aspire Resources Inc. SM (formerly known as ISL Service Corp. SM ), Iowa Student Loan s wholly owned for-profit subsidiary. Witthoff received his bachelor s degree from Nebraska Wesleyan University and his master s degree from Drake University. Witthoff has earned the Institute of Certified Bankers Certified Regulatory Compliance Manager designation, a recognized standard of knowledge and competence for regulatory compliance professionals working in the financial services industry. Outstanding Indebtedness of the Corporation The Corporation has previously issued various series of its revenue bonds and other indebtedness pursuant to (i) an Indenture of Trust, dated as of July 1, 2005, between the Corporation and Bankers Trust Company, N.A., as trustee (the Series Indenture ), (ii) an Indenture of Trust, dated as of November 1, 2009, between the Corporation and Wells Fargo Bank, National Association, as trustee, as amended and supplemented (the Series 2009 Indenture ), (iii) an Indenture of Trust, dated as of November 1, 2011, between the Corporation and Wells Fargo Bank, National Association, as trustee, as amended and supplemented (the Series Indenture ), (iv) an Indenture of Trust, dated as of November 1, 2011, between the Corporation and Wells Fargo Bank, National Association, as trustee, as amended and supplemented (the Series 2011-A Indenture ), (v) a Secured Term Credit Facility Series 2011-B Note (the Series 2011-B Note ) issued pursuant to a Secured Credit, Trust, Pledge and Security Agreement, dated as of October 17, 2011, between the Corporation and Bankers Trust Company (the 2011 Secured Credit Agreement ), (vi) an Indenture of Trust, dated as of July 12, 2012, between the Corporation and Wells Fargo Bank, National Association, as trustee, as amended and supplemented (the Series Indenture ), and (vii) a Secured Term Credit Facility Series 2012-B Note (the Series 2012-B Note ) issued pursuant to a Secured Credit, Trust, Pledge and Security Agreement dated as of July 25, 2012 (the 2012 Secured Credit Agreement 33

46 and, together with the Series Indenture, the Series 2009 Indenture, the Series Indenture, the Series 2011-A Indenture, the 2011 Secured Credit Agreement, the 2012 Secured Credit Agreement, the Series Indenture, collectively, the Prior Indentures ), to finance its Iowa Partnership Loan Program and FFELP loans. As of February 28, 2015, the Corporation had previously (i) issued Student Loan Revenue Bonds under its Series Indenture, $206,186,986 in aggregate principal amount of which was outstanding as of such date, (ii) issued Student Loan Revenue Bonds under its Series 2009 Indenture, $120,060,000 in aggregate principal amount of which was outstanding as of such date, (iii) issued Student Loan Asset-Backed Notes under its Series Indenture, $190,596,013 in aggregate principal amount of which was outstanding as of such date, (iv) issued Student Loan Revenue Bonds under its Series 2011-A Indenture, $296,685,000 in aggregate principal amount of which was outstanding as of such date, (v) issued the Series B Note in the principal amount of $50,699,627 under the Secured Credit Agreement, (vi) issued Student Loan Asset-Backed Notes under its Series Indenture, $363,998,600 in aggregate principal amount of which was outstanding as of such date and (vii) issued the Series 2012-A Note in the principal amount of $7,139,147 outstanding as of such date. As of February 28, 2015, $1,235,365,373 of the Corporation s bonds and other indebtedness were outstanding under the Prior Indentures. The bonds issued and other indebtedness incurred pursuant to the Prior Indentures are not payable from, nor secured by, any portion of the Trust Estate securing the Series 2015-A Bonds, nor are the Series 2015-A Bonds payable from, or secured by, any portion of the trust estates established under the Prior Indentures. In addition to such bonds and other indebtedness and the Series 2015-A Bonds, the Corporation may from time to time incur general obligation debt, or issue or incur other debt, including debt issued for its Private Loan Programs, secured by moneys and funds not pledged, and not available for the payment of the Series A Bonds, under the Indenture. In addition, as of February 28, 2015, the Corporation had a long-term outstanding promissory note with Central Bank, People s Bank and Dubuque Bank and Trust for private loans made subject to school guaranty agreements in the aggregate principal amount of $683,606, all of which is either unsecured or is secured by collateral separate and distinct from, and none of which has any interest in, the Trust Estate under the Indenture. Financial and Other Information The financial statements of the Corporation at June 30, 2014 and 2013 have been audited by KPMG LLP, Independent Auditors, as set forth in their report related thereto. Such financial statements have been included in Appendix D in reliance upon such reports given upon the authority of such firm as experts in accounting and auditing. The Corporation s financial statements include information with respect to its loan programs generally, including its FFELP loan program and other information regarding the Corporation. These financial statements are included for general background purposes only. Since the Bonds are limited obligations of the Corporation, payable solely from the Financed Loans and other assets pledged to the Trustee under the Indenture, the overall financial status of the Corporation, or that of its other programs, does not indicate and does not affect whether the Trust Estate will be sufficient to fund the timely and full payment of principal and interest on the Series 2015-A Bonds. See SOURCES OF PAYMENT AND SECURITY FOR THE SERIES 2015-A BONDS. 34

47 The Corporation s financial information included in this Official Statement that is reported as of February 28, 2015, is unaudited. ESTIMATED SOURCES AND USES OF PROCEEDS * The Corporation estimates the sources and uses of funds relevant to the Series 2015-A Bonds as follows: SOURCES OF FUNDS: Principal Amount of Series 2015-A Bonds $ USES OF FUNDS: Deposit to Student Loan Fund For origination of loans $ Deposit to Reserve Fund 1 Deposit to Capitalized Interest Fund 2 Deposit to pay Costs of Issuance 3 Released to Corporation 4 Total Uses: $ 1 The amount of this deposit is expected to be % of the initial principal amount of the Series 2015-A Bonds. 2 The amount of this deposit is expected to be approximately % of the expected aggregate principal balance, plus accrued interest to be capitalized, of the Financed Loans. 3 Does not include the underwriting fee of $. The Corporation will pay this fee from other sources. 4 A portion of the proceeds of the Series 2015-A Bonds in the approximate amount of $ will be released to the Corporation and applied pursuant to the Private Loan Program. THE FINANCED LOANS The Eligible Loans that comprise the Trust Estate securing the Series 2015-A Bonds include: Contributed Loans in the approximate principal amount of $34,802,953, * plus accrued interest which will be acquired on the Closing Date and credited to the Student Loan Fund; and Prefunded Loans in the approximate principal amount of $12,000,000 * which will be originated during the Acquisition Period. * Preliminary, subject to change. 35

48 The Eligible Loans referred to in the two subparagraphs above are herein referred to as the Series 2015-A Loans and, together with any other Eligible Loans comprising the Trust Estate, are referred to collectively as the Financed Loans. Each Financed Loan has been or will be a loan made pursuant to one of the Corporation s Private Loan Programs or is an FFELP Loan, unless there has been a Rating Agency Notification with respect to other types of Eligible Loans. Such Loans will have the characteristics thereof described under THE CORPORATION S PRIVATE LOAN PROGRAMS herein. See, also, ESTIMATED SOURCES AND USES OF PROCEEDS, THE FINANCED LOANS and CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. Financed Loans as to which any payment has been delinquent for 180 days or more constitute Zero Value Loans under the Indenture and will be deemed to have a Value of $0. Zero Value Loans will continue to constitute Financed Loans. On the Closing Date, the Corporation will cause $12,000,000 of Series 2015-A Bond proceeds to be deposited in the 2015-A Subaccount of the Acquisition Account, to be used to originate the Prefunded Loans. Also on the Closing Date, the Corporation will contribute the Contributed Loans to the 2015-A Account of the Student Loan Fund, which Contributed Loans shall be part of the Trust Estate under the Indenture. A portion of the proceeds of the Series 2015-A Bonds in the approximate amount of $ will be released to the Corporation and applied pursuant to the Private Loan Program. The Financed Loans are and will be serviced by the Corporation. See SERVICING OF THE FINANCED LOANS herein. Repurchase Requests The indentures entered into in connection the Corporation s securitization transactions contain covenants requiring the Corporation to repurchase student loans in the case of an uncured breach of certain representations and warranties. In the past year, the Corporation has not received a demand to repurchase (as a result of such a breach) any student loan underlying a securitization of student loans for which Corporation has acted as sponsor. The FFELP Loans The following tables describe certain characteristics of the Financed Loans that consist of FFELP Loans. The Corporation expects that the characteristics of the Financed Loans reflected in these tables will vary due to the continued amortization of the Financed Loans between February 28, 2015, and the Closing Date. Although the statistical distribution of the characteristics of the Financed Loans as of the Closing Date will vary somewhat in other respects from the statistical distribution of those characteristics shown below, the Corporation does not believe that those characteristics will differ materially. The sum of the characteristics may not add up to the total therefor in the following tables due to rounding. Preliminary, subject to change 36

49 Summary Portfolio Characteristics - FFELP Loans Stratification Statistic Aggregate Outstanding Principal Balance $5,366,219 Accrued Interest $33,218 Aggregate Accrued Interest to be Capitalized $9,428 Aggregate Outstanding Principal Balance and Interest to be Capitalized $5,375,647 ("Aggregate Outstanding Balance") Number of Borrowers 393 Average Outstanding Principal Balance & Interest Per Borrower $13,678 Number of Loans 730 Average Outstanding Principal Balance & Interest Per Loan $7,364 Weighted Average Coupon (1) 3.72% Weighted Average Remaining Repayment Term to Scheduled Maturity (months) 165 Weighted Average Original Term to Scheduled Maturity (months) 256 Weighted Average SAP Margin (One-Month LIBOR) (2) 2.61% Weighted Average SAP Margin (Three-Month T-Bill) (2) 3.10% 1. Determined using the interest rates applicable to the FFELP Financed Student Loans as of February 28, 2015 and includes any interest rate reductions from borrower benefits. However, the interest rate does not represent the actual rate of return with respect to loans under the Higher Education Act, due to Special Allowance Payments and special allowance support level. 2. The Weighted Average SAP Margin (LIBOR) and the Weighted Average SAP Margin (91 day Treasury bill) refers to the margin by which the combination of interest (net of the excess over the special allowance support level) and Special Allowance Payment rates, assuming all payments are made when due, exceeds the one-month LIBOR index or the 91 day US Treasury bill rate index, respectively. The Corporation elected to change the index for Special Allowance Payment calculations on the FFELP Financed Student Loans disbursed after January 1, 2000 from the three month commercial paper rate to the one month LIBOR index beginning on April 1, The margin has not been reduced to take into account any interest rate reductions as a result of the repayment incentives described under the caption THE FINANCED LOANS Borrower Benefits and the last two tables included under this subcaption FFELP Financed Student Loans Distribution of the FFELP Financed Student Loans by Loan Type as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Loan Type Number of Loans Percent of Loans Subsidized Stafford % $202, % Unsubsidized Stafford % $195, % Subsidized Consolidation % $2,734, % Unsubsidized Consolidation % $2,218, % PLUS % $25, % Total % $5,375, % 37

50 Distribution of the FFELP Financed Student Loans by Borrower Payment Status as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Borrower Payment Status Number of Loans Percent of Loans School 2 0.3% $6, % Grace 4 0.5% $26, % Deferment % $264, % Forbearance % $210, % Repayment First year in repayment % $80, % Second year in repayment % $144, % Third year in repayment % $147, % Fourth year in repayment % $161, % Fifth year in repayment % $126, % Sixth year in repayment % $146, % Seventh year and greater in repayment % $4,059, % Total % $5,375, % Scheduled Weighted Average Remaining Months (WAM) in Status by Current Borrower Payment Status as of February 28, 2015 Current Borrower Payment Status In-School WAM Grace WAM Deferment WAM Forbearance WAM Repayment WAM Total Term In-School Grace Deferment Forbearance Repayment Weighted Average Distribution of the FFELP Financed Student Loans by Disbursement Date as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Date of Disbursement Number of Loans Percent of Loans Prior to October 1, % $0 0.0% October 1, 1993 to March 31, % $2,618, % April 1, 2006 to September 30, % $2,638, % October 1, 2007 to June 30, % $118, % Total % $5,375, % 38

51 Distribution of the FFELP Financed Student Loans by Repayment Terms as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Loan Repayment Terms Number of Loans Percent of Loans Level Repayment % $3,107, % Other Repayment Options* % $2,267, % Total % $5,375, % *May include, among others, graduated repayment loans, income sensitive and interest-only period loans Distribution of the FFELP Financed Student Loans by Borrower Interest Rate as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Borrower Interest Rate Number of Loans Percent of Loans Fixed Rate % $5,227, % Three-Month T-Bill % $148, % Total % $5,375, % Distribution of the FFELP Financed Student Loans by Percent Guaranteed as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Percent Guaranteed (1) Number of Loans Percent of Loans 100% 0 0.0% $0 0.0% 98% % $2,923, % 97% % $2,452, % Total % $5,375, % 1. The percent guaranteed refers to the percentage of the principal of and accrued interest on a FFELP Financed Student Loan that would be payable on a default claim. Distribution of the FFELP Financed Student Loans by Guaranty Agency or Insurance as of February 28, 2015 Number of Guaranty Agency Loans Great Lakes Higher Education Guaranty Corporation 479 Pennsylvania Higher Education Assistance Agency 250 Percent of Loans Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance 65.6% $3,216, % 34.2% $2,157, % Educational Credit Management Corp 1 0.1% $1, % Total % $5,375, % 39

52 Distribution of the FFELP Financed Student Loans by Sap Interest Rate Index as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance SAP Interest Rate Index + Repayment Margin Number of Loans Percent of Loans One-Month LIBOR % 2 0.3% $10, % One-Month LIBOR % % $64, % One-Month LIBOR % % $82, % One-Month LIBOR % 2 0.3% $24, % One-Month LIBOR % % $241, % One-Month LIBOR % % $4,949, % 3-Month T-Bill % 1 0.1% $1, % Total % $5,375, % (1) The Corporation elected to change the index for Special Allowance Payment calculations on the FFELP Financed Student Loans disbursed after January 1, 2000 from the three-month commercial paper rate to the one-month LIBOR index beginning on April 1, Distribution of the FFELP Financed Student Loans by Current Borrower Interest Rate as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Current Borrower Interest Rate Number of Loans Percent of Loans 1.51% % % $601, % 2.01% % % $768, % 2.51% % % $839, % 3.01% % % $443, % 3.51% % % $524, % 4.01% % % $559, % 4.51% % % $1,022, % 5.01% % % $154, % 5.51% % 3 0.4% $23, % 6.01% % 4 0.5% $44, % 6.51% % % $282, % 7.01% % % $89, % 8.01% % 8 1.1% $23, % Total % $5,375, % [Remainder of Page Intentionally Left Blank] 40

53 Distribution of the FFELP Financed Student Loans by Range of Outstanding Principal Balances as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Outstanding Balances Number of Loans Percent of Loans $ $4, % $851, % $5, $9, % $1,295, % $10, $14, % $1,243, % $15, $19, % $740, % $20, $24, % $585, % $25, $29, % $164, % $30, $34, % $249, % $35, $39, % $76, % $40, $44, % $41, % $45, $49, % $49, % $75, $79, % $77, % Total % $5,375, % Distribution of the FFELP Financed Student Loans by Delinquency Status as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Days Delinquent Number of Loans Percent of Loans Current % $4,878, % Less than 30 Days % $401, % 30 to 59 Days 3 0.4% $29, % 60 to 89 Days 2 0.3% $6, % 90 to 119 Days 2 0.3% $8, % 150 to 179 Days 2 0.3% $34, % 180 Days and Greater 7 1.0% $17, % Total % $5,375, % [Remainder of Page Intentionally Left Blank] 41

54 Distribution of the FFELP Financed Student Loans by Remaining Months to Scheduled Maturity as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Remaining Months to Scheduled Maturity Number of Loans Percent of Loans 0 to % $41 0.0% 4 to % $ % 13 to % $3, % 25 to % $10, % 37 to % $62, % 49 to % $71, % 61 to % $91, % 73 to % $193, % 85 to % $89, % 97 to % $225, % 109 to % $481, % 121 to % $390, % 133 to % $613, % 145 to % $393, % 157 to % $216, % 169 to % $378, % 181 to % $204, % 193 to % $528, % 205 to % $265, % 217 to % $448, % 229 to % $295, % 241 to % $89, % 253 to % $199, % 265 to % $64, % 277 to % $20, % 289 to % $38, % Total % $5,375, % [Remainder of Page Intentionally Left Blank] 42

55 Distribution of the FFELP Financed Student Loans by State of Borrower s Address as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance State Distribution (1) Number of Loans Percent of Loans Alabama 4 0.5% $23, % Arizona 5 0.7% $60, % Arkansas 2 0.3% $20, % California % $240, % Colorado % $124, % Florida 4 0.5% $13, % Georgia 8 1.1% $113, % Illinois % $413, % Indiana % $78, % Iowa % $2,576, % Kansas % $126, % Maryland 4 0.5% $11, % Minnesota % $514, % Mississippi 4 0.5% $26, % Missouri 8 1.1% $72, % Nebraska % $161, % Nevada 3 0.4% $11, % New Jersey 4 0.5% $47, % New York 8 1.1% $58, % Ohio 2 0.3% $ % Oregon 4 0.5% $21, % Pennsylvania 2 0.3% $12, % South Carolina 4 0.5% $30, % South Dakota 7 1.0% $40, % Tennessee 3 0.4% $13, % Texas % $138, % Virginia % $97, % Washington 5 0.7% $37, % West Virginia 2 0.3% $61, % Wisconsin % $221, % Total % $5,375, % 1. Based on the billing addresses of the borrowers of the FFELP Financed Student Loans shown on Servicer s records. Distribution of the FFELP Financed Student Loans by Servicer as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Servicer Number of Loans Percent of Loans Aspire Resources Inc % $5,375, % Total % $5,375, % 43

56 Distribution of the FFELP Financed Student Loans by School Type as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance School Type Number of Loans Percent of Loans 4-Year University / Grad % $5,045, % 2-Year University % $176, % Proprietary % $153, % Total % $5,375, % Distribution of the FFELP Financed Student Loans by ACH Loan Reduction as of February 28, 2015 Aggregate Outstanding Balance* Percent of Loans by Aggregate Outstanding Balance EFT Reduction Number of Loans Percent of Loans None (1) % $604, % 0.25% interest rate reduction (receiving) (2) % $2,260, % 0.25% interest rate reduction (eligible) (3) % $2,510, % Total % $5,375, % 1. Not eligible for this borrower benefit 2. Receiving this borrower benefit as of the Statistical Cut-off Date. 3. Eligible for but not receiving this borrower benefit as of the Statistical Cut-off Date. Distribution of the FFELP Financed Student Loans by Timely Pay Interest Rate Reduction as of February 28, 2015 Aggregate Outstanding Balance* Percent of Loans by Aggregate Outstanding Balance Timely Pay Interest Reduction Description Number of Loans Percent of Loans None (1) % $2,829, % 0.75% at 6 Months (receiving) (2) % $2,511, % 1.10% at 36 Months (receiving) (2) 2 0.3% $3, % 1.50% at 0 Months (receiving) (2) 7 1.0% $20, % 2.50% at 48 Months (eligible) (3) 4 0.5% $10, % Total % $5,375, % 1. Not eligible for this borrower benefit 2. Receiving this borrower benefit as of the Statistical Cut-off Date. 3. Eligible for but not receiving this borrower benefit as of the Statistical Cut-off Date. [Remainder of Page Intentionally Left Blank] 44

57 Distribution of the FFELP Financed Student Loans by Principal Reduction as of February 28, 2015 Aggregate Outstanding Balance* Percent of Loans by Aggregate Outstanding Balance Timely Pay Principal Reduction Number of Loans Percent of Loans None (1) % $4,080, % 1.50% at 6 Months (receiving) (2) % $1,294, % Total % $5,375, % 1. Not eligible for this borrower benefit 2. Receiving this borrower benefit as of the Statistical Cut-off Date. The Private Loans The following tables describe certain characteristics of the Financed Loans that consist of Private Loans. The Corporation expects that the characteristics of the Financed Loans reflected in these tables will vary due to the continued amortization of the Financed Loans between February 28, 2015 and the Closing Date. Although the statistical distribution of the characteristics of the Financed Loans as of the Closing Date will vary somewhat in other respects from the statistical distribution of those characteristics shown below, the Corporation does not believe that those characteristics will differ materially. The sum of the characteristics may not add up to the total therefor in the following tables due to rounding. Summary Portfolio Characteristics - Private Loans Stratification Statistic Aggregate Outstanding Principal Balance $28,810,707 Accrued Interest $643,616 Aggregate Accrued Interest to be Capitalized $616,599 Aggregate Outstanding Principal Balance and Interest to be Capitalized $29,427,306 ("Aggregate Outstanding Balance") Number of Borrowers 2,466 Average Outstanding Principal Balance & Interest Per Borrower $11,933 Number of Loans 3,760 Average Outstanding Principal Balance & Interest Per Loan $7,826 Weighted Average Coupon (1) 7.07% Weighted Average Remaining Repayment Term to Scheduled Maturity (months) 184 Weighted Average Original Term to Scheduled Maturity (months) 191 Weighted Average FICO 734 Weighted Average Active Margin (Prime Loans) 4.50% Weighted Average Active Margin (LIBOR Loans) 4.21% 1. Includes borrower interest rate reductions [Remainder of Page Intentionally Left Blank] 45

58 Distribution of the Private Financed Student Loans by Loan Type as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Loan Type Number of Loans Percent of Loans Alliance 1, % $8,389, % Health Degree Loan Program 1 0.0% $1, % Partnership Advance Education Loan 2, % $19,662, % Partnership Loan Program % $1,369, % Partnership Law Loan Program 4 0.1% $4, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by Borrower Payment Status as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Borrower Payment Status Number of Loans Percent of Loans School 2, % $19,990, % Grace % $2,327, % Deferment % $946, % Repayment First year in repayment % $3,012, % Second year in repayment % $623, % Third year in repayment % $447, % Fourth year and greater in repayment % $2,079, % Total 3, % $29,427, % Scheduled Weighted Average Remaining Months (WAM ) in Status by Current Borrower Payment Status as of February 28, 2015 Current Borrower Payment Status In-School WAM Grace WAM Deferment WAM Forbearance WAM Repayment WAM Total Term In-School Grace Deferment Forbearance Repayment Weighted Average [Remainder of Page Intentionally Left Blank] 46

59 Distribution of the Private Financed Student Loans by Interest Rate Type as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Interest Rate Type Number of Loans Percent of Loans Fixed Rate 2, % $16,547, % Prime Rate % $6,356, % Three-Month LIBOR % $6,523, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by ACH Loan Reduction as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance ACH Reduction Number of Loans Percent of Loans None (1) 1, % $13,054, % 0.25% interest rate reduction (receiving) (2) % $104, % 0.25% interest rate reduction (eligible) (3) 1, % $16,268, % Total 3, % 29,427, % 1. Not eligible for this borrower benefit 2. Receiving this borrower benefit as of the Statistical Cut-off Date. 3. Eligible for but not receiving this borrower benefit as of the Statistical Cut-off Date. Distribution of the Private Financed Student Loans by Interest Rate Reduction as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Interest Rate Reduction Description Number of Loans Percent of Loans None (1) 3, % $23,778, % 1.00% at 24 Months (receiving) (2) 1 0.0% $ % 1.00% at 24 Months (eligible) (3) % $5,647, % Total 3, % $29,427, % 1. Not eligible for this borrower benefit 2. Receiving this borrower benefit as of the Statistical Cut-off Date. 3. Eligible for but not receiving this borrower benefit as of the Statistical Cut-off Date. [Remainder of Page Intentionally Left Blank] 47

60 Distribution of the Private Financed Student Loans by Current Interest Rate as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Current Interest Rate Number of Loans Percent of Loans 2.01% % 7 0.2% $52, % 2.51% % % $225, % 3.01% % 4 0.1% $39, % 4.01% % % $1,505, % 4.51% % % $4,439, % 5.51% % % $297, % 6.01% % % $2,444, % 6.51% % % $5,189, % 7.51% % 1, % $8,744, % 8.01% % % $131, % 8.51% % $6,355, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by Range of Outstanding Principal Balances as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Outstanding Balances Number of Loans Percent of Loans $ $4, , % $4,207, % $5, $9, , % $10,267, % $10, $14, % $8,556, % $15, $19, % $4,365, % $20, $24, % $1,353, % $25, $29, % $432, % $30, $34, % $167, % $35, $39, % $76, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by Delinquency Status as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Delinquency Status Number of Loans Percent of Loans Current 3, % $28,259, % Less than 30 Days % $681, % 30 to 59 Days % $198, % 60 to 89 Days % $184, % 90 to 119 Days % $102, % Total 3, % $29,427, % 48

61 Distribution of the Private Financed Student Loans by Remaining Months to Scheduled Maturity as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Remaining Months to Scheduled Maturity Number of Loans Percent of Loans 0 to % $15 0.0% 4 to % $ % 13 to % $ % 25 to % $7, % 37 to % $32, % 49 to % $11, % 61 to % $1, % 73 to % $6, % 85 to % $26, % 97 to % $247, % 109 to % $6,911, % 121 to % $145, % 133 to % $89, % 145 to % $92, % 157 to % $234, % 169 to % $7,707, % 181 to % $707, % 193 to % $1,135, % 205 to % $5,184, % 217 to % $372, % 229 to % $6,512, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by Co-Signer as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Co-Signer Number of Loans Percent of Loans Co-Signed 2, % $19,785, % Not-Co-Signed 1, % $9,641, % Total 3, % $29,427, % [Remainder of Page Intentionally Left Blank] 49

62 Distribution of the Private Financed Student Loans by FICO Score as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance FICO Score Number of Loans Percent of Loans % $18, % % $133, % % $571, % % $2,037, % % $2,625, % % $2,391, % % $2,193, % % $1,802, % % $1,762, % % $1,266, % % $1,522, % % $1,320, % % $1,371, % % $969, % % $1,097, % % $906, % % $1,521, % % $1,357, % % $1,130, % % $430, % % $565, % % $308, % % $309, % % $103, % % $76, % % $68, % % $43, % % $8, % % $79, % % $16, % % $3, % Missing % $1,411, % Total 3, % $29,427, % [Remainder of Page Intentionally Left Blank] 50

63 Distribution of the Private Financed Student Loans by State of Borrower s Address as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance State Distribution Number of Loans Percent of Loans Arizona % $100, % Arkansas 4 0.1% $20, % California % $57, % Colorado % $125, % District Of Columbia 1 0.0% $9, % Florida 5 0.1% $36, % Georgia 3 0.1% $33, % Idaho 3 0.1% $33, % Illinois % $1,265, % Indiana 2 0.1% $13, % Iowa 3, % $25,165, % Kansas 7 0.2% $59, % Kentucky 2 0.1% $23, % Louisiana 1 0.0% $1, % Maryland 6 0.2% $15, % Massachusetts 5 0.1% $35, % Michigan 5 0.1% $14, % Minnesota % $625, % Missouri % $296, % Montana 1 0.0% $3, % Nebraska % $284, % Nevada 3 0.1% $38, % New Hampshire 1 0.0% $9, % New York 1 0.0% $8, % North Carolina 4 0.1% $19, % North Dakota 7 0.2% $60, % Ohio 5 0.1% $35, % Oklahoma 3 0.1% $18, % Unknown 2 0.1% $10, % Pennsylvania 4 0.1% $23, % South Dakota % $202, % Tennessee 7 0.2% $80, % Texas % $124, % Utah 2 0.1% $36, % Virginia 4 0.1% $49, % Washington % $82, % Wisconsin % $405, % Total 3, % $29,427, % 1. Based on the billing addresses of the borrowers of the Private Financed Student Loans shown on the Servicer s records. 51

64 Distribution of the Private Financed Student Loans by School Types as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance School Type Number of Loans Percent of Loans 4-Year University / Grad 3, % $27,604, % 2-Year University % $1,480, % Proprietary % $341, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by Servicer as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance Servicer Number of Loans Percent of Loans Iowa Student Loan (Aspire Resources Inc.) 3, % $29,427, % Total 3, % $29,427, % Distribution of the Private Financed Student Loans by School as of February 28, 2015 Aggregate Outstanding Balance Percent of Loans by Aggregate Outstanding Balance School Number of Loans Percent of Loans Iowa State University % $5,454, % University Of Iowa % $1,877, % Wartburg College % $1,622, % Central College % $1,547, % University Of Northern Iowa % $1,466, % Simpson College % $1,215, % University Of Dubuque % $1,118, % St. Ambrose University % $1,102, % Luther College % $1,010, % Morningside College % $919, % Drake University % $918, % Buena Vista University % $696, % Grand View University % $680, % Clarke University % $556, % Mercy College - Health Science % $557, % Coe College % $503, % Briar Cliff University % $501, % Des Moines Area Community College % $482, % Mount Mercy College % $430, % South Dakota State % $383, % Other/Unknown % $6,381, % Total 3, % $29,427, % 52

65 Borrower Benefits In the past the Corporation has offered some borrowers of the Private Loan Programs a 0.25% interest rate reduction if they choose to use electronic funds transfer to make their monthly payments. This benefit was available between 1996 and 2002 and after July, 2013, on certain loans. As of February 28, 2015, approximately 0.4% of the Financed Private Loans were receiving this discount, 52% were eligible but not taking advantage of the rate reduction and 48% are ineligible for the program. Certain borrowers are eligible for a 1.0% interest rate reduction for 24 months of consecutive on-time payments. In the past the Corporation has offered some borrowers of the FFELP Programs a 0.25% interest rate reduction if they choose to use electronic funds transfer to make their monthly payments. As of the February 28, 2015, approximately 42.7% of Financed FFELP loans were receiving this discount, 46.1% were eligible but not taking advantage of the rate and 11.2% are ineligible for the program. Certain borrowers are eligible for interest rate reduction programs ranging from 0.75% to 2.50% from 0 to 48 months of consecutive on-time payments. As of February 28, 2015, approximately 52.6% of the Financed FFELP loans by aggregate outstanding balance are not eligible for such interest rate reduction programs. Under some plans, should the borrower make an untimely payment, a payment received 5 days after the due date, the applicable rate reduction is forfeited. Principal balance reduction programs are available to certain borrowers allowing for a principal reduction of 1.50% after 6 months of consecutive ontime payments. As of February 28, 2015, approximately 75.9% of the Financed FFELP loans are not eligible for such principal balance reductions programs. FFELP Program THE CORPORATION S FEDERAL LOAN PROGRAMS The Corporation has established its student loan program for financing certain student loans originated pursuant to the Federal Family Education Loan Program ( FFELP or the FFEL Program ), authorized by Title IV of the federal Higher Education Act (such loans, FFELP loans ). On March 30, 2010, the Reconciliation Act was enacted into law. Included in the Reconciliation Act were provisions that eliminate the FFEL Program. As of July 1, 2010 no additional FFELP loans were originated, and all new federal student loans were originated solely under the Direct Loan Program. However, FFELP loans originated under the Higher Education Act prior to July 1, 2010, which have been acquired or are anticipated to be acquired by the Corporation (including the loans described under CHARACTERISTICS OF THE FINANCED LOANS ) continue to be subject to the provisions of the FFEL Program, and are not materially affected by the Reconciliation Act. The Corporation has established its student loan program (the Program ) in order to effectuate the general purposes of the Corporation and the specific objective of, in order to effectuate the general purposes of the Corporation and the specific objective of providing funds to assist students in obtaining a post-secondary education. 53

66 In order to participate in the Corporation s finance programs with respect to Higher Education Act Financed Loans, each third-party lender must enter into a loan purchase agreement with the Corporation and must be an eligible lender under the Higher Education Act or be otherwise approved by the Corporation. An eligible lender under the Higher Education Act includes certain commercial banks, mutual savings banks, savings and loan associations, credit unions, insurance companies, pension funds, certain trust companies and educational institutions. In its agreement with the Corporation, the selling lender must make certain representations with respect to the loans to be sold, and agree to repurchase the loan at the Corporation s request if any representation or warranty made by the lender regarding the loan proves to be materially incorrect, if a maker or endorser of a note evidencing the loan asserts a defense which raises a reasonable doubt as to its legal enforcement or if the Secretary of Education refuses to honor a claim with respect to the loan because of circumstances which occurred prior to the Corporation s purchase of the loan. General DESCRIPTION OF THE GUARANTY AGENCIES Approximately 15.5%, by principal balance plus accrued interest to be capitalized as of the Statistical Cut-off Date, of the Financed Loans expected to comprise the Trust Estate are loans Guaranteed (with respect to payments of principal and interest) by a Guaranty Agency and reinsured by the Secretary of Education under the Higher Education Act. The Guarantee provided by a Guaranty Agency is an obligation solely of that Guaranty Agency and is not supported by the full faith and credit of the federal or any state government. However, the Higher Education Act provides that if the Secretary of Education determines that a Guaranty Agency is unable to meet its insurance obligations, the Secretary of Education shall assume responsibility for all functions of that Guaranty Agency under its loan insurance program. In the issuance of guarantees on loans, each Guaranty Agency is required to review loan applications to verify the completion of required information. In addition, each Guaranty Agency is required to make a determination that the applicant has not borrowed amounts in excess of those permitted under the Higher Education Act. In addition to the Guaranty Agencies described below, the Indenture provides that Financed Student Loans may be Guaranteed by any entity authorized to Guarantee student loans under the Higher Education Act, with respect to Financed FFELP Loans, and with which the Corporation or the Trustee has entered into a Guarantee Agreement. As of the Statistical Cut-off Date (and based on the outstanding principal balances plus accrued interest to be capitalized of the Financed Loans as of such date), of the Financed Loans to be held in the Trust Estate: approximately 59.83% are guaranteed by the Great Lakes Higher Education Guaranty Corporation ( GLHEGC ) approximately 40.14% are guaranteed by the Pennsylvania Higher Education Assistance Agency approximately 0.03% are guaranteed by Educational Credit Management Corp 54

67 The following is certain additional information with respect to GLHEGC and PHEAA, which are the only Guaranty Agencies expected to guarantee or insure at least 10% of the Financed Student Loans held under the Indenture. Great Lakes Higher Education Guaranty Corporation The following information has been furnished by GLHEGC for use in this Offering Memorandum. Neither the Corporation nor the Underwriter makes any guarantee or any representation as to the accuracy or completeness thereof or the absence of material adverse change in such information or in the condition of GLHEGC subsequent to the date hereof. Great Lakes Higher Education Guaranty Corporation ( GLHEGC ) is a Wisconsin nonstock, nonprofit corporation the sole member of which is Great Lakes Higher Education Corporation ( GLHEC ). GLHEGC s predecessor organization, GLHEC, was organized as a Wisconsin nonstock, nonprofit corporation and began guaranteeing student loans under the Higher Education Act in GLHEGC is the designated guaranty agency under the Higher Education Act for Wisconsin, Arkansas, Iowa, Minnesota, Ohio, South Dakota, Puerto Rico and the Virgin Islands. On January 1, 2002, GLHEC (and GLHEGC directly and through its support services agreement with GLHEC), outsourced certain aspects of its student loan program guaranty support operations to Great Lakes Educational Loan Services, Inc. ( GLELSI ). GLHEGC continues as the guaranty agency as defined in Section 435(j) of the Higher Education Act and continues its default aversion, claim purchase and compliance, collection support and federal reporting responsibilities as well as custody and responsibility for all revenues, expenses and assets related to that status. GLHEGC (directly and through its support services agreement with GLHEC) also performs oversight of all direct and outsourced student loan program operations. The primary operations center for GLHEC and its affiliates (including GLHEGC and GLELSI) is in Madison, Wisconsin, which includes the data processing center and operational staff offices for both guaranty and servicing functions. GLHEC and affiliates also maintain offices in Rocky Hill, Connecticut; Eagan, Minnesota; Aberdeen, South Dakota; Plano, Texas; Boscobel, Eau Claire and Stevens Point, Wisconsin; and customer support staff located nationally. GLHEGC will provide a copy of GLHEC s most recent consolidated financial statements on receipt of a written request directed to 2401 International Lane, Madison, Wisconsin 53704, Attention: Chief Financial Officer. The information in the following tables has been provided to the Corporation from reports provided by or to the U.S. Department of Education and has not been verified by the Corporation, GLHEGC or the initial purchasers. No representation is made by the Corporation, GLHEGC or the initial purchasers as to the accuracy or completeness of this information. Prospective investors may consult the U.S. Department of Education Data Books and Web sites and for further information concerning GLHEGC or any other guaranty agency. No portion of these websites are incorporated into this Official Statement. Guaranty Volume. Pursuant to the SAFRA Act, part of the Health Care and Education Reconciliation Act of 2010, GLHEGC ceased issuing new loan guarantees on June 30, The most recent year for which the U.S. Department of Education has issued guaranty volume information is GLHEGC issued $7.0 billion in new loan guarantees in that year. 55

68 Reserve Ratio. Following are GLHEGC s reserve fund levels as calculated in accordance with 34 CFR (a)(10) for the last five federal fiscal years: Federal Guaranty Reserve Federal Fiscal Year Fund Level % % % % % The U.S. Department of Education s website at has posted reserve ratios for GLHEGC for federal years 2010, 2011, 2012, 2013 and 2014 of 0.744%, 0.744%, 0.726%, 0.699% and 0.648%, respectively. GLHEGC believes the Department of Education has not calculated the reserve ratio in accordance with the Act and the correct ratio should be 0.93%, 0.96%, 0.97%, 0.94% and 0.94%, respectively, as shown above and as explained in the following footnote. No portion of the website is incorporated into this Official Statement. On November 17, 2006, the U.S. Department of Education advised GLHEGC that beginning in Federal Fiscal Year 2006 it will publish reserve ratios that include loan loss provision and deferred revenues. GLHEGC believes this change more closely approximates the statutory calculation. According to the U.S. Department of Education, available cash reserves may not always be an accurate barometer of a guarantor s financial health. Claims Rate. For the past five federal fiscal years, GLHEGC s claims rate has not exceeded 5%, and, as a result, the highest allowable reinsurance has been paid on all GLHEGC s claims. The actual claims rates are as follows: Federal Fiscal Year Claims Rate % % % % % As a result of various statutory and regulatory changes over the past several years, historical rates may not be an accurate indicator of current delinquency or default trends or future claims rates. 1 In accordance with Section 428(c)(9) of the Higher Education Act, does not include loans transferred from the former Higher Education Assistance Foundation, Northstar Guarantee Inc., Ohio Student Aid Commission or Puerto Rico Higher Education Assistance Corporation. (The minimum reserve fund ratio under the Higher Education Act is 0.25%.) 56

69 Pennsylvania Higher Education Assistance Agency The following information has been furnished by PHEAA for use in this Offering Memorandum. Neither the Corporation nor the Underwriter makes any guarantee or any representation as to the accuracy or completeness thereof or the absence of material adverse change in such information or in the condition of PHEAA subsequent to the date hereof. Pennsylvania Higher Education Assistance Agency ( PHEAA ) is a body corporate and politic constituting a public corporation and government instrumentality created pursuant to the Pennsylvania Act of August 7, 1963, P.L. 549, as amended (the Pennsylvania Act ). PHEAA has been guaranteeing student loans since As of December 31, 2014, PHEAA has guaranteed a total of approximately $48.8 billion principal amount of Stafford Loans, $7.9 billion principal amount of PLUS and SLS Loans, and $52.1 billion principal amount of Consolidation Loans under the Higher Education Act. PHEAA initially guaranteed loans only to residents of the Commonwealth of Pennsylvania (the Commonwealth ) or persons who planned to attend or were attending eligible education institutions in the Commonwealth. In May 1986, PHEAA began guaranteeing loans to borrowers who did not meet these residency requirements pursuant to its national guarantee program. Under the Pennsylvania Act, guarantee payments on loans under PHEAA s national guarantee program may not be paid from funds appropriated by the Commonwealth. Effective April 1, 2013 PHEAA was designated as the guarantor for the State of Georgia. PHEAA accepted the transfer and assignment of the rights, duties and responsibilities as a Guaranty Agency under the Federal Family Education Loan Program from the Georgia Higher Education Assistance Corporation s (GHEAC), the previous designated guarantor for the State of Georgia. As a result PHEAA accepted the transfer and assignment of student loans with an aggregate of $687.8 million in original principal, net of cancellations. All percentages and results for PHEAA in the charts below for periods of activity after April 1, 2013 include the impact of the additional guaranty volume received in the transfer. PHEAA has adopted a default prevention program consisting of (i) informing new borrowers of the serious financial obligations incurred by them and stressing the financial and legal consequences of failure to meet all terms of the loan, (ii) working with institutions to make certain that student borrowers are enrolled in sound education programs and that the proper individual enrollment records are being maintained, (iii) assisting lenders with operational programs to ensure sound lending policies and procedures, (iv) maintaining up-to-date student status and address records of all borrowers in the guaranty program, (v) initiating prompt collection actions with borrowers who become delinquent on their loans, do not establish repayment schedules or skip, (vi) taking prompt action, including legal action and garnishment of wages, to collect on all defaulted loans, and (vii) adopting a general policy that no loan will be automatically written off. Since the loan servicing program was initiated in 1974, PHEAA has never exceeded an annual default claims percentage of 5 percent and, as a result, federal reimbursement for default claims has thus far been at the maximum federal reimbursement level. For the last five federal fiscal years (ended September 30), the annual default claims percentages have been as follows: 57

70 Fiscal Year Annual Default Claims As of December 31, 2014, PHEAA had total federal reserve-fund assets of approximately $85.6 million. Through December 31, 2014, the outstanding amount of original principal on loans that had been directly guaranteed by PHEAA and loans transferred from GHEAC under the Federal Family Education Loan Program was approximately $33.5 billion. In addition, as of December 31, 2014, PHEAA had total assets of $8.5 billion, which does not include Federal Reserve Fund assets. Guarantee Volume. PHEAA s guaranty volume (the approximate aggregate principal amount of federally reinsured education loans, including PLUS Loans but excluding federal consolidation loans) was as follows for the last five federal fiscal years (ended September 30): Fiscal Year Guaranty Volume (Millions) Reserve Ratio. Under current law, PHEAA is required to manage the Federal Fund so net assets are greater than 0.25% of the original principal balance of outstanding guarantees. The table below shows the reserve ratio for PHEAA for the last five federal fiscal years (ended September 30): [Remainder of Page Intentionally Left Blank] 58

71 Fiscal Year Reserve Ratio The table displays PHEAA s calculation of the reserve ratio on a regulatory basis of accounting. In addition to gain contingencies not recognized under generally accepted accounting principles, starting with fiscal year 2010 the reserve ratio includes an adjustment related to foregoing the transfer of default aversion fees from the Federal Reserve Fund to the Agency Operating Fund as agreed to in our management plan approved by the Department of Education on May 22, Recovery Rates. A guarantor's recovery rate, which provides a measure of the effectiveness of the collection efforts against defaulting borrowers after the guarantee claim has been satisfied, is determined for each year by dividing the current year collections by the total outstanding claim portfolio for the prior fiscal year. The table below shows the cumulative recovery rates for PHEAA for the five federal fiscal years (ended September 30): Fiscal Year Recovery Rates THE CORPORATION S PRIVATE LOAN PROGRAMS General Pursuant to Iowa legislation enacted in 1992 and the Iowa Partnership Loan Program Agreement, the Corporation is authorized to finance student loans other than those originated under the Higher Education Act. Pursuant to such authority, the Corporation established additional supplemental loan programs. 59

72 The Financed Loans will include the Corporation s Partnership Advance Education Loan (formerly known as its Partnership III Loan) through the Partnership Loan Program. The Partnership Advance Education Loan consists of programs providing financial assistance to Iowa residents or students who are attending an Iowa-based school. The Financed Loans include loans made or to be made under the following private loan programs offered by the Corporation: The Partnership Loan Programs, consisting of programs providing financial assistance to Iowa residents or students who were attending an Iowa-based school through the origination of loans known as the Partnership Loan Program (Partnership I and Partnership II loans or the PLP I & II Loans ), Partnership Law Loan, and Partnership Advance Education Loan Program ( PAEL ); The Medical Loan Program (the Medical Loan Program ), consisting of programs providing financial assistance to students in a variety of health science disciplines through the origination of the Health Degree Loan and Health Degree Extra Loan ; and The Iowa Alliance Loan Program ( Alliance ), consisting of a program providing loans in conjunction with participating Iowa lenders to students which are identified as having no other education financing alternatives. The Corporation anticipates creating additional private loan programs under the Partnership Loan Program in the future, with such loans being eligible for financing under the Indenture upon a Rating Agency Notification. THE TERMS AND FEATURES OF EACH OF THE CORPORATION S PRIVATE LOAN PROGRAMS HAVE BEEN ESTABLISHED TO SERVE THE GOALS OF THE CORPORATION IN INCREASING THE AVAILABILITY OF CREDIT FOR EDUCATION, CONSISTENT WITH PROVIDING FOR PAYMENT OF DEBT SERVICE ON THE CORPORATION S OBLIGATIONS. Under each of the private loan programs, the Corporation makes (or made, in the case of Partnership I and Partnership II loans, the Medical Loan Program, the Alliance Loan Program and the Canadian Alternative Loan Program) loans ( Private Loans ) to eligible individuals (each an Eligible Borrower ) for postsecondary education from the proceeds of its revenue bonds or other obligations, from repayments or prepayments of the Private Loans made under the applicable private loan program and from other monies available therefore under the applicable private loan program. Degree-granting colleges and universities eligible to participate in each private loan program certify (except for the refinancing or consolidation of such loans) to the Corporation certain information that is needed to complete and evaluate each application. [Remainder of Page Intentionally Left Blank] 60

73 Partnership Advance Education Loans ( PAEL, formerly known as Partnership III Loan Program) Fixed-rate Partnership Advance Education Loan Options Partnership Advance Education Loan Immediate Repayment Loan FICO: FICO: FICO: FICO: Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 3% 3% 0% 0% Interest Rate 6.60% Fixed Rate 6.40% Fixed Rate 6.00% Fixed Rate 5.50% Fixed Rate Capitalization of Interest At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes Yes Yes Yes N/A N/A N/A N/A 10 Years 3 10 Years 3 10 Years 3 10 Years 3 [Remainder of Page Intentionally Left Blank] 61

74 Partnership Advance Education Loan Interest Only Loan FICO: FICO: FICO: FICO: Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 3% 3% 0% 0% Interest Rate 6.70% Fixed Rate 6.50% Fixed Rate 6.20% Fixed Rate 5.80% Fixed Rate Capitalization of Interest At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes, interestonly payments 1 6 Months 2 Note: Interestonly repayment required during this period. Yes, interest-only payments 1 6 Months 2 Note: Interestonly repayment required during this period. Yes, interest-only payments 1 6 Months 2 Note: Interestonly repayment required during this period. Yes, interest-only payments 1 6 Months 2 Note: Interestonly repayment required during this period. 10 Years 3 10 Years 3 10 Years 3 10 Years 3 [Remainder of Page Intentionally Left Blank] 62

75 Partnership Advance Education Loan Deferment Loan FICO: FICO: FICO: FICO: Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 3% 3% 0% 0% Interest Rate 7.80% Fixed Rate 7.20% Fixed Rate 6.40% Fixed Rate 6.00% Fixed Rate Capitalization of Interest At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) No No No No 6 Months 6 Months 6 Months 6 Months Principal and Interest 15 Years 3 15 Years 3 15 Years 3 15 Years 3 Repayment Term 1 Borrowers with delinquencies during the interest-only repayment period may have future disbursements and/or loans suspended or canceled. 2 The in-school and separation periods cannot exceed 60 months for the interest only repayment option. The inschool and separation periods cannot exceed 84 months for the deferred repayment option. 3 A loan of $1,000 or less has a maximum repayment term of 37 months. [Remainder of Page Intentionally Left Blank] 63

76 Variable-rate Partnership Advance Education Loan Options Partnership Advance Education Loan Immediate Repayment Loan FICO: FICO: FICO: FICO: Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 3% 3% 0% 0% Interest Rate Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Capitalization of Interest At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes Yes Yes Yes N/A N/A N/A N/A 10 Years 4 10 Years 4 10 Years 4 10 Years 4 [Remainder of Page Intentionally Left Blank] 64

77 Partnership Advance Education Loan Interest Only Loan FICO: FICO: FICO: FICO: Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 3% 3% 0% 0% Interest Rate Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Capitalization of Interest At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes, interestonly payments 2 6 Months 3 Note: Interestonly repayment required during this period. Yes, interest-only payments 2 6 Months 3 Note: Interestonly repayment required during this period. Yes, interest-only payments 2 6 Months 3 Note: Interestonly repayment required during this period. Yes, interest-only payments 2 6 Months 3 Note: Interestonly repayment required during this period. 10 Years 4 10 Years 4 10 Years 4 10 Years 4 [Remainder of Page Intentionally Left Blank] 65

78 Partnership Advance Education Loan Deferment Loan FICO: FICO: FICO: FICO: Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 3% 3% 0% 0% Interest Rate Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Capitalization of Interest At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term No No No No 6 Months 3 6 Months 3 6 Months 3 6 Months 3 15 Years 4 15 Years 4 15 Years 4 15 Years 4 1 The rate is subject to increase after consummation. The three-month Libor index is defined as the daily average of the 3-month London Interbank Offered Rate (LIBOR) (currency in U.S. dollars) that was calculated and published on the British Bankers Association s website on each business day during the 91-day period ending on the 20th day of March, June, September and December. 2 Borrowers with delinquencies during the interest-only repayment period may have future disbursements and/or loans suspended or canceled. 3 The in-school and separation periods cannot exceed 60 months for the interest only repayment option. The inschool and separation periods cannot exceed 84 months for the deferred repayment option. 4 A loan of $1,000 or less has a maximum repayment term of 37 months. [Remainder of Page Intentionally Left Blank] 66

79 Expired FICO Tiered Partnership Advance Education Loan Options Partnership Advance Education Loan Immediate Repayment Loan Tier 1 Tier 2 FICO Requirement 750 and above Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 0% 3% Interest Rate Fixed rate 6.15% Fixed rate 6.15% Capitalization of Interest In-between disbursements and at the end of deferment period Variable rate % + 3-month Libor index (varies quarterly) In-between disbursements and at the end of deferment period In-between disbursements and at the end of deferment period Variable rate % + 3-month Libor index (varies quarterly) In-between disbursements and at the end of deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes Yes Yes Yes None None None None 10 Years 4 10 Years 4 10 Years 4 10 Years 4 [Remainder of Page Intentionally Left Blank] 67

80 Partnership Advance Education Loan Interest Only Loan Tier 1 Tier 2 FICO Requirement 750 and above Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 0% 3% Interest Rate Fixed rate 6.40% Fixed rate 6.40% Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Capitalization of Interest At the end of deferment period At the end of deferment period At the end of deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes, interestonly payments 2 6 Months 3 Note: Interestonly repayment required during this period. Yes, interest-only payments 2 6 Months 3 Note: Interestonly repayment required during this period. Yes, interest-only payments 2 6 Months 3 Note: Interestonly repayment required during this period. At the end of deferment period Yes, interest-only payments 2 6 Months 3 Note: Interestonly repayment required during this period. 10 Years 4 10 Years 4 10 Years 4 10 Years 4 [Remainder of Page Intentionally Left Blank] 68

81 Partnership Advance Education Loan Deferment Loan Tier 1 Tier 2 FICO Requirement 750 and above Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 0% 3% Interest Rate Fixed rate 6.89% Fixed rate 6.89% Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Capitalization of Interest At the end of deferment period At the end of deferment period At the end of deferment period Loan Amount Minimum Amount: $1,001 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term At the end of deferment period No No No No 6 Months 3 6 Months 3 6 Months 3 6 Months 3 15 Years 4 15 Years 4 15 Years 4 15 Years 4 1 The rate is subject to increase after consummation. The three-month Libor index is defined as the daily average of the 3-month London Interbank Offered Rate (LIBOR) (currency in U.S. dollars) that was calculated and published on the British Bankers Association s website on each business day during the 91-day period ending on the 20th day of March, June, September and December. 2 Borrowers with delinquencies during the interest-only repayment period may have future disbursements and/or loans suspended or canceled. 3 The in-school and separation periods cannot exceed 60 months for the interest only repayment option. The inschool and separation periods cannot exceed 84 months for the deferred repayment option. 4 A loan of $1,000 or less has a maximum repayment term of 37 months. [Remainder of Page Intentionally Left Blank] 69

82 Expired Fixed-rate Partnership Advance Education Loan Options Partnership Advance Education Loan Loan Option 1 Option 2 Option 3 FICO Requirement 670 or above Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 0% 0% 4% Interest Rate 7.75% Fixed Rate 7.85% Fixed Rate 7.90% Fixed Rate Capitalization of Interest At the end of a qualifying deferment At the end of a qualifying deferment At repayment and at the end of a qualifying deferment period period period Loan Amount Minimum Amount: $500 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term Yes, interest-only payments 1 10 Months 2 Note: Interest-only repayment required during this period. Yes, interest-only payments 1 8 Months 2 Note: Interest-only repayment required during this period. No 6 Months 2 10 Years 3 15 Years 3 18 Years 3 1 Borrowers with delinquencies during the interest-only repayment period may have future disbursements and/or loans suspended or canceled. 2 The in-school and separation periods cannot exceed 60 months for the interest only repayment option. The inschool and separation periods cannot exceed 84 months for the deferred repayment option. 3 A loan of $1,000 or less has a maximum repayment term of 37 months. [Remainder of Page Intentionally Left Blank] 70

83 Expired Variable-rate Partnership Advance Education Loan Options Partnership Advance Education Loan Loan Option 4 Option 5 FICO Requirement 670 or above Cosigners One or more creditworthy cosigner(s) Note: Applicants who are creditworthy (meet the underwriting and credit criteria) are not required to provide cosigner(s). Origination Fee 0% 0% Interest Rate Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + 3-month Libor index (varies quarterly) Capitalization of Interest At the end of a qualifying deferment period At repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $500 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? Yes, interest-only payments 2 No Separation Period (After the in-school period and before 10 Months 3 Note: Interest-only repayment 6 Months 2 principal and interest repayment begin) required during this period. Principal and Interest Repayment Term 10 Years 4 18 Years 4 1 The rate is subject to increase after consummation. The three-month Libor index is defined as the daily average of the 3-month London Interbank Offered Rate (LIBOR) (currency in U.S. dollars) that was calculated and published on the British Bankers Association s website on each business day during the 91-day period ending on the 20th day of March, June, September and December. 2 Borrowers with delinquencies during the interest-only repayment period may have future disbursements and/or loans suspended or canceled. 3 The in-school and separation periods cannot exceed 60 months for the interest only repayment option. The inschool and separation periods cannot exceed 84 months for deferred repayment option. 4 A loan of $1,000 or less has a maximum repayment term of 37 months. Underwriting Criteria To qualify for a Partnership Advance Education Loan, borrowers or their cosigner(s) must have: Monthly payments for approved credit (mortgages, car loans, credit cards and other forms of credit, including the loan for which the student has submitted an application) that do not exceed 40% of gross monthly income (if a mortgage is not included, debtto-income ratio cannot exceed 25%). All student loan debt will be treated as though it is in repayment. Continuous employment over the last two years. (This requirement may be waived for retirees, disabled persons or those receiving a verified income.) An annual income of at least $25,

84 No more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years. No charge-offs, repossessions, collection accounts, judgments, foreclosures or garnishments by credit providers. No previous bankruptcies. Not defaulted on any student loan. Note: For joint cosigned loans, at least one cosigner must meet all credit underwriting criteria with the exception of the debt-to-income ratio. Eligibility Criteria To be eligible for this supplemental private student loan program, borrowers must: Be at least of majority age pursuant to applicable law at the time of application or be an emancipated minor. Not have defaulted on any private or government student loan. Be an Iowa resident attending any nonprofit, Title IV eligible, degree-granting, regionally accredited college or university across the country or nonprofit school of nursing across the country; or be a non-iowa resident attending any nonprofit, Title IV eligible, degree-granting, regionally accredited Iowa college or university or nonprofit school of nursing in Iowa. Be accepted, enrolled or attending on at least a half-time basis, as half-time basis is defined by the school, and be making satisfactory academic progress in an eligible education program. Be a citizen or permanent resident of the United States. Cosigner(s) must be citizens of the United States. Repayment Terms Borrowers may qualify for deferment depending upon the loan option chosen. Partnership Advance Education Loan options including: interest payments during the in-school and separation periods, immediate repayment of the loan while enrolled, and a deferred payment option with repayment not required during the in-school period and up to six months after graduation, less than half-time enrollment or leaving school. Deferment is granted at the sole discretion of Iowa Student Loan. Loan Collection If payments are not received on time, the Corporation institutes collection procedures and practices similar to financial institutions for the collection of consumer credit, including but not limited to making collection calls, sending collection letters and s to borrowers, cosigners and references (if/when applicable). For purposes of the indentures and the Iowa Partnership Loan Program Agreement, loans that become 120 days delinquent are considered to be in default. In addition, the Corporation makes monthly reports to four national consumer reporting agencies. The Corporation follows all applicable state and federal laws in its collection efforts. 72

85 Alliance Loan Program Alliance Loan Program Loan Alliance I Alliance V Cosigners None Origination Fee 10% 10% Interest Rate Variable rate % + 3-month Libor index (varies quarterly) Variable rate % + Prime index (varies quarterly) Capitalization of Interest Annually, at repayment and at the end of a qualifying deferment period Annually, at repayment and at the end of a qualifying deferment period Loan Amount Minimum Amount: $500 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $80,000 Payments Required While Enrolled? No No Separation Period (After the in-school period and before principal and interest repayment begin) Principal and Interest Repayment Term 6 Months 3 6 Months 3 20 Years 4 20 Years 4 1 The rate is subject to increase after consummation. The three-month Libor index is defined as the daily average of the 3-month London Interbank Offered Rate (LIBOR) (currency in U.S. dollars) that was calculated and published on the British Bankers Association s website on each business day during the 91-day period ending on the 20th day of March, June, September and December. 2 The rate is subject to increase after consummation. The prime rate index is defined as the U.S. Prime Rate published by the Wall Street Journal on the 10th calendar day prior to month end March, June, September and December (or the preceding business day if the 10th calendar day is not a business day) or 4.50%; whichever is greater. 3 The in-school and separation periods cannot exceed 84 months. 4 A loan of $1,000 or less has a maximum repayment term of 37 months. 73

86 Underwriting Criteria To qualify for an Alliance Loan Program, borrowers must have: Continuous employment over the last two years. (This requirement may be waived for retirees, disabled persons or those receiving a verified income.) No more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years. No charge-offs, repossessions, collection accounts, judgments, foreclosures or garnishments by credit providers. No previous bankruptcies. Not defaulted on any student loan. Eligibility Criteria To be eligible for the Alliance Loan Program, borrowers must: Be at least of majority age pursuant to applicable law at the time of application or be an emancipated minor. Not have defaulted on any private or government student loan. Be an Iowa resident attending any nonprofit, Title IV eligible, degree-granting, regionally accredited college or university across the country or nonprofit school of nursing across the country; or be a non-iowa resident attending any nonprofit, Title IV eligible, degree-granting, regionally accredited Iowa college or university or nonprofit school of nursing in Iowa. Be accepted, enrolled or attending on at least a half-time basis, as half-time basis is defined by the school, and be making satisfactory academic progress in an eligible education program. Be a citizen or permanent resident of the United States. Cosigner(s) must be citizens of the United States. Have been denied a supplemental private student loan requiring a cosigner for the same academic year for which a borrower is applying for the Iowa Alliance Loan. Repayment Terms Borrowers may qualify for deferment depending upon the loan option chosen. Alliance Loan Program offers a deferred payment option with repayment not required during the inschool period and up to six months after graduation, less than half-time enrollment or leaving school. Deferment is granted at the sole discretion of Iowa Student Loan. Loan Collection If payments are not received on time, the Corporation institutes collection procedures and practices similar to financial institutions for the collection of consumer credit, including but not limited to making collection calls, sending collection letters and s to borrowers, cosigners and references (if/when applicable). For purposes of the indentures and the Iowa Partnership Loan Program Agreement, loans that become 120 days delinquent are considered to be in 74

87 default. In addition, the Corporation makes monthly reports to four national consumer reporting agencies. The Corporation follows all applicable state and federal laws in its collection efforts. Loans PLP I Loan = PLP I PLPII Loan = PLP II Partnership Law Loan = PLL Other Partnership Loan Programs Loans PLP I PLL PLP II PLL PLP II PLL PLP II PLL PLP II PLL Cosigners Interest Rate Optional (for applicant or applicant with cosigner(s) who meet employment and credit criteria) None Origination Fee 1% 0% 5% 0% 9% 8.40% Fixed Rate Capitalization of Interest Loan Amount Repayment Term Varies Quarterly Variable Rate 1 Quarterly Annually 2 Varies Quarterly Variable Rate 1 Varies Quarterly Variable Rate 1 Annually Varies Quarterly Variable Rate 1 Minimum Amount: $500 Maximum Annual Amount: Cost of attendance minus other aid 3 Maximum Cumulative Amount: $80, Years 1 The rate is subject to increase after consummation. In no event will the interest rate exceed 21%. Cosigned loans with no origination fee bear a variable rate based on the following: (i) if approved on or prior to June 1, 2002 April 30, 2006, the rate will be based on the COF Index IV plus 2.95% and (ii) if approved on or after May 1, 2006, the rate will be based on Libor plus 2.85%. Cosigned loans with a 5% origination fee bear a variable rate based on the following: (i) if approved on or prior to May 31, 2002, the rate will be based on the corporation s Cost of Funds ( COF ) Index I plus 2.85%, (ii) if approved between June 1, 2002 April 30, 2006, the rate will be based on the COF Index IV plus 2.30% and (iii) if approved on or after May 1, 2006, the rate will be based on Libor plus 2.20%. Non-cosigned loans with no origination fee bear a variable rate based on the following: (i) if approved on or prior to June 1, 2002 April 30, 2006, the rate will be based on the COF Index IV plus 4.10% and (ii) if approved on or after May 1, 2006, the rate will be based on Libor plus 4.20%. Non-cosigned loans with a 9% origination fee bear a variable rate based on the following: (i) if approved on or prior to May 31, 2002, the rate will be based on the COF Index I plus 2.85%, (ii) if approved between June 1, 2002 April 30, 2006, the rate will be based on the COF Index IV plus 2.60% and (iii) if approved on or after May 1, 2006, the rate will be based on Libor plus 2.70%. Cosigned loans with no origination fee bear a variable rate based on the following: (i) if approved on or prior to June 1, 2002 April 30, 2006, the rate will be based on the COF Index IV plus 2.95% and (ii) if approved on or after May 1, 2006, the rate will be based on Libor plus 2.85%. On the first quarterly interest rate change date after the issuance of the Series 2015-A Bonds, the COF Index I and COF Index IV will be Libor plus 1.30%. Libor is defined as the daily average of the 3-month London Interbank Offered Rate (LIBOR) (currency in U.S. dollars) that was calculated and published on the British Bankers Association s website on each business day during the 91-day period ending on the third to last business day of March, June, September and December. 75

88 Underwriting Criteria To qualify for a cosigner loan, the borrower and/or cosigner(s) must meet the following general credit criteria: Have monthly payments for approved credit (mortgages, car loans, credit cards and other forms of credit, including the loan for which the student has submitted an application) that do not exceed 40% of gross monthly income (if a mortgage is not included, debt-toincome ratio cannot exceed 25%). All student loan debt will be treated as though it is in repayment. Have continuous employment over the last two years (for cosigners that are retirees or disabled persons, the requirement will be waived). Have an annual income of at least $15,000. Have no more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years. Have no charge-offs, repossessions, collection accounts, judgments, foreclosures or garnishments by credit providers. Have no previous bankruptcies. Have not defaulted on any student loan. To qualify for a no-cosigner loan, the borrower must meet the following general credit criteria: Have no more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years. Have no charge-offs, repossessions, collection accounts, judgments, foreclosures or garnishments by credit providers. Have no previous bankruptcies. Have not defaulted on any student loan. Eligibility Criteria PLP I & II Loans Applicants: Must be Iowa residents attending any eligible college/university across the country or non-iowa residents attending any eligible Iowa college/university or nonprofit school of nursing approved by the Iowa Board of Nursing. Must be at least age 18 at the time of application or be an emancipated minor for loans without cosigner(s). Students younger than age 18 may qualify with a qualified cosigner(s); cosigner(s) must be at least age 18. Must be a citizen or permanent resident of the United States. Cosigner(s) must be citizens of the United States. Must be accepted for, enrolled or attending, and making satisfactory academic progress in an eligible education program on at least a half-time basis, as half-time basis is defined by the school. 76

89 Must meet the prescribed credit criteria. Partnership Law Loans Applicants: Must be Iowa residents attending any nonprofit, eligible, degree-granting law school across the country or non-iowa residents attending eligible Iowa law schools. Must be at least age 18 at the time of application or be an emancipated minor for loans without cosigner(s). Students younger than age 18 may qualify with a qualified cosigner(s); cosigner(s) must be at least age 18. Must be a citizen or permanent resident of the United States. Cosigner(s) must be citizens of the United States. Must be accepted for, enrolled or attending and making satisfactory academic progress in an eligible law school on at least a half-time basis, as half-time basis is defined by the school. Must meet the prescribed credit criteria. Repayment Terms PLP I & II Loans These loans are placed into automatic deferment of principal and interest. Under this deferment applicants are not expected to make any payments until six months after they have graduated, left school or dropped below half-time status. The aggregate authorized period of deferment may not exceed 84 months. Once repayment of principal and interest begins, payments will be due monthly. Applicants have the option of choosing between a standard (equal payments of monthly principal and interest) repayment plan or two different graduated (scheduled increases in payments of monthly principal and interest) repayment plans. The repayment period is a maximum of 240 months. There is no penalty for prepayment. Partnership Law Loans These loans are placed into automatic deferment of principal and interest. Under this deferment applicants are not expected to make any payments until nine months after they have graduated, left school or dropped below half-time status. The aggregate authorized period of deferment may not exceed 84 months. Once repayment of principal and interest begins, payments will be due monthly. Applicants have the option of choosing between a standard (equal payments of monthly principal and interest) repayment plan or two different graduated (scheduled increases in payments of monthly principal and interest) repayment plans. The repayment period is a maximum of 240 months. There is no penalty for prepayment. 77

90 Loan Collection If payments are not received on time, the Corporation institutes collection procedures and practices similar to financial institutions for the collection of consumer credit, including but not limited to making collection calls, sending collection letters and s to borrowers, cosigners and references (if/when applicable). For purposes of the indentures and the Iowa Partnership Loan Program Agreement, loans that become 120 days delinquent are considered to be in default. In addition, the Corporation makes monthly reports to four national consumer reporting agencies. The Corporation follows all applicable state and federal laws in its collection efforts. Loans Health Degree Loan = HDL Medical Loan Program Loans Cosigner(s) Origination Fee Interim Interest Rate Repayment Interest Rate Capitalization of Interest Loan Amount Repayment Term HDL HDL HDL Optional None (for applicant or applicant with cosigner(s) who meet employment and credit criteria) 5% 7% 9% Varies Quarterly Variable Rate 1, 2 Varies Quarterly Variable Rate 2 Once at Repayment Minimum Amount: $500 Maximum Annual Amount: Cost of attendance minus other aid Maximum Cumulative Amount: $120,000 Varies Quarterly Varies Quarterly Variable Rate 1, 2 Variable Rate 1, 2 Varies Quarterly Varies Quarterly Variable Rate 2 Variable Rate 2 Once at Repayment Minimum Amount: $500 Maximum Annual Amount: Cost of attendance minus other aid 3 Maximum Cumulative Amount: $120, Years 20 Years 1 2 The interim interest rate is applicable during the allowable in-school, internship, residency and grace periods. The rate is subject to increase after consummation. In no event will the interest rate exceed 21.00%. If approved on or prior to April 30, 2006, the rate will be based on the Corporation s COF Index II plus (x) 2.10% during in-school and grace periods, and (y) 2.45% during the repayment period. If approved on or after May 1, 2006, the rate will be based on Libor plus (x) 2.05% during in-school and grace periods, and (y) 2.40% during the repayment period. On the first quarterly interest rate change date after the issuance of the 2015-A Bonds, the COF Index II will be Libor plus 1.30%. Libor is defined as the daily average of the 3-month London Interbank Offered Rate (LIBOR) (currency in U.S. dollars) that was calculated and published on the British Bankers Association s website on each business day during the 91-day period ending on the third to last business day of March, June, September and December. 78

91 Underwriting Criteria To qualify for a cosigner Medical Loan, the borrower and/or cosigner(s) must meet the following general credit criteria: Have monthly payments for approved credit (mortgages, car loans, credit cards and other forms of credit, including the loan for which the student has submitted an application) that do not exceed 40% of gross monthly income (if a mortgage is not included, debt-toincome ratio cannot exceed 25%). All student loan debt will be treated as though it is in repayment. Have continuous employment over the last two years (for cosigners that are retirees or disabled persons, the requirement will be waived). Have an annual income of at least $15,000. Have no more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years. Have no charge-offs, repossessions, collection accounts, judgments, foreclosures or garnishments by credit providers. Have no previous bankruptcies. Have not defaulted on any student loan. To qualify for a no-cosigner Medical Loan, the borrower must meet the following general credit criteria: Have no more than two accounts reporting 30-day delinquencies and no delinquencies of 60 days or more during the previous two years. Have no charge-offs, repossessions, collection accounts, judgments, foreclosures or garnishments by credit providers. Have no previous bankruptcies. Have not defaulted on any student loan. Eligibility Criteria Health Degree Loans Applicants: Must be enrolled in one of the following programs: Allopathy, Chiropractic, Clinical Psychology, Dentistry, Health Administration, Optometry, Osteopathy, Pharmacy, Podiatry, Public Health, Veterinary Medicine or other medical related disciplines. Must be at least age 18 at the time of application or be an emancipated minor for loans without cosigner(s). Students younger than age 18 may qualify with a qualified cosigner(s); cosigner(s) must be at least age 18. Must be a citizen or permanent resident of the United States. Cosigner(s) must be citizens of the United States. 79

92 Must be accepted for, enrolled or attending, and making satisfactory academic progress in an eligible education program on at least a half-time basis, as half-time basis is defined by the school. Must meet the prescribed credit criteria. Loan Collection If payments are not received on time, the Corporation institutes collection procedures and practices similar to financial institutions for the collection of consumer credit, including but not limited to making collection calls, sending collection letters and s to borrowers, cosigners and references (if/when applicable). For purposes of the indentures and the Iowa Partnership Loan Program Agreement, loans that become 120 days delinquent are considered to be in default. In addition, the Corporation makes monthly reports to four national consumer reporting agencies. The Corporation follows all applicable state and federal laws in its collection efforts. Loan Origination The Private Loan origination process is a cooperative effort among the Corporation and eligible schools. The following apply with respect to the Private Loan Programs as provided. Application Process. Applications are available on line and from other sources. Application materials consist of a promissory note or credit agreement, an application, an addendum and a notice to Cosigner which the Eligible Borrower and Cosigner, if applicable, must sign at the time of the application. Evaluation of Application. In evaluating the application for a Private Loan, the Corporation determines whether the applicant meets all the criteria to be an Eligible Borrower and, if applicable, whether the Cosigner meets the criteria to be a Cosigner. Assuming the applicant is eligible to receive a loan, the Corporation also determines that the amount of the Private Loan represents at least the minimum loan amount and does not exceed the annual or cumulative maximum allowed under both the Credit Test and the Iowa Partnership Loan Program. If all criteria for borrower eligibility and Cosigner eligibility, if applicable, are not met, the Corporation rejects the application. The Corporation informs the applicant within thirty days of receipt of the application as to the status of their loan. A negative determination may be appealed by the applicant to the Corporation within sixty days of such notice. The Corporation informs the applicant if other eligibility criteria have not been met pursuant to applicable laws. A. Credit Test. In order to be eligible to receive a Private Loan under these programs, the prospective borrower or Cosigner, upon whose creditworthiness the Private Loan is sought (the Creditworthy Applicant ), must have a satisfactory credit record and must meet the following credit history criteria pursuant to a credit report to qualify: 1. No more than two 30-or-more day delinquencies and no 60-or-more day delinquencies in the prior two years. 2. No chargeoffs, repossessions, collection accounts, judgments, foreclosures, bankruptcies, student loan defaults, garnishments by credit providers or tax liens; 80

93 provided that in the case where there is more than one Cosigner, only one of the Cosigners will constitute the Creditworthy Applicant and be required to have a satisfactory credit record and meet the foregoing credit history criteria. For Canadian Loans, no Cosigner is allowed and accordingly, the prospective borrower must meet the requirements of the Credit Test on his or her own. The Corporation uses the same credit criteria in determining eligibility for all loans under these programs (including Partnership I and II Loans and Partnership Advance Education Loans, formerly known as Partnership III Loans), except that (i) in order to be eligible to receive a Partnership Advance Education Loan, the borrower or Cosigner upon whose creditworthiness the Partnership Advance Education Loan is sought must have a minimum annual income level of $25,000 and a minimum FICO score of 670, and (ii) in order to be eligible to receive a Medical Loan with a 5% origination fee, a Tier 1 National Alternative Loan with a 4% origination fee or a Tier 2 National Alternative Loan with a 5% origination fee, the borrower or Cosigner upon whose creditworthiness the Medical Loan or National Alternative Loan is sought must have a minimum annual income level of $15,000. B. Certification by the eligible school. The Corporation relies upon certification by the eligible school in determining whether the applicant meets certain requirements of eligibility unrelated to the Credit Test, except when used for Private Loan consolidation or refinancing. The Corporation relies on certifications from the eligible school in determining (i) whether the applicant is currently enrolled or has been accepted for enrollment; (ii) whether the applicant is making satisfactory academic progress; and (iii) whether the applicant is eligible for a Private Loan based on costs of attendance and estimated financial aid. Certification as to eligibility based on costs of attendance and estimated financial aid relates to the provision of each of the Private Loan Programs, which provide that the applicable Private Loans cannot exceed an amount greater than the difference between the borrower s total costs of attendance at the eligible school for the academic year for which the loan is sought and other forms of student assistance for which the borrower may be eligible, excluding loans pursuant to the provisions of Section 428(B) of the Higher Education Act (relating to parent loans) and Subpart I of Part C of Title VII of the Public Health Service Act (relating to student assistance). In determining the costs of attendance, eligible schools are requested to provide and certify the cost of tuition and fees and other expenses related to attendance during the loan period which is cited on the application. Private Loan Program Loan Statistics Following is certain current and historical information relating to loans originated under the Corporation s previously offered Private Loan Programs. [Remainder of Page Intentionally Left Blank] 81

94 Iowa Student Loan Liquidity Corporation Static Pool Cohort Default Loans are in Default at 120 Days Delinquent Loans with a Cosigner (as of June 30, 2014) Repayment Year Principal Balance at Repayment Repayment Year of Default Totals ,318, % 0.54% 1.07% 0.47% 0.61% 0.45% 0.29% 0.79% 0.47% 0.24% 0.17% 0.15% 5.57% ,904, % 0.80% 0.88% 0.69% 0.42% 0.76% 0.41% 0.25% 0.46% 0.21% 0.19% 5.31% ,579, % 0.98% 0.61% 0.55% 0.73% 0.52% 0.34% 0.33% 0.31% 0.08% 5.13% ,546, % 1.56% 1.32% 0.68% 0.54% 0.54% 0.53% 0.69% 0.38% 6.70% ,257, % 1.78% 1.35% 0.75% 0.53% 0.90% 0.41% 0.64% 6.60% ,942, % 1.94% 0.79% 0.79% 0.70% 0.61% 0.43% 5.59% ,721, % 1.41% 0.59% 0.83% 0.93% 0.80% 5.18% ,502, % 1.10% 1.07% 0.62% 0.73% 4.11% ,561, % 1.88% 0.78% 0.50% 3.42% ,553, % 1.36% 0.71% 2.91% ,663, % 1.97% 3.12% ,735, % 1.12% Loans without a Cosigner (as of June 30, 2014) Repayment Year Principal Balance at Repayment Repayment Year of Default Totals ,794, % 6.79% 4.81% 2.52% 1.92% 1.41% 1.94% 1.25% 0.88% 0.85% 0.57% 0.44% 25.90% ,348, % 7.54% 3.22% 2.43% 2.04% 1.95% 1.33% 0.79% 0.85% 0.72% 0.64% 25.02% ,170, % 7.01% 3.60% 2.86% 2.12% 1.79% 1.43% 0.96% 0.79% 0.66% 26.03% ,806, % 8.01% 4.52% 2.92% 1.97% 1.56% 1.19% 1.01% 0.78% 25.88% ,317, % 9.65% 4.66% 2.94% 1.52% 1.46% 1.46% 0.97% 26.77% ,141, % 10.18% 3.58% 2.36% 2.02% 1.59% 1.09% 26.16% ,435, % 8.97% 3.34% 2.69% 2.40% 1.75% 24.22% ,803, % 7.64% 3.68% 3.38% 2.21% 22.11% ,899, % 7.85% 3.75% 2.33% 19.21% ,035, % 7.36% 4.31% 17.86% ,577, % 8.32% 15.47% ,287, % 7.92% 82

95 Aggregated data based on all private loans offered by Iowa Student Loan Liquidity Corporation Terms and calculations of the default statistics are defined as follows: Repay Begin Fiscal Year - The fiscal year that the loans entered repayment. Principal Balance at Repayment - The amount of principal entering repayment in a given year based on the disbursed principal including any interest capitalized at repayment less any payments made. Years in Repayment - Measured in years between repayment start date and default date. Periodic Defaults - Defaulted principal in each year of repayment as a percentage of the Principal Balance at Repayment in each repayment year, includes any interest capitalization that occurred prior to default and is not reduced by any amount of recoveries after the loan defaulted. Total - The sum of the Periodic Defaults across Years in Repayment for each Repayment Year. Iowa Student Loan Liquidity Corporation Recovery Status Loans with a Cosigner (as of June 30, 2014) Repayment Year Gross Defaults Years of Recovery Totals ,298, % 1.82% 3.33% 2.84% 1.74% 2.23% 1.12% 3.34% 2.09% 3.42% 3.59% 2.48% 28.02% ,959, % 1.78% 3.32% 0.97% 1.42% 2.28% 2.78% 3.74% 3.27% 2.76% 2.77% 25.27% ,284, % 1.63% 1.03% 2.14% 2.20% 3.68% 3.36% 4.75% 3.54% 2.62% 24.94% ,120, % 0.28% 0.50% 1.71% 2.04% 2.22% 2.03% 3.72% 2.83% 15.35% ,316, % 0.73% 2.61% 1.53% 3.24% 1.83% 3.35% 3.77% 17.09% ,069, % 0.37% 0.85% 1.21% 2.84% 2.09% 4.01% 11.39% ,422, % 1.10% 1.94% 1.25% 1.66% 3.45% 9.54% ,376, % 1.29% 3.92% 1.34% 1.78% 8.37% , % 0.44% 0.69% 1.56% 2.69% , % 1.11% 2.58% 3.76% , % 0.61% 0.69% , % 0.45% [Remainder of Page Intentionally Left Blank] 83

96 Loans without a Cosigner (as of June 30, 2014) Repayment Year Gross Defaults Years of Recovery Totals ,672, % 6.47% 2.44% 0.80% 0.71% 1.76% 1.32% 1.42% 1.45% 1.54% 1.98% 2.06% 22.63% ,099, % 4.69% 1.11% 1.18% 0.96% 1.25% 1.30% 1.41% 1.87% 1.86% 2.02% 19.08% ,595, % 1.09% 0.74% 0.88% 1.39% 1.51% 1.59% 2.13% 2.13% 2.54% 14.30% ,295, % 0.33% 0.80% 1.02% 1.37% 1.80% 1.88% 1.83% 2.23% 11.29% ,565, % 0.36% 1.10% 1.41% 1.41% 1.85% 2.25% 2.66% 11.10% ,153, % 0.54% 0.91% 1.33% 1.47% 1.67% 2.04% 7.98% ,821, % 0.52% 0.79% 0.97% 1.34% 1.61% 5.27% ,271, % 0.37% 0.63% 1.05% 1.29% 3.37% ,159, % 0.41% 0.75% 1.05% 2.26% ,220, % 0.50% 0.82% 1.47% ,028, % 0.41% 0.47% , % 2.14% Aggregated data based on all private loans offered by Iowa Student Loan Liquidity Corporation. Terms and calculations of the recovery statistics are defined as follows: Repayment Year is the fiscal year that the loans entered repayment. Gross Defaults is the cumulative defaulted principal in each Repayment Year. Default Recoveries is recoveries of principal as a percentage of the Gross Defaults for each Repayment Year. Total is the sum of the Default Recoveries across Years of Recovery for each Fiscal Year. [Remainder of Page Intentionally Left Blank] 84

97 Iowa Student Loan Liquidity Corporation Default Experience (All Private Loan Programs) Loans are in Default at 120 Days Delinquent (as of June 30) Aggregated data based on all private loans offered by Iowa Student Loan Liquidity Corporation. The twelve month reporting period is measured from July 1 st through June 30 th. Gross Loan Defaults is the sum of the default experience for the past twelve months and includes principal and any capitalized interest at the time the loans defaulted. Net Recoveries is the sum of all principal recoveries during the period. Net Loan Defaults are the gross defaults net of all principal recoveries for the past twelve months. Average Loans in Repayment is the twelve-month average of total loan principal in repayment. [Remainder of Page Intentionally Left Blank] 85

98 Iowa Student Loan Liquidity Corporation Delinquency Experience (All Private Loan Programs) (as of June 30) Delinquency Status Principal Balance Outstanding % to Total in Repayment Principal Balance Outstanding % to Total in Repayment Principal Balance Outstanding % to Total in Repayment Principal Balance Outstanding % to Total in Repayment Principal Balance Outstanding % to Total in Repayment Current $ 782,683, % $ 822,205, % $ 858,051, % $ 875,839, % $ 842,884, % ,633, % 17,492, % 18,960, % 19,620, % 23,947, % ,003, % 10,788, % 13,271, % 12,581, % 14,607, % ,637, % 6,319, % 8,813, % 6,187, % 7,575, % Greater than ,454, % 140,183, % 128,595, % 111,721, % 93,758, % Total Repayment $ 953,412, % $ 996,989, % $ 1,027,692, % $ 1,025,950, % $ 982,773, % Economic Hardship Deferment History (All Private Loan Programs) (as of June 30) Deferment History Total Repayment Principal Balance Outstanding Principal % to Total in % to Total in Principal Balance % to Total in Principal Balance % to Total in Principal Balance Balance Repayment Repayment Outstanding Repayment Outstanding Repayment Outstanding Outstanding % to Total in Repayment $ 22,818, % $ 27,194, % $ 32,714, % $ 29,035, % $ 32,664, % $ 953,412, % $ 996,989, % $ 1,027,692, % $ 1,025,950, % $ 982,773, % Financed FFELP Loans SERVICING OF THE FINANCED LOANS With respect to the Financed Loans that are FFELP Loans, the Corporation and each other Servicer is required under the Higher Education Act, the rules and regulations of the Guaranty Agencies and, in the case of the Corporation, the Indenture, to use due diligence in the servicing and collection of such Financed Loans. The Higher Education Act defines due diligence as requiring the use of collection practices at least as extensive and forceful as those generally practiced by financial institutions for the collection of consumer loans. The Higher Education Act also requires the exercise of reasonable care and diligence in the making and servicing of student loans originated under the Higher Education Act and provides that the Secretary of Education may disqualify an eligible lender (which could include the Corporation or the Trustee as holder of student loans originated under the Higher Education Act) from further federal insurance if the Secretary of Education is not satisfied that the foregoing standards have been or will be met. An eligible lender may not relieve itself of its responsibility for meeting these standards by delegation of its responsibility to any servicing agent and, accordingly, if any Servicer fails to meet such standards, the Corporation s ability to realize the benefits of insurance may be adversely affected. The Higher Education Act requires that a Guaranty Agency ensure that due diligence will be exercised by an eligible lender in making and servicing student loans originated under the Higher Education Act Guaranteed by such Guaranty Agency. Each Guaranty Agency establishes procedures and standards for due diligence to be exercised by the servicer and by eligible lenders which service loans subject to such Guaranty Agencies Guarantee. If the Corporation or any 86

99 other Servicer does not comply with the established due diligence standards, the Corporation s ability to realize the benefits of any guaranty may be adversely affected. Servicing of Financed Loans The Financed Loans will be serviced by Aspire Resources Inc. ( Aspire ), a wholly owned taxable subsidiary of the Corporation, as servicer (the Servicer ). The Corporation has also entered into an agreement with the Pennsylvania Higher Education Assistance Agency ( PHEAA ) under which PHEAA will act as backup servicer (the Backup Servicer ) and, in such role, will act as successor Servicer with respect to the Financed Loans serviced by the Corporation upon the occurrence of certain events described below under Backup Servicer and Backup Servicing Agreement. The Corporation may also in the future contract with a loan servicer to provide such services for any or all of the Financed Loans. The Corporation will be paid a monthly fee to pay the Servicer (the Servicing Fee ), equal to one-twelfth of 1.10% of the outstanding principal balance of the Financed FFELP Loans as of the end of each calendar month and one-twelfth of 0.75% of the outstanding principal balance of the Financed Private Loans. This fee will be in addition to the Program Expenses the Corporation will receive under the Indenture. The Corporation has been servicing student loans originated under the Higher Education Act ( Higher Education Act Loans ) since 1981 and Private Loans since In January 2015, the Corporation transferred all staff utilized for Loan servicing to Aspire and assigned all servicing contract to Aspire. The Aspire employs over 320 employees. As of February 28, 2015, Aspire was the servicer for (1) $776,976,262 outstanding principal amount of Higher Education Act Loans owned by the Corporation, (2) $984,972,853 outstanding principal amount of Private Loans owned by the Corporation, and (3) $761,438,826 outstanding principal amount of Higher Education Act Loans and Private Loans owned by other lenders. Aspire is also a servicer of Federal Direct Student loans made to approximately 424,000 borrowers. The Servicer will, among other services, perform the following activities relating to the Financed Loans: file maintenance; process borrower deferment and forbearance requests; exercise due diligence, within the meaning of the applicable Private Loan Program, in the servicing, administration and collection of all Financed Loans; collect payments of principal and interest and deposit such payments within two business days of receipt into the Revenue Fund established under the Indenture; prepare and maintain all appropriate accounting records with respect to all transactions related to each Financed Loan; prepare and file various reports with the Trustee; identify on its servicing system the Bonds as the source of financing for each such Financed Loan; and maintain duplicates or copies of all material file documents. The Servicer bills Private Loan borrowers monthly for payments. If payments are not received on time, the Servicer institutes collection procedures and practices similar to financial 87

100 institutions for the collection of consumer credit loans. In addition, the Servicer makes periodic reports to a national credit bureau. The Servicer follows all applicable state and federal laws in its collection efforts. The Servicer attempts to contact borrowers before they enter repayment in an effort to ensure they have the information necessary to repay their student loans. The Servicer also works with borrowers who request counseling regarding ways they can avoid delinquent payments. If a Private Loan borrower becomes delinquent, the Servicer will promptly identify and implement appropriate collection procedures and practices. The Loan Servicing Department has in place controls and quality assurance checks to provide assurance that incoming calls, tasks and loan documents are processed accurately and completely. The Servicer provides its loan counselors with extensive training through a five- to sixweek private loan training program. The Loan Servicing Department also utilizes a voice response system to enable customers to access detailed account information, make payment requests, and manage their accounts without human interaction. Customers also have the option to speak with a representative at any time, and may also receive account information and make payments using a secure website. The Loan Servicing Department also offers auto debit and electronic bill reminder notices. Since its inception, the Corporation has serviced its portfolio of federally reinsured loans with the assistance of the electronic servicing programs created, maintained and utilized by PHEAA and/or American Education Services, an unincorporated division of PHEAA. The servicing system of PHEAA is presently in operation in several states in addition to Pennsylvania. The Corporation has entered into an agreement with PHEAA (the PHEAA Contract ) under which PHEAA agrees to provide the equipment, software, training and related support necessary to enable the Corporation to comply with the provisions of the Higher Education Act, the Public Health Service Act and other federal and state laws. Pursuant to the PHEAA Contract, the Corporation uses the PHEAA system. The current expiration date of the PHEAA Contract is October 31, The termination date is automatically extended for one-year periods unless either party, by written notice to the other, at least 180 days prior to the scheduled or extended termination date, notifies the other party of its intention to terminate the contract, in which case there shall be no such automatic extension. The Financed Loans serviced directly by the Corporation are not subject to a separate servicing agreement, but are subject to the specific servicing terms and conditions set forth in the Indenture. Backup Servicer and Backup Servicing Agreement The Corporation has covenanted in the Indenture to maintain a backup servicing agreement with a third-party servicer. PHEAA has agreed to act as Backup Servicer with respect to the Financed Loans serviced by the Corporation pursuant to a Back-Up Third Party Servicing 88

101 Agreement, dated August 25, 2011 (the Backup Servicing Agreement ), by and between PHEAA and the Corporation. PHEAA. The following information has been furnished by PHEAA for use in this Official Statement. Neither the Corporation nor the Underwriter makes any guarantee or any representation as to the accuracy or completeness thereof or the absence of material adverse change in such information or in the condition of PHEAA subsequent to the date hereof. The Pennsylvania Higher Education Assistance Agency ("PHEAA") is a body corporate and politic constituting a public corporation and government instrumentality created pursuant to an act of the Pennsylvania Legislature. Under its enabling legislation, PHEAA is authorized to issue bonds or notes, with the approval of the Governor of the Commonwealth of Pennsylvania for the purpose of purchasing, making, or guaranteeing loans. Its enabling legislation also authorizes PHEAA to undertake the origination and servicing of loans made by PHEAA and others. PHEAA's headquarters are located in Harrisburg, Pennsylvania with regional offices located throughout Pennsylvania. As of December 31, 2014, PHEAA had approximately 3,400 employees. PHEAA services student loans through its Commercial Servicing line of business, FedLoan Servicing ("FLS") line of business and Remote Servicing line of business. The Commercial Servicing line of business services private student loans and Federal Family Education Loan ( FFEL ) program loans for customers which consist of national and regional banks and credit unions, secondary markets, and government entities. The FLS line of business services federally owned FFEL and William D. Ford ( Direct Loan ) program loans. The Remote Servicing line of business provides PHEAA's systems to guarantors, other servicers and Not-for-Profit ( NFP ) servicers, who were awarded servicing contracts under the Direct Loan program for use in servicing borrowers. As of December 31, 2014, PHEAA serviced approximately 9.8 million student borrowers representing an aggregate of approximately $256.9 billion outstanding principal amount under its Commercial Servicing and FLS lines of business. PHEAA is one of the nation's largest servicers of private student loans, with approximately $13.1 billion principal balance outstanding of the $50.8 billion serviced for private lenders as of December 31, PHEAA is also one of four primary servicers that were awarded a contract to service Title IV loans owned by the Department of Education. The initial phase of the Title IV Servicing Management contract involved FFEL program loans, which were sold to the Department of Education under the Ensuring Continued Access to Student Loans Act ( ECASLA ). ECASLA gave the Department of Education authority to purchase FFELP Loans from private lenders. In addition, PHEAA began servicing student loans originated under the FDSL Program during the academic year. PHEAA's FLS line of business services the federally owned program loans, and as of December 31, 2014, the portfolio balance of loans serviced by FLS was $206.1 billion. 89

102 Under PHEAA s Remote Servicing line of business, the remote clients service approximately 2.1 million student borrowers representing approximately $46.0 billion outstanding principal amount, including $35.5 billion owned by the Department of Education. FFELP Net Reject Rate As a servicer, PHEAA works to minimize the net reject rate, which is the amount of claims submitted for payment that are rejected by the guarantor and are subsequently unable to be cured. The net reject rate for both the number and dollar value of loans for the last three calendar years is listed below. FFELP Net Reject Rate Year 2014 Loans 0.005% Dollars 0.004% % 0.010% % 0.036% The net reject rate is calculated based on claims submitted three years prior which were unable to be cured during the three year cure period which ended during the calendar years noted above. The number and dollar value of rejected claims not cured is divided by the total claims filed during that same period three years prior. PHEAA's most recent audited financial reports are available at No portion of the website is incorporated into this Official Statement. The location of PHEAA s audited financial statements is included here in for the convenience of potential purchasers of the Bonds. In no event is such information or any information on PHEAA s website incorporated herein by reference. Neither the Corporation nor the Underwriter is responsible for the accuracy of the information contained on the PHEAA website. Backup Servicing Agreement. Pursuant to the Indenture, upon the occurrence of a Servicer Termination Event, the Trustee, at the written direction of the Corporation or the Owners of a majority of the outstanding principal amount of Bonds, shall remove the Corporation as Servicer and appoint PHEAA as the successor Servicer for the Financed Loans. The Trustee shall give prompt written notice to the Bondowners of any Servicer Termination Event of which it has knowledge. Notice of the replacement of the Corporation as Servicer shall be given by the Trustee to the Bondowners and each Rating Agency. Upon the Trustee s notice to PHEAA, as Backup Servicer, that a Servicer Termination Event has occurred under the Indenture, PHEAA will be appointed to then act as Servicer under the Indenture pursuant to the terms of that certain Servicing Agreement, dated as of August 25, 2011 (the PHEAA Servicing Agreement ), between PHEAA and the Corporation. 90

103 The Backup Servicing Agreement has a term commencing on August 25, 2011 and continuing until such time as the principal and interest on the Financed Loans are paid in full, unless earlier terminated by the Corporation or PHEAA pursuant to the terms thereof. The term of the PHEAA Servicing Agreement will commence upon the appointment of the Backup Servicer as Servicer and continue until such time as the principal of and interest on the Financed Loans are paid in full, unless the PHEAA Servicing Agreement is terminated by either party thereto pursuant to the terms thereof. PHEAA may terminate the Backup Servicing Agreement and the PHEAA Servicing Agreement in the event that (i) the Corporation cannot perform a material provision of the Backup Servicing Agreement; or (ii) the Corporation (a) discontinues its business, (b) generally does not pay its debts as such become due, (c) makes a general assignment for the benefit of its creditors, (d) admits material allegations of petitions filed against it in any bankruptcy or other similar proceeding, (e) suffers or permits for 30 days any judgment approving a reorganization or liquidation of all or substantially all its assets or (f) takes any action to effect the foregoing; provided such termination right in (ii) above shall not be available if, within 14 days of such event, the Trustee agrees to take full assignment of the Backup Servicing Agreement and fulfill all responsibilities and duties of the Servicer, for the Financed Loans in the Trust Estate. In the event PHEAA elects to terminate for failure of payment, PHEAA has agreed that the termination will not become effective if, within 14 days of such event, the Trustee agrees to remedy the situation and take full assignment and fulfill all responsibilities and duties of owner for the Student Loans identified in its trust(s). The Attorney General of the State of Pennsylvania, on behalf of PHEAA, has given final approval of the Backup Servicing Agreement. The Corporation will be responsible for paying when due any fees or expenses owed to PHEAA under the Backup Servicing Agreement. LEGALITY FOR INVESTMENT AND DEPOSIT The Series 2015-A Bonds are securities in which the State and all political subdivisions of the State, their officers, boards, commissions, departments or other agencies, banks, savings banks, savings and loan associations, investment companies, all insurance companies, insurance associations and all administrators, guardians, executors, trustees, other fiduciaries, and all other persons who are authorized to invest in bonds, notes or other obligations of the State, may properly and legally invest any funds, including capital belonging to them or within their control. The Series 2015-A Bonds are securities which may properly and legally be deposited with and received by any State or municipal officers or agency of the State for any purpose for which the deposit of bonds or other obligations of the State is now or may hereafter be authorized by law. TAX MATTERS In the opinion of Ahlers & Cooney, P.C., Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions and assuming (among other things), 91

104 compliance with certain covenants, interest on the Series 2015-A Bonds is excluded from gross income for federal income tax purposes. Interest on the Series 2015-A Bonds is a specific preference item for purposes of the individual and corporate federal alternative minimum taxes. The opinions are subject to the condition that the Corporation comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code") that must be satisfied subsequent to the issuance of the Series 2015-A Bonds in order that interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The Corporation has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Series 2015-A Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2015-A Bonds. However, interest on the Series 2015-A Bonds is not excluded from income for State of Iowa income tax purposes. A copy of the opinion of Bond Counsel proposed to be delivered with the Series 2015-A Bonds is set forth in APPENDIX B hereto. Section 103 of the Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Series 2015-A Bonds. The Corporation has covenanted to comply with certain restrictions designed to assure that interest on the Series 2015-A Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Series 2015-A Bonds being included in federal gross income, possibly from the date of issuance of the Series 2015-A Bonds. The opinions of Bond Counsel assume compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Series 2015-A Bonds may adversely affect the tax status of interest on the Series 2015-A Bonds. Although Bond Counsel has rendered an opinion that interest on the Series 2015-A Bonds is excluded from gross income for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Series 2015-A Bonds may otherwise affect a Bondowner s federal, state or local tax liability. The nature and extent of these other tax consequences will depend upon the particular tax status of the Bondowner or the Bondowner s other items of income or deduction. Bond Counsel expresses no opinion regarding any other tax consequences. Bond Counsel s opinion is not a guarantee of a result, but represents its legal judgment based upon its review of existing statutes, regulations, published rulings and court decisions and the representations and covenants of the Corporation described above. No ruling has been sought from the Internal Revenue Service (the Service ) with respect to the matters addressed in the opinion of Bond Counsel, and Bond Counsel s opinion is not binding on the Service. The Service has an ongoing program of auditing the tax-exempt status of the interest on tax-exempt obligations. If an audit of the Series 2015-A Bonds is commenced, under current procedures the Service is likely to treat the Corporation as the taxpayer, and the Bondowners would have no right to participate in the audit process. In responding to or defending an audit of the tax-exempt status of the interest on the Series 2015-A Bonds, the Corporation may have different or conflicting interests from the Bondowners. Public awareness of any future audit of the Series 92

105 2015-A Bonds could adversely affect the value and liquidity of the Series 2015-A Bonds during the pendency of the audit, regardless of its ultimate outcome. Except as described above, Bond Counsel expresses no other opinion with respect to any other federal, state or local tax consequences under present law, or proposed legislation, resulting from the receipt or accrual of interest on, or the acquisition or disposition of, the Series 2015-A Bonds. Prospective purchasers of the Series 2015-A Bonds should be aware that the ownership of tax-exempt obligations such as the Series 2015-A Bonds may result in collateral federal tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, certain foreign corporations doing business in the United States, S corporations with subchapter C earnings and profits, individual recipients of Social Security or Railroad Retirement benefits, individuals otherwise qualifying for the earned income tax credit, owners of an interest in a FASIT, and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry, or who have paid or incurred certain expenses allocable to, tax-exempt obligations. Prospective purchasers should consult their own tax advisors as to the applicability of these consequences to their particular circumstances. The initial public offering price of certain Series 2015-A Bonds may be less than the principal amount thereof (the Discount Bonds ). The difference between the principal amount payable at maturity of the Discount Bonds and the initial public offering price of such Discount Bonds, assuming a substantial amount is first sold to the public at such price (the Offering Price ), will be treated as original issue discount. With respect to a taxpayer who purchases a Discount Bond in the initial public offering at the Offering Price and who holds such Discount Bond to maturity, the full amount of original issue discount will constitute interest which is excludable from the gross income of the owner of such Discount Bond for federal income tax purposes to the same extent as current interest, and will not be treated as taxable capital gain upon payment of such Discount Bond upon maturity. The original issue discount on each of the Discount Bonds is treated as accruing daily over the term of such Discount Bond on the basis of a constant yield compounded at the end of each six-month period (or shorter initial period from the date of original issue). The amount of original issue discount accruing during such period will be added to the owner s tax basis for the Discount Bonds. Such adjusted tax basis will be used to determine taxable gain or loss upon disposition of the Discount Bonds (including sale, redemption or payment at maturity). An owner of a Discount Bond who disposes of it prior to maturity should consult such owner s tax advisor as to the amount of original issue discount accrued over the period held and the amount of taxable gain or loss upon the sale or other disposition of such Discount Bond prior to maturity. Owners who purchase Discount Bonds in the initial public offering but at a price different than the Offering Price or who do not purchase Discount Bonds in the initial public offering should consult their tax advisors with respect to the tax consequences of the ownership of such Discount Bonds. Owners of Discount Bonds should consult their own tax advisors with respect to the state and local tax consequences of owning the Discount Bonds. It is possible that under the applicable provisions governing the determination of state or local income taxes, accrued 93

106 original issue discount on the Discount Bonds may be deemed to be received in the year of accrual even though there will not be a corresponding cash payment until a later year. The initial public offering price of certain Series 2015-A Bonds (the Premium Bonds ) may be greater than the amount payable on such Series 2015-A Bonds at maturity. An amount equal to the difference between the initial public offering price of a Premium Bond (assuming that a substantial amount of the Premium Bonds of that maturity are sold to the public at such price) and the amount payable at maturity constitutes premium to the initial purchaser of such Premium Bonds. The basis for federal income tax purposes of a Premium Bond in the hands of such initial purchaser must be reduced each year by the amortizable bond premium, although no federal income tax deduction is allowed as a result of such reduction in basis for amortizable bond premium. Such reduction in basis will increase the amount of any gain (or decrease the amount of any loss) to be recognized for federal income tax purposes upon a sale or other taxable disposition of a Premium Bond. The amount of premium which is amortizable each year by an initial purchaser is determined by using such purchaser s yield to maturity. Purchasers of the Premium Bonds should consult with their own tax advisors with respect to the determination of amortizable bond premium on Premium Bonds for federal income tax purposes and with respect to the state and local tax consequences of owning and disposing of Premium Bonds. ABSENCE OF CERTAIN LITIGATION To the knowledge of the Corporation, there is no controversy or litigation of any nature now pending or threatened to restrain or enjoin the issuance, sale, execution or delivery of the Series 2015-A Bonds, or in any way contesting or affecting the validity of the Series 2015-A Bonds, any proceedings of the Corporation taken with respect to the issuance or sale thereof, the pledge or application of any moneys or security provided for the payment of the Series 2015-A Bonds or the due existence of powers of the Corporation. LEGALITY The legality of the authorization, issuance and sale of the Series 2015-A Bonds is subject to the approving legal opinions of Ahlers & Cooney, P.C., Des Moines, Iowa, Bond Counsel. The opinion of Bond Counsel will be delivered substantially in the form attached hereto as Appendix B. Certain additional legal matters will be passed upon for the Corporation by Ahlers & Cooney, P.C., Des Moines, Iowa, in its capacity as corporate counsel to the Corporation. Certain legal matters will be passed upon for the Underwriter by its counsel, Dorsey & Whitney LLP, Des Moines, Iowa. UNDERWRITING The Series 2015-A Bonds are being purchased by Morgan Stanley & Co. LLC (the Underwriter ). The Underwriter will receive an underwriting fee for the Series 2015-A Bonds in the amount of $. The initial public offering prices of the Series 2015-A Bonds set forth on the inside front cover page may be changed without notice by the Underwriter. The Underwriter may offer and sell the Series 2015-A Bonds to certain dealers (including dealers depositing Series 2015-A Bonds into investment trusts, certain of which may be sponsored or 94

107 managed by the Underwriter) and others at prices lower than the offering prices set forth on the inside front cover page hereof. Morgan Stanley, parent company of Morgan Stanley & Co. LLC, an underwriter of the Bonds, has entered into a retail distribution arrangement with Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute municipal securities to retail investors through the financial advisor network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co. LLC may compensate Morgan Stanley Smith Barney LLC for its selling efforts with respect to the Bonds. The Underwriter (and its affiliates) is full service financial institution engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, principal investment, hedging, financing and brokerage services. The Underwriter has, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for the Corporation, for which it received or will receive customary fees and expenses. In the ordinary course of its various business activities, the Underwriter may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities, which may include credit default swaps) and financial instruments (including bank loans) for its own account and/or the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investments and securities may involve securities and instruments of the Corporation. The Underwriter may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities, or instruments and may at any time hold or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments. RATINGS Prior to the issuance and delivery of the Series 2015-A Bonds, Standard & Poor s Ratings Services, a division of The McGraw-Hill Companies, Inc. ( S&P ), and Fitch, Inc. ( Fitch ) are expected to assign their bond rating of A(sf) and Asf, respectively, to the Series 2015-A Bonds. Such ratings reflect only the views of each rating agency at the time such ratings were given and the Corporation makes no representation as to the appropriateness of the ratings. An explanation of the significance of such ratings can only be obtained from the rating agency furnishing the same. There is no assurance that a particular rating will continue for any given period of time or that it will not be revised downward or withdrawn entirely by such rating agency if, in the judgment of S&P or Fitch, as the case may be, circumstances so warrant. Any such downward revision or withdrawal of such rating may have an adverse effect on the market price of the Series 2015-A Bonds. The ratings are not a recommendation to buy or sell the Series 2015-A Bonds, and are not a comment as to the suitability of the Series 2015-A Bonds for any investor. See CERTAIN RISK FACTORS Certain Actions May be Permitted Without Bondowner Approval herein. 95

108 MUNICIPAL ADVISOR The Corporation has retained Springsted Incorporated, Public Finance Advisors, of St. Paul, Minnesota, as municipal advisor (the Municipal Advisor ), in connection with the issuance of the Series 2015-A Bonds. The Municipal Advisor is not a public accounting firm and has not been engaged by the Corporation to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Series 2015-A Bonds. CONTINUING DISCLOSURE In order to assist the Underwriter in complying with Rule 15c2-12 promulgated by the SEC (the Rule ), the Corporation will enter into a continuing disclosure agreement with respect to the Series 2015-A Bonds (a Continuing Disclosure Agreement ) setting forth the undertaking of the Corporation regarding continuing disclosure with respect to the Series 2015-A Bonds. The proposed form of the Continuing Disclosure Agreement is set forth in Appendix C attached hereto. During the previous five years from the date of this Official Statement, the Corporation has not failed to comply, in any material respect, with any informational undertaking to provide annual reports or notices of material events in accordance with the Rule. MISCELLANEOUS Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the Corporation and the purchasers or owners of any of the Series 2015-A Bonds. Quarterly reports concerning the Bonds and the Financed Loans will be made available to Bondowners as described in APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE PARTICULAR COVENANTS Statements to Bondowners attached hereto. Generally, Bondowners will receive those reports not from the Corporation, but through Cede & Co., as nominee of The Depository Trust Company and registered owner of the Bonds. See THE SERIES 2015-A BONDS Book-Entry Only Registration. The Corporation is also required to post these reports on its website, the address of which is currently No portion of the website is incorporated into this Official Statement. These quarterly reports will contain information concerning the Bonds and the Financed Loans during the period since the previous report. The Indenture provides that all covenants, stipulations, promises, agreements and obligations of the Corporation contained in the Indenture shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Corporation and not of any officer, director or employee of the Corporation in his individual capacity, and no recourse shall be had for the payment of the principal of or interest on the Series 2015-A Bonds or for any claim based thereon or on the Indenture against any officer or employee of the Corporation or against any person executing the Series 2015-A Bonds. 96

109 The execution and delivery of this Official Statement have been duly authorized by the Corporation. IOWA STUDENT LOAN LIQUIDITY CORPORATION Dated May, 2015 By: /s/ President and CEO 97

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111 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE

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113 APPENDIX A SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE Definitions In the Indenture, the following words and terms shall, unless the context otherwise requires, have the following meanings: "Account" means any account within a Fund created and established pursuant to and held by the Trustee under this Indenture, including, without limitation, the Payment Account. "Accountant" means KPMG, LLP, or another firm of certified public accountants duly licensed and entitled to practice and practicing as such under the laws of the State which (i) is selected and appointed by the Issuer, (ii) is in fact independent and not under the dominion of the Issuer, and (iii) apart from compensation for services rendered in such capacity, does not have a substantial financial interest, directly or indirectly, in the Issuer or its operations. "Accrued Assets" means, with respect to any date, the sum of (i) the Value of all Financed Loans, and (ii) the Value of all other amounts or investments on deposit in all the Funds and Accounts (other than the Rebate Fund), less any funds to be used to pay Costs of Issuance unless under the provisions of a Supplemental Indenture. "Accrued Liabilities" means, with respect to any date, the sum of (i) the principal of and unpaid interest on all Outstanding Bonds, (ii) all accrued but unpaid Program Expenses and Servicing Fees, (iii) all accrued Issuer Derivative Product Payments and (iv) any Rebate Amounts or Excess Earnings in excess of the amounts on deposit in the Rebate Fund (any reduction in the Value of Eligible Loans in respect of any Loan Excess Earnings Value Reductions to be deemed an amount on deposit in the Excess Earnings Account for this purpose). "Acquisition Account" means the Acquisition Account established pursuant to Section 5.2 of the General Indenture. "Acquisition Period" means, with respect to the use of the proceeds of the Series 2015-A Bonds deposited into the 2015-A Subaccount of the Acquisition Account pursuant to the First Supplement with respect to the $12,000,000 of such proceeds, the period beginning on the Closing Date and ending on and including July 1, 2016, provided this period may be extended upon a Rating Agency Notification with respect to such extension. "Act" shall mean the Higher Education Act of 1965, as amended or supplemented from time to time, or any successor federal act and all regulations, directives, bulletins and guidelines promulgated from time to time thereunder. "Acting Bondowners Upon Default" means, as such term is used in Article IX of the General Indenture, (i) at any time that any Senior Bonds are Outstanding, the Owners of a majority in aggregate principal amount of Senior Bonds Outstanding; (ii) at any time that no Senior Bonds are Outstanding but Senior Subordinate Bonds are Outstanding, the Owners of a majority in aggregate principal amount of Senior Subordinate Bonds Outstanding; and (iii) at any time that no Senior Bonds or Senior Subordinate Bonds are Outstanding but Subordinate Bonds are Outstanding, the Owners of a majority in aggregate principal amount of Subordinate Bonds Outstanding. A-1

114 "Administration Termination Event" means the occurrence of any of the following events: (a) the Issuer or, during such time as an Administrator is performing the Administrative Duties on behalf of the Issuer, the Administrator has failed to perform the Administrative Duties in any material respect in accordance with the terms hereof, and such failure has not been cured within 30 days after the Administrator has received notice from the Trustee, or otherwise has knowledge, thereof; or (b) the Issuer or, during such time as an Administrator is performing the Administrative Duties on behalf of the Issuer, the Administrator shall admit in writing its inability to pay its debts generally as they become due, file a petition to take advantage of or commence a voluntary case under, any applicable insolvency, bankruptcy or reorganization statute, make an assignment for the benefit of its creditors, or voluntarily suspend payment of its obligations. "Administrative Duties" means the Issuer s obligations (including, without limitation, any required or prohibited action as well as any required inaction) under the following Sections of this Indenture: the definition of "Paying Agent" (regarding the Issuer s power to designate the Paying Agent), Section 3.3 of the General Indenture (with respect to the registration, transfer and exchange of Bonds), Section 5.6 of the General Indenture (regarding actions to be taken to prevent a Series of Tax-Exempt Bonds from becoming "arbitrage bonds"), Section 5.9 of the General Indenture (with respect to the investment of amounts in certain Funds), and Section 10.8 of the General Indenture (with respect to appointment of a successor Trustee); provided that the Issuer s obligations under such Sections, and therefore "Administrative Duties," shall not be deemed to include taking any actions provided for under such Sections that are optional on the part of the Issuer (except to the extent the actions are necessary to prevent a default in the payment of principal or interest on the Bonds or any other amounts due and owing under the Indenture), which such actions shall remain subject to direction by the Issuer. Administrative Duties will also have the meaning set forth in a Supplemental Indenture providing for the issuance of a Series of Bonds. "Administrator" means any successor to the Issuer in performing the Administrative Duties hereunder. Any successor to the Issuer with respect to the performance of Administrative Duties shall be a corporation or association organized and doing business under the laws of a state or the United States of America, having the experience and capability to perform the Administrative Duties, and having a combined capital and surplus of at least $25,000,000. "Administrator Fee" means such fee as agreed upon between the Issuer and the Administrator, payable to the Administrator for its performance of the Administrative Duties hereunder, which fee shall be a Program Expense. "Arbitrage Regulations" means the Treasury Regulations pertaining to Section 148 of the Code, now or hereafter promulgated, including Treasury Regulations, Sections through and "Authorized Denomination" means with respect to any Bonds, such denominations as shall be authorized in the Supplemental Indenture pursuant to which such Bonds are to be issued, and means, with respect to the Series 2015-A Bonds, $5,000 and in integral multiples of $5,000 in excess thereof. "Authorized Officer" means the Chairperson or the Vice-Chairperson of the Board of Directors, the President, the Chief Financial Officer or the Treasurer of the Issuer, or, in the case of any act to be performed or duty to be discharged, any other member, officer or employee of the Issuer then authorized by resolution to perform such act or discharge such duty. A-2

115 "Back Up Servicer" shall mean the Pennsylvania Higher Education Assistance Agency ("PHEAA"), and any successor thereto. "Backup Servicer Servicing Agreement" shall mean the Servicing Agreement, dated as of August 25, 2011, between the Issuer and the Pennsylvania Higher Education Assistance Agency, and any replacement thereof. "Backup Servicing Agreement" shall mean the Backup Third Party Servicing Agreement, dated August 25, 2011, as amended, between the Issuer and the Pennsylvania Higher Education Assistance Agency, and any replacements thereof, the fees under which shall be paid by the Issuer. "Beneficial Owner" shall mean any Person which has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bond. "Bond Counsel" means Ahlers & Cooney, P.C., or another firm of attorneys of recognized standing in the field of law relating to municipal, state and public agency financing selected by the Issuer. "Bond Counsel Opinion" means an opinion signed by Bond Counsel. "Bond Register" means the register maintained by the Trustee pursuant to Section 3.3 of the General Indenture. "Bond Registrar" means the Trustee serving in such capacity under the terms of the General Indenture. "Bond Year," when used with respect to a Series of Tax-Exempt Bonds, shall have the meaning set forth in the Supplemental Indenture providing for the issuance of such Series of Bonds. "Bondowner" means the Owner of a Bond. "Bonds" means all bonds issued pursuant to this Indenture in accordance with the provisions of Article II of the General Indenture, including any Refunding Bonds authorized pursuant to Article II of the General Indenture. "Business Day" means a day of the year, except Saturday or Sunday or days on which banks located in the City of New York, New York, the City of Des Moines, Iowa, or the city in which the principal office of the Trustee is located, are required or authorized by law or executive order to remain closed or, for so long as Bonds are Outstanding, on which the New York Stock Exchange is closed. "Capitalized Interest Fund" means the Capitalized Interest Fund established pursuant to Section 5.2 of the General Indenture. "Certificate" means (i) a signed document either attesting to or acknowledging the circumstances, representations or other matters therein stated or set forth or setting forth matters to be determined pursuant to this Indenture or (ii) the report of an accountant as to audit or other procedures called for by this Indenture. "Certificate of Insurance" shall mean any Certificate evidencing that a Financed Eligible Loan is Insured pursuant to a Contract of Insurance. A-3

116 "Code" means the Internal Revenue Code of 1986, as amended, and the applicable regulations of the Department of Treasury thereunder. "Conditional Redemption" means a redemption where the Issuer has stated in the redemption notice to the Trustee that (i) the redemption is conditioned upon deposit of funds or (ii) the Issuer has retained the right to rescind the redemption, as further described in Section 3.8. "Continuing Disclosure Agreement" shall mean a Continuing Disclosure Agreement executed by the Issuer with respect to a Series of Bonds dated the date of issuance and delivery of such Series of Bonds, as it may be amended from time to time in accordance with the terms thereof. "Consolidation Loan" shall mean a student loan made in accordance with Section 428C of the Act, or in accordance with the HEAL Act, to consolidate the Borrower s obligations under various federally authorized student loan programs into a single loan. "Contract of Insurance" shall mean the contract of insurance between the Eligible Lender and the Secretary. "Contract of Purchase" means the agreement between the Issuer and the Underwriter of a Series of Bonds, as specified in the Supplemental Indenture providing for the issuance of such Bonds, pursuant to which such Underwriter agrees to underwrite and purchase such Bonds. "Counterparty Derivative Product Payment" means a payment due to or received by the Issuer from a Derivative Product Counterparty pursuant to a Derivative Product Agreement (including, but not limited to, payments in respect of any early termination of such Derivative Product Agreement) and amounts received by the Issuer under any related Derivative Product Counterparty Guaranty. "Costs of Issuance" means all items of expense, directly or indirectly payable or reimbursable by or to the Issuer and related to the authorization, sale and issuance of Bonds, including but not limited to, printing costs, costs of preparation and reproduction of documents, filing and recording fees, initial fees and charges of any Transaction Party, legal fees and charges, fees and disbursements of consultants and professionals, costs of credit ratings, costs of mathematical verification of certain computations, fees and charges for preparation, execution, transportation and safekeeping of Bonds, and any other cost, charge or fee (including underwriting fees) in connection with the original issuance of the Bonds. "Credit Facility" means, when used with respect to funding all or a portion of the Reserve Fund, any surety bond, insurance policy, letter of credit or other similar obligation described in a Supplemental Indenture and deposited in accordance with the provisions of Section 5.5(B) of the General Indenture and shall be rated in one of the two highest rating categories by the Rating Agencies, and shall have the qualifications as more particularly set forth in the Supplemental Indenture authorizing the issuance of such Series of Bonds. "Custodian" shall mean the Issuer, the Trustee, Wells Fargo Bank, National Association, and any other Person entering into a custody agreement. "Custodial Agreement" shall mean (i) the Custodial Agreement, dated as of April 13, 2012, among the Custodian, the Issuer and Aspire Resources Inc. and (ii) that certain E-Vault Storage Registry Services and Bailment Agreement, dated January 1, 2007, between the Issuer, Wells Fargo Bank, National Association, as trustee, Bankers Trust Company, as trustee, and DocuSign, Inc., as bailee; as supplemented and amended. A-4

117 "Debt Service" means, with respect to any Bonds, as of any particular date and with respect to any particular period, the aggregate of the moneys to be paid or set aside on such date or during such period for the payment (or retirement) of the principal of, premium, if any, and interest on such Bonds. "Department" shall mean the United States Department of Education, an agency of the Federal government. "Department Rebate Interest Amount" means, with respect to any date of determination, the greater of (a)(i) the amount of interest paid by borrowers on the FFELP Financed Eligible Loans that exceeds the Special Allowance Payment support levels applicable to such Financed Eligible Loans under the Act since the prior Department Rebate Payment Date less (ii) the amount of accrued Interest Benefit Payments or Special Allowance Payments due to the Issuer since the prior Department Rebate Payment Date, and (b) $0.00. "Derivative Product Agreement" means an interest rate or hedge agreement between the Issuer and a Derivative Product Counterparty, as supplemented or amended from time to time. "Derivative Product Counterparty" means any Person with whom the Issuer shall, from time to time, enter into a Derivative Product Agreement, provided there has been a Rating Agency Notification. "Derivative Product Counterparty Guaranty" means a guarantee in favor of the Issuer given in connection with the execution and delivery of a Derivative Product Agreement under this Indenture. "Defaulted Interest" shall have the meaning set forth in Section 2.2 of the General Indenture. "Depositary" means any bank, trust company, national banking association or savings and loan association selected by the Issuer or the Trustee as a depositary of moneys or securities held under the provisions of this Indenture and may include the Trustee or any Paying Agent. "Eligible Lender" shall mean any "eligible lender," as defined in the Act or the HEAL Act, and which has received an eligible lender designation from the Secretary, or the Insurer with respect to Eligible Loans made under the Act or the HEAL Act, respectively. "Eligible Loan" means any loan made to finance post-secondary education that is (i)a FFELP Loan; or (ii) any Private Loan that is originated or purchased by the Issuer pursuant to a Private Loan Program. Notwithstanding the foregoing, any Supplemental Indenture may prescribe a definition of Eligible Loan applicable to the disposition of the proceeds of Bonds issued pursuant to such Supplemental Indenture (including, without limitation, all original proceeds of such Bonds, all Revenues received in respect of any Eligible Loans Financed with proceeds of such Bonds and all investment or other proceeds attributable to proceeds of such Bonds) and any other moneys in the Accounts and Subaccounts established pursuant to such Supplemental Indenture, which may include less than all of the loans included in this definition. "Event of Default" means any of the events specified in Section 9.1 of the General Indenture. "Excess Earnings" means, with respect to any Series of Tax-Exempt Bonds, the amount, if any, which, if applied to reduce the yield on all student loans allocable to such Bonds (including Financed Loans and other non-financed student loans allocated to such Bonds in accordance with the related Tax Certificate), would be necessary to reduce such yield to the yield on such Bonds plus such additional spread as would not cause such Bonds to be "arbitrage bonds" under Section 148 of the Code. Any A-5

118 related Forgiveness Amount shall be taken into account in determining, and thereby reducing Excess Earnings. "Excess Earnings Account" shall mean Excess Earnings Account established pursuant to Section 5.2 of the General Indenture. "Excess Revenue" with respect to any Series of Bonds shall have the meaning set forth in the related Supplemental Indenture, and with respect to the Series 2015-A Bonds, shall mean, as of the nextto-last Monthly Payment Date preceding each Interest Payment Date, any funds remaining solely in the 2015-A Account of the Revenue Fund, after taking into account amounts necessary to pay all amounts required to be paid from, or set aside in, the Revenue Fund on such Monthly Payment Date pursuant to clauses FIRST through EIGHTEENTH of Section 5.3(B) of the General Indenture on such Monthly Payment Date. "FFELP Loan" means a student loan made pursuant to the Act. "Financed," when used with respect to Eligible Loans (or Private Loans), means Eligible Loans (or Private Loans) acquired by the Issuer with moneys in the Student Loan Fund, any Eligible Loans (or Private Loans) received in exchange for Financed Loans upon the sale thereof or substitution or exchange therefor in accordance with Section 5.4(C) or Section 6.8 of the General Indenture, any Eligible Loans (or Private Loans) refinanced with proceeds of one or more Series of Bonds, any Eligible Loans (or Private Loans) otherwise contributed and pledged as additional collateral under this Indenture in connection with the issuance of one or more Series of Bonds and any other Eligible Loans (or Private Loans) deemed to be "Financed" with moneys in the Student Loan Fund pursuant to this Indenture, but does not include Eligible Loans (or Private Loans) released from the lien of this Indenture and sold, as permitted in this Indenture, to any purchaser, including a trustee for the holders of the Issuer's bonds, notes or other evidences of indebtedness. "Financed Loan" means any Eligible Loan Financed under this Indenture; it being recognized and agreed that only Eligible Loans can and are intended to be Financed under this Indenture, but that if a Private Loan that is not an Eligible Loan is mistakenly Financed hereunder, such Private Loan shall nonetheless constitute a Financed Loan. "Financing Statements" means any and all financing statements (including continuation statements) filed for record from time to time to perfect the security interests created or assigned in this Indenture. "First Supplemental Trust Indenture" or "First Supplement" means that certain First Supplemental Trust Indenture dated as of May 1, 2015, between the Issuer and the Trustee and any amendments made thereto. "Fiscal Year" means a twelve-month period commencing on the first day of July of any year or any other twelve-month period adopted by the Issuer as its fiscal year for accounting purposes. "Fitch" means Fitch, Inc., a Delaware organization, its successors and their assigns, and, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any other nationally recognized securities rating agency designated by the Issuer for one or more Series of Bonds. A-6

119 "Forgiveness Amount" means the amount of principal and interest with respect to a Financed Loan which has been forgiven by the Issuer in connection with reducing any Excess Earnings with respect to the related Series of Tax-Exempt Bonds. "General Indenture" shall mean the Indenture of Trust dated as of May 1, 2015 by and between the Issuer and Trustee. "Fund" means any of the trust funds created and established and held by the Trustee under this Indenture including, except when otherwise expressly provided, the Rebate Fund. "Government Obligations" shall mean direct obligations of, or obligations the full and timely payment of the principal of and interest on which are unconditionally guaranteed by, the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury). "Guarantee" or "Guaranteed" means, with respect to an Eligible Loan, the insurance or guarantee by a Guaranty Agency pursuant to such Guaranty Agency's Guarantee Agreement of the maximum percentage of the principal of and accrued interest on such Eligible Loan allowed by the terms of the Act with respect to such Eligible Loan at the time it was originated and the coverage of such Eligible Loan by the federal reimbursement contracts, providing, among other things, for reimbursement to such Guaranty Agency for payments made by it on defaulted Eligible Loans insured or guaranteed by such Guaranty Agency of at least the minimum reimbursement allowed by the Act with respect to a particular Eligible Loan. "Guarantee Agreements" shall mean, with respect to any Eligible Loan originated pursuant to the Act, a guaranty or lender agreement between the Issuer and any Guaranty Agency, and any amendments thereto. "Guaranty Agency" or "Guarantor" shall mean, with respect to any Eligible Loan originated pursuant to the Act, any entity authorized to guarantee student loans under the Act and with which the Issuer maintains a Guarantee Agreement. "Higher Education Act" means Title IV, Part B of the Higher Education Act of 1965, as amended, and the regulations thereunder. "Indenture" means the General Indenture dated as of May 1, 2015, as amended and supplemented by the First Supplement date as of May 1, 2015 and any other supplemental Indentures entered into by the Issuer and the Trustee from time to time. "Insurance" or "Insured" or "Insuring" shall mean, with respect to a Student Loan, the insuring by the Secretary under the Act (as evidenced by a Certificate of Insurance or other document or certification issued under the provisions of the Higher Education Act). "Interest Payment Date" means each regularly scheduled interest payment date with respect to the Bonds (which shall be each June 1 and December 1) or, with respect to the payment of interest upon redemption or acceleration of a Bond, purchase of a Bond by the Trustee or the payment of Defaulted Interest, such date on which such interest is payable under this Indenture. "Investment Securities" means: A-7

120 (a) direct general obligations of, or obligations fully and unconditionally guaranteed as to the timely payment of principal and interest by, the United States or any agency or instrumentality thereof, provided such obligations are backed by the full faith and credit of the United States, FHA debentures, Freddie Mac senior debt obligations, Federal Home Loan Bank consolidated senior debt obligations, and Fannie Mae senior debt obligations, but excluding any of such securities whose terms do not provide for payment of a fixed dollar amount upon maturity or call for redemption; (b) federal funds, certificates of deposit, time deposits and banker's acceptances (having original maturities of not more than 90 days) of any bank or trust company incorporated under the laws of the United States or any state thereof, provided that the short-term debt obligations of such bank or trust company at the date of acquisition thereof have been rated "A-1+" or better by S&P, "P-1" or better by Moody's and "F-1+" by Fitch.; (c) deposits of any bank or savings and loan association which has combined capital, surplus and undivided profits of at least $3,000,000 which deposits are held only up to the limits insured by the Bank Insurance Fund or Savings Association Insurance Fund administered by the Federal Deposit Insurance Corporation, provided that the unsecured long-term debt obligations of such bank or savings and loan association have been rated "BBB" or better by S&P, or "A-2" or better by Moody's and "BBB" or better by Fitch; (d) commercial paper (having original maturities of not more than 90 days) rated "A-1+" or better by S&P, "P-1" or better by Moody's and "F-1+" by Fitch; (e) debt obligations maturing in 365 days or fewer rated "AAA" by S&P, "Aaa" by Moody's and "AAA" by Fitch (other than any such obligations that do not have a fixed par value and/or whose terms do not promise a fixed dollar amount at maturity or call date); (f) investments in money market funds (including those funds managed or advised by the Trustee or an affiliate thereof) rated by the following: "AAAm" by S&P and "Aaa" by Moody's; (g) guaranteed investment contracts or surety bonds and providing for the investment of funds in an account or insuring a minimum rate of return on investments of such funds, which contract or surety bond shall: (i) be an obligation of or guaranteed by an insurance company or other corporation or financial institution whose debt obligations or insurance financial strength or claims paying ability are rated "AAA" by S&P, "Aaa" by Moody's and "AAA" by Fitch; and (ii) provide that the Trustee may exercise all of the rights of the Issuer under such contract or surety bond without the necessity of the taking of any action by the Issuer; (h) a repurchase agreement that satisfies the following criteria: (i) must be between the Trustee and a dealer, bank, securities firm, insurance company or other financial institution described in (A) or (B) below: (A) primary dealers on the Federal Reserve reporting dealer list which (x) have a long term rating of "AA-" or better by S&P, "Aa2" or better by Moody's and "A" or better by Fitch or (y) have a long term rating of "AA-" or better by S&P, "A" or better by Fitch and "Aa3" or better by Moody's and a short term rating of "P-1" by Moody's, or A-8

121 (B) banks, insurance companies or other financial institutions which (x) have a long term rating of "AA-" or better by S&P, "Aa2" or better by Moody's and "A" or better by Fitch or (y) have a long term rating of "AA-" or better by S&P, "A" or better by Fitch and "Aa3" or better by Moody's and a short term rating of "P-1" by Moody's; (ii) the written repurchase agreement must include the following: Securities which are acceptable for the transfer are: (A) Government Obligations, or (B) Federal Agencies backed by the full faith and credit of the U.S. government (and Fannie Mae & Freddie Mac); and (iii) the collateral must be delivered to the Trustee or third party custodian acting as agent for the Trustee by appropriate book entries and confirmation statements must have been delivered before or simultaneous with payment (perfection by possession of certificated securities). (i) any other investment satisfying with respect to which a Rating Agency Notification has been given (provided, however, that if such other investment meets the rating criteria above for a particular Rating Agency but not all Rating Agencies, a Rating Agency Notification has been given only with respect to any other Rating Agency for which such rating criteria has not been met). Any such Investment Securities may be purchased by or through the Trustee or any of its affiliates. "Iowa Partnership Loan Program" means the private loan programs authorized by Section (7) of the Iowa Code (2013), as amended, and originally established pursuant to the Iowa Partnership Loan Program Agreement dated May 19, 1992, as previously amended and as may be amended in the future from time to time, between the Issuer and the Iowa College Student Aid Commission, to provide alternative educational loan programs, as the same may be amended from time to time hereafter. "Issuer" means Iowa Student Loan Liquidity Corporation or any corporation, body, agency or instrumentality which shall hereafter succeed to the powers, duties and functions of such Issuer. "Issuer Derivative Product Payment" means a payment due to a Derivative Product Counterparty from the Issuer pursuant to the applicable Derivative Product Agreement (including, but not limited to, payments in respect of any early termination of such Derivative Product Agreement). "Issuer Request," "Issuer Order," "Issuer Certificate" or "Issuer Consent" shall mean, respectively, a written request, order, certificate or consent signed in the name of the Issuer by an Authorized Officer and delivered to the Trustee. "Letter of Representations" means the Blanket Letter of Representations, dated February 22, 1995, between the Issuer and The Depository Trust Company. "Loan Excess Earnings Value Reduction" means the amount by which Excess Earnings exceeds the Balance of the Excess Earnings Account. Any such excess shall be allocated to Financed Loans in accordance with the requirements of the Arbitrage Regulations and the related Tax Certificate. A-9

122 "Loan Purchase Agreement" means an agreement between the Issuer and a seller pursuant to which the Issuer has purchased from the seller, and the seller has sold to the Issuer, Eligible Loans. Any such agreement shall contain standard representations and warranties by the seller with respect to such Eligible Loans and the obligation of the seller to repurchase any Eligible Loan, at a purchase price of at least par plus accrued and unpaid interest, upon a breach of any of such representations and warranties with respect thereto. "Maturity" means, when used with respect to any Bond, the date on which the principal of such Bond becomes due and payable as therein or herein provided, whether at the Stated Maturity thereof or by declaration of acceleration, call for redemption or otherwise. "Medical Loan Program" means the program established by the Issuer to provide an alternative educational loan program for students pursuing medical and other health related professions. "Monthly Payment Date" means the 25th day (or the next succeeding Business Day if such day is not a Business Day) of each calendar month. "Opinion of Counsel" means an opinion signed by an attorney or firm of attorneys of recognized standing in the field of law to which such opinion relates, selected by the Issuer. "Official Statement" means the Official Statement, dated, 2015, relating to the offer and sale of the Series 2015-A Bonds. "Other Obligations" means, collectively, Other Senior Obligations, Other Senior Subordinate Obligations and Other Subordinate Obligations. "Other Senior Obligation" means any Senior Derivative Product Agreement. "Other Senior Subordinate Obligation" means any Senior Subordinate Derivative Product Agreement. "Other Subordinate Obligation" means any Subordinate Derivative Product Agreement. "Outstanding," when used with reference to Bonds, shall mean, as of any date, all Bonds theretofore or thereupon being authenticated and delivered under this Indenture except: (a) any Bond cancelled by the Trustee or delivered to the Trustee for cancellation at or prior to such date; (b) any Bond (or portion of a Bond) for the payment of which there have been separately set aside and held: (i) moneys in an amount sufficient to effect payment of the principal thereof, together with accrued interest on such Bond to the Redemption Date or Stated Maturity of such Bond, (ii) Investment Securities, as described in clause (a) and (b) of the definition thereof, except that such Investment Securities must also be non-callable, in such principal amounts, of such Stated Maturities, bearing such interest and otherwise having such terms and qualifications as shall be necessary to provide moneys in an amount sufficient to effect payment of the principal and purchase price of such Bond, together with accrued interest on such Bond to its Redemption Date or Stated Maturity or (iii) any combination of (i) and (ii above; A-10

123 (c) any Bond in lieu of or in substitution for which other Bonds shall have been authenticated and delivered pursuant to Sections 3.5 and 3.6 or Section 8.6 of the General Indenture; and (d) any Bond deemed to have been paid as provided in subsection (B) of Section 11.1 of the General Indenture. "Owner", when used with reference to a Bond, means the Person in whose name such Bond is registered in the Bond Register. "Parity Percentage" means, as of the date of determination, the percentage resulting from dividing (a) the Accrued Assets by (b) the Accrued Liabilities. "Participant" means a participant in the Book-Entry-Only System. "Paying Agent" means the Trustee or any commercial bank or trust company designated by the Issuer as paying agent for the Bonds, and its successor or successors hereafter appointed, provided the same has accepted the appointment in the manner herein provided. "Payment Account" means the Payment Account established pursuant to Section 5.2 of the General Indenture with respect to amounts to be used to pay the interest and premium, if any, on, and the principal, Redemption Price or purchase price of, Bonds in accordance with Section 5.3(B) of the General Indenture. "Person" means any individual, corporation, partnership, joint venture, association, joint stock company, trust, incorporated organization or government or any agency or political subdivision thereof. "Principal Office" means (i) with respect to the Trustee, the principal corporate trust office of the Trustee, which office as of the date of execution of this Indenture is located at 625 Marquette Avenue, Minneapolis, Minnesota 55479, or such other office as designated in writing by the Trustee to the Issuer, and (ii) with respect to the Paying Agent or the Bond Registrar (if other than the Trustee), such office designated in writing to the Trustee and the Issuer as the location of its principal office for the performance of its duties as Paying Agent or Bond Registrar, as applicable. "Principal Payment Date" means the Stated Maturity of principal of, or the Redemption Date of, any Bond. "Priority Termination Payment" means, with respect to a Derivative Product Agreement, any Termination Payment payable by the Issuer under such Derivative Product Agreement relating to an early termination of such Derivative Product Agreement by the Derivative Product Counterparty, as the nondefaulting party, following (i) a monthly payment default by the Issuer thereunder, (ii) the occurrence of an Event of Default specified in Section 9.1(5)(c) of the General Indenture, (iii) the liquidation of the Trust Estate, including without limitation, the Trustee's taking any action hereunder to liquidate the Trust Estate pursuant to Section 9.3(B) of the General Indenture or (iv) the occurrence of an "illegality" under the Derivative Product Agreement. With respect to a Derivative Product Agreement entered into with respect to a given Series of Bonds, a "Priority Termination Payment" shall have the meaning set forth in the Supplemental Indenture providing for the issuance of a Series of Bonds. "Private Loan" means a loan to a borrower for post-secondary education authorized to be originated or purchased by the Issuer pursuant to a Private Loan Program. A-11

124 "Private Loan Program" means (i) the Iowa Partnership Loan Program, the Medical Loan Program, or (ii) any other loan program hereinafter established by the Issuer pursuant to which loans are made to borrowers for post-secondary education, which are not federally insured or guaranteed, as described in a Supplemental Indenture providing for the issuance of a Series of Bonds, provided a Rating Agency Notification has been given with respect to said program. "Program Expenses" means all of the Issuer's expenses in carrying out and administering its Student Loan Program under this Indenture other than Servicing Fees and Trustee Fees, and shall include, without limiting the generality of the foregoing, salaries, acquisition, processing, supplies, utilities, mailing, labor, materials, office rent, maintenance, furnishings, equipment, machinery and apparatus, telephone, technology, occupancy, internet, insurance premiums, any Rating Agency surveillance fees, legal, accounting, management, consulting and banking services and expenses, fees and expenses of the Transaction Parties (including such fees and expenses incurred pursuant to Section 6.9(B) of the General Indenture, but excluding Trustee Fees), the Administrator Fee, Costs of Issuance not otherwise paid for or provided for from the proceeds of the Bonds, fees and expenses payable under the Backup Servicing Agreement, Rating Agency fees, travel, payments for pension, thrift savings, retirement, health and hospitalization and life and disability insurance benefits, all to the extent properly allocable to the financing under this Indenture. "Proposed Action" means any proposed action, failure to act or other event which, under the terms of this Indenture is conditioned upon a Rating Agency Notification. "Rating Agency" or "Rating Agencies" means either of S&P or Fitch to the extent such agency has been requested by the Issuer to issue a rating on any of the Bonds and such agency has issued and continues to apply a rating on such Bonds at the time in question. "Rating Agency Notification" means, with respect to a Proposed Action, that the Issuer shall have given written notice of such Proposed Action to each Rating Agency at least twenty Business Days prior to the proposed effective date thereof. "Rating Category" means one of the general rating categories of the applicable Rating Agency, if any, without regard to any refinement or gradation of such rating category by a numerical modifier or otherwise. "Rebate Account" means the Rebate Account established pursuant to Section 5.2 of the General Indenture. "Rebate Amount" shall have the meaning set forth in Section 5.6(A) of the General Indenture. "Rebate Fees" means any fees payable to the Department on the Financed Student Loans. "Rebate Fund" means the Rebate Fund established pursuant to Section 5.2 of the General Indenture. "Recycling Period" with respect to any Series of Bonds shall have the meaning set forth in the related Supplemental Indenture. "Recycling Suspension Event" shall mean, if applicable pursuant to a Supplemental Indenture, with respect to Eligible Loans the occurrence and uncured continuation of an Event of Default under the Indenture. A-12

125 "Redemption Date," when used with respect to any Bond, all or any portion of the principal amount of which is to be redeemed, means the date fixed for such redemption pursuant to this Indenture and the applicable Supplemental Indenture. "Refunding Bond" means any Bond issued to refund Bonds previously issued pursuant to this Indenture. "Regular Record Date" means, with respect to an Interest Payment Date for any Series of Bonds, unless the Supplemental Indenture authorizing the issuance of such Series of Bonds otherwise provides, the fifteenth day (whether or not a Business Day) of the calendar month immediately preceding such Interest Payment Date. "Regulations" means the regulations promulgated from time to time by the Department of the Treasury under the Code relating to the tax exemption of interest on Tax-Exempt Bonds, including, without limitation, Treasury Regulations, Sections to , 1.149(b)-1, 1.149(g)-1, and "Redemption Price," when used with respect to any Bond to be redeemed, means the price at which it is to be redeemed pursuant to this Indenture. "Replacement Counterparty Upfront Payment" means any upfront payments made to the Issuer by a replacement Derivative Product Counterparty in consideration for entering into a Derivative Product Agreement with the Issuer intended to replace a Derivative Product Agreement that has been terminated prior to its scheduled termination date. "Reserve Fund" means the Reserve Fund established pursuant to Section 5.2 of the General Indenture. "Reserve Fund Requirement" shall have the meaning set forth in the Supplemental Indenture providing for the issuance of the most recent Series of Bonds, and with respect to the Series 2015-A Bonds, means, at any time, the greater of (i) an amount equal to two percent (2%) of the aggregate principal amount of Bonds then Outstanding, or (ii) one percent (1%) of the principal balance of the Series 2015-A Bonds as of the Closing Date, unless a Rating Agent Notification has been given for a lesser amount. In calculating the Reserve Fund Requirement, all Bonds to be defeased by a Series of Refunding Bonds shall be deemed not Outstanding as of the date of calculation. "Revenue Fund" means the Revenue Fund established pursuant to Section 5.2 of the General Indenture. "Revenues" mean all payments, proceeds, charges and other cash income received by the Issuer from or on account of any Financed Loan, including scheduled, delinquent and advance payments of and any insurance or guarantee proceeds with respect to, interest and principal on any Financed Loan, all payments received by the Issuer from a Derivative Product Counterparty (excluding any Replacement Counterparty Upfront Payment) and all interest earned or gain realized from the investment of amounts in any Fund or Account (other than amounts required to be deposited to or on deposit in the Rebate Fund). "S&P" means Standard & Poor's, a division of McGraw-Hill, Inc., a New York corporation, its successors and assigns, and, if such division 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 other nationally recognized securities rating agency designated by the Issuer for one or more Series of Bonds. A-13

126 "Securities Depository" shall mean, initially, The Depository Trust Company, New York, New York ("DTC"), and its successors and assigns, or a successor securities depository. "Senior Asset Requirement" shall have the meaning set forth in each Supplemental Indenture providing for the issuance of a Series of Senior Subordinate Bonds or Subordinate Bonds. "Senior Bonds" means any Bonds designated in a Supplemental Indenture as Senior Bonds, which are secured under this Indenture on a basis senior to any Senior Subordinate Bonds and any Subordinate Bonds (as such seniority is described herein), and on a parity with all Other Senior Obligations. The Series 2015-A Bonds are designated as Senior Bonds. "Senior Derivative Product Agreement" means a Derivative Product Agreement designated as a Senior Derivative Product Agreement in the Supplemental Indenture pursuant to which such Derivative Product Agreement is furnished by the Issuer. "Senior Derivative Product Counterparty" means any Person who provides a Senior Derivative Product Agreement. "Senior Parity Percentage" means, as of the date of determination, the percentage resulting from dividing (i) the Accrued Assets by (ii) the sum of (a) the principal of and unpaid interest on all Outstanding Senior Bonds, (b) all accrued but unpaid Issuer Derivative Product Payments with respect to Senior Derivative Product Agreements, (c) all accrued but unpaid Program Expenses and Servicing Fees and (d) any Rebate Amounts or Excess Earnings in excess of the amounts on deposit in the Rebate Fund (any reduction in the Value of Eligible Loans in respect of any Loan Excess Earnings Value Reductions to be deemed an amount on deposit in the Excess Earnings Account for this purpose). "Senior Subordinate Bonds" means any Bonds designated in a Supplemental Indenture as Senior Subordinate Bonds, which are secured under this Indenture on a basis junior to any Senior Bonds and senior to any Subordinate Bonds (as such seniority is described herein), and on a parity with all Other Senior Subordinate Obligations. "Senior Subordinate Derivative Product Agreement" means a Derivative Product Agreement designated as a Senior Subordinate Derivative Product Agreement in the Supplemental Indenture pursuant to which such Derivative Product Agreement is furnished by the Issuer. "Senior Subordinate Derivative Product Counterparty" means any Person who provides a Senior Subordinate Derivative Product Agreement. "Senior Subordinate Parity Percentage" means, as of the date of determination, the percentage resulting from dividing (i) the Accrued Assets by (ii) the sum of (a) the principal of and unpaid interest on all Outstanding Senior Bonds and Senior Subordinate Bonds, (b) all accrued but unpaid Issuer Derivative Product Payments with respect to the Senior Derivative Product Agreements and the Senior Subordinate Derivative Product Agreements, (c) all accrued but unpaid Program Expenses and Servicing Fees and (d) any Rebate Amounts or Excess Earnings in excess of the amounts on deposit in the Rebate Fund (any reduction in the Value of Eligible Loans in respect of any Loan Excess Earnings Value Reductions to be deemed an amount on deposit in the Excess Earnings Account for this purpose). "Series" means a series of Bonds authenticated and delivered on original issuance in a simultaneous transaction pursuant to this Indenture and a Supplemental Indenture authorizing such Bonds, regardless of variations in maturity, interest rate or other provisions and may also mean, if A-14

127 appropriate, a lot or subseries of any Series if, for any reason, the Issuer should determine to divide any Series into two or more lots or subseries. "Series 2015-A Bonds" means the Bonds created and to be issued under this First Supplement in the original principal amount of $ and designated as the "Student Loan Revenue Bonds, Senior Series 2015-A." "Series 2015-A Term Bonds" means those certain Series 2015-A Bonds designated as "Term Bonds" in Section 2 of the First Supplement. "Servicer" means (i) Aspire Resources Inc.; (ii) the Back Up Servicer if and at such time as it shall become a Servicer in accordance with Section 6.9(B) of the General Indenture; and (iii) any other additional Servicer or successor Servicer or subservicer selected by the Issuer with which the Issuer has entered into a Servicing Agreement with respect to the Financed Loans.. "Servicer Termination Event" means, if the Issuer is the Servicer of the Financed Loans, any one of the following; (i) the Servicer shall default in the performance of any of its duties under this Indenture in connection with its servicing of the Financed Loans and, after written notice of such default, shall not cure such default within 90 days (or, if such default cannot be cured in such time, shall not give within 90 days such assurance of cure as shall be reasonably satisfactory to the Trustee); (ii) a court having jurisdiction in the premises shall enter a decree or order for relief, and such decree or order shall not have been vacated within 90 days, in respect of the Servicer in any involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for the Servicer or any substantial part of its property or order the winding-up or liquidation of its affairs; (iii) the Servicer shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of a receiver, liquidator, assignee, trustee, custodian, sequestrator or similar official for the Servicer or any substantial part of its property, shall consent to the taking of possession by any such official of any substantial part of its property, shall make any general assignment for the benefit of creditors or shall fail generally to pay its debts as they become due; (iv) the Servicer determines that it will no longer service any Financed Loans and provides 180 days written notice to the Trustee of such determination; or (v) the Issuer, as Servicer, has breached any representations or warranties made herein, after any applicable cure period, with respect to the Financed Loans, the result of which would have a material adverse effect on the Trust Estate. "Servicing Agreements" means any agreements between the Issuer and any third party Servicer relating to the Financed Loans, including, without limitation, the Backup Servicer Servicing Agreement at such time as the Backup Servicer shall become a Servicer in accordance with Section 6.9(B) of the General Indenture, as may be amended from time to time. "Servicing Fees" means, with respect to a Series of Bonds, a monthly fee in an amount set forth in the Supplemental Indenture authorizing such Series of Bonds which will be released to the Issuer each month to pay the origination and servicing fees for Financed Loans and to cover expenses incurred in connection with the performance of other duties and powers under this Indenture and any Servicing Agreements, and with respect to the Series 2015-A Bonds and for each calendar month, means a fee in an amount equal to.75% of the aggregate principal amount of 2015-A Financed FFELP Loans and 1.10% of the aggregate principal amount of 2015-A Financed Private Loans (or a larger amount upon a Rating Agency Notification) as of the end of such calendar month (which fee will be prorated for the month in which the Series 2015-A Bonds are issued based upon the number of days remaining in such month after the Closing Date), to be disbursed from the Revenue Fund as provided in Section 5.3(B) of the General A-15

128 Indenture on the Monthly Payment Date following such calendar month. Notwithstanding the foregoing, the Servicing Fees shall never be less than $2.50 per borrower of the Financed Loans, and the Servicing Fees shall be subject to increase by an amount not to exceed 3% per annum. "Sinking Fund Payment Date" shall mean the date on which any Term Bond is to be called for redemption pursuant to the applicable provisions of the Supplemental Indenture providing for the issuance thereof, or, if not redeemed, the Stated Maturity thereof. "Special Allowance Payments" shall mean the special allowance payments authorized to be made by the Secretary by Section 438 of the Act, or similar allowances, if any, authorized from time to time by federal law or regulation. "Special Record Date" means, with respect to the payment of any Defaulted Interest, a date fixed by the Trustee pursuant to the General Indenture. "State" means the State of Iowa. "Stated Maturity," when used with respect to any Bond or any installment of interest thereon, shall mean the date specified in such Bond as the fixed date on which principal of such Bond or such installment of interest is due and payable, which shall be a June 1 or a December 1. "Student Loan Fund" means the Student Loan Fund established pursuant to Section 5.2 of the General Indenture. "Student Loan Program" means the program for the financing of the origination or acquisition of Eligible Loans for post-secondary education established by the Issuer, including without limitation, the Private Loan Program, as the same may be amended from time to time consistent with the Indenture, but only to the extent that such program is financed through the issuance of Bonds or obligations to be refunded thereby or from amounts otherwise available out of the money and assets held or pledged pursuant to the Indenture. "Subaccount" means any Subaccount within a Fund or Account created and established and held by the Trustee under the General Indenture. "Subordinate Bonds" means any Bonds designated in a Supplemental Indenture as Subordinate Bonds, which are secured under this Indenture on a basis junior to any Senior Bonds and Senior Subordinate Bonds (as such seniority is described herein), and on a parity with all Other Subordinate Obligations. "Subordinate Derivative Product Agreement" means a Derivative Product Agreement designated as a Subordinate Derivative Product Agreement in the Supplemental Indenture pursuant to which such Derivative Product Agreement is furnished by the Issuer. "Subordinate Derivative Product Counterparty" means any Person who provides a Subordinate Derivative Product Agreement. "Subordinate Parity Percentage" means, as of the date of determination, the percentage resulting from dividing (i) the Accrued Assets by (ii) the sum of (a) the principal of and unpaid interest on all Outstanding Bonds, (b) all accrued Issuer Derivative Product Payments with respect to the Senior Derivative Product Agreements, Senior Subordinate Derivative Product Agreements and Subordinate A-16

129 Derivative Product Agreements, (c) all accrued but unpaid Program Expenses and Servicing Fees and (d) any Rebate Amounts or Excess Earnings in excess of the amounts on deposit in the Rebate Fund (any reduction in the Value of Eligible Loans in respect of any Loan Excess Earnings Value Reductions to be deemed an amount on deposit in the Excess Earnings Account for this purpose). "Supplemental Indenture" means any indenture supplemental to or amendatory of this Indenture, between the Issuer and the Trustee and effective in accordance with Article VII of this Indenture, including without limitation, the First Supplemental Trust Indenture. "Tax Certificate" means the Tax Certificate and Agreement, concerning certain matters pertaining to the use of proceeds of each Series of Tax-Exempt Bonds, executed by the Issuer and the Trustee on the date of issuance of such Tax-Exempt Bonds, including any and all exhibits thereto, as the same may be amended from time to time. "Tax-Exempt Bonds" means each Series of Bonds that is issued with the intent that interest thereon be excludable from gross income for purposes of federal income taxation, as evidenced by a Bond Counsel Opinion to that effect delivered upon issuance of such Series of Bonds. "Term Bonds" means Bonds the payment of the principal of which is provided for by payments on Sinking Fund Payment Dates as provided in the Supplemental Indenture providing for the issuance thereof. "Termination Payment" means, with respect to a Derivative Product Agreement, any payment payable by the Issuer or the Derivative Product Counterparty under such Derivative Product Agreement relating to an early termination of such Derivative Product Agreement. "Trust Estate" means all right, title, interest, privileges and other property described in the Granting Clauses of this Indenture. "Transaction Party" means the Trustee, the Depositary and any Paying Agent, or any or all of them as may be appropriate. "Trustee" means Wells Fargo Bank, National Association, and its successor and any other Person at any time substituted in its place pursuant to this Indenture. "Trustee Fees" means an amount equal to the monthly fee of the Trustee as set forth in the Trustee Fee Letter, dated February 25, 2015, or such other trustee fee letter as the Issuer may designate prior to a successor Trustee being appointed hereunder, which will be released to the Trustee each month as compensation for the performance of its duties and powers under this Indenture. "UCC" means the Uniform Commercial Code of the State. "Underwriter" means the underwriter or underwriters of any Series of Bonds, and with respect to the Series 2015-A Bonds, means Morgan Stanley & Co. LLC. "Value" means, on any calculation date when required under this Indenture, the value of the Trust Estate calculated by the Issuer, in accordance with the following: A-17

130 (1) with respect to any Eligible Loan, the principal balance thereof, plus any accrued interest thereon, less any Loan Excess Earnings Value Reduction; provided that any Zero Value Loan shall be deemed to have a value of $0; (2) with respect to any funds of the Issuer on deposit in any commercial bank or as to any banker s acceptance or repurchase agreement or investment agreement, the amount thereof plus accrued interest thereon; (3) with respect to any Investment Securities of an investment company, the bid price of the shares as reported by the investment company plus (to the extent not included in the price thereof) any accrued interest; (4) as to investments the bid and asked prices of which are published on a regular basis in The Wall Street Journal (or, if not there, then in The New York Times), (i) the bid price published by a nationally recognized pricing service; or (ii) the average of the bid and asked prices for such investments so published on or most recently prior to such time of determination plus (to the extent not included in the price thereof) any accrued interest; (5) as to other investments the bid and asked prices of which are not published on a regular basis in The Wall Street Journal or The New York Times, (i) the bid price published by a nationally recognized pricing service; or (ii), the average bid price at such time of determination for such investments by any two nationally recognized government securities dealers (selected by the Trustee in its absolute discretion) at the time making a market in such investments or the bid price published by a nationally recognized pricing service plus (to the extent not included in the price thereof) any accrued interest; (6) as to certificates of deposit and bankers acceptances: the face amount thereof, plus accrued interest; and (7) as to any investment not specified above; the value thereof established by prior agreement between the Issuer and the Trustee plus (to the extent not included in the value thereof) any accrued interest. "Zero Value Loan" means a Financed Loan as to which any payment has been delinquent for 180 days or more. A Zero Value Loan shall continue to constitute a Financed Loan. "2015-A Custodians" means DocuSign, Inc. and Wells Fargo Bank, National Association. "2015-A Financed Loan" means (i) each Financed Loan credited to the 2015-A Subaccount of the Acquisition Account within the Student Loan Fund in accordance with Section 4 herein; and (ii) each Financed Loan originated, purchased or refinanced from payments received in respect of 2015-A Financed Loans. "2015-A Financial Private Loan" means those certain Private Loans described on Exhibit B to the First Supplement. "2015-A Tax Certificate" means the Tax Certificate and Agreement dated as of the Closing Date between the Issuer and the Trustee with respect to the Series 2015-A Bonds. A-18

131 TERMS OF BONDS General Limitations; Purposes and Conditions. Bonds shall be issued only for the purposes of (a) to fund the 2015-A Account of the Reserve Fund up to an amount equal to the Series 2015-A Reserve Requirement, (b) to pay Costs of Issuance with respect to the Series 2015-A Bonds, (c) to make a deposit in the 2015-A Account of the Capitalized Interest Fund, (d) to make a deposit in the 2015-A Account of the Revenue Fund, and (e) to make a deposit in the 2015-A Subaccount of the Acquisition Account of the Student Loan Fund. The Stated Maturities and Sinking Fund Redemption Dates of all Bonds shall occur on a June 1 or a December 1. The principal of and premium, if any, on the Bonds, together with interest payable on the Bonds at the Maturity thereof if the date of such Maturity is other than a regularly scheduled Interest Payment Date, shall, except as hereinafter provided or as otherwise provided in a Supplemental Indenture, be payable upon presentation and surrender of such Bonds at the Principal Office of the Trustee or, at the option of the Owner, at the Principal Office of a duly appointed Paying Agent. Interest due on the Bonds on each regularly scheduled Interest Payment Date shall, except as hereinafter provided or as otherwise provided in a Supplemental Indenture, be payable by check or draft drawn upon the Paying Agent mailed to the Person who is the Owner thereof as of 5:00 p.m. in the city in which the Principal Office of the Paying Agent is located on the Regular Record Date relating thereto, at the address of such Owner as it appears on the Bond Register. Any interest not so timely paid or duly provided for (herein referred to as Defaulted Interest ) shall cease to be payable to the Person who is the Owner thereof at the close of business on the Regular Record Date and shall be payable to the Person who is the Owner thereof at the close of business on a Special Record Date for the payment of any such defaulted interest. Such Special Record Date shall be fixed by the Trustee whenever moneys become available for payment of the Defaulted Interest, and notice of the Special Record Date shall be given to the Owners of the Bonds not less than ten (10) days prior thereto by first-class mail to each such Owner as shown on the Bond Register on a date selected by the Trustee, stating the date of the Special Record Date and the date fixed for the payment of such Defaulted Interest. After the issuance of the initial Series of Bonds pursuant to that certain First Supplemental Trust Indenture executed contemporaneously with the execution and delivery of the Indenture, and from time to time, one or more Series of Bonds may be issued upon compliance with the provisions of the Indenture in such principal amounts as may be determined by the Issuer for any of the purposes hereinbefore specified in the Indenture upon compliance with the following conditions and any additional conditions specified in a Supplemental Indenture: (A) After the issuance of the Series of Bonds then to be issued, the Reserve Fund Requirement shall be satisfied. (B) An Authorized Officer of the Issuer shall certify (as evidenced by an Issuer Certificate filed with the Trustee) that the Issuer is not in default in the performance of any of its covenants and agreements in the Indenture made (unless, in a Bond Counsel Opinion, any such default does not deprive any Bondowner in any material respect of the security afforded by the Indenture). (C) The Trustee receives an Issuer Certificate certifying that, after giving effect to such issuance of Bonds, there will not be a deficiency in the Rebate Fund, the Senior Asset Requirement will be met. (D) If such Bonds are to be Senior Bonds or Senior Subordinate Bonds, written evidence from each Rating Agency that such Series of Bonds is rated (i) if such Bonds are to be A-19

132 Senior Bonds, at least as high as the outstanding rating assigned by each Rating Agency to any Outstanding Senior Bonds, and (ii) if such Bonds are to be Senior Subordinate Bonds, at least as high as the outstanding rating assigned by each Rating Agency to any Outstanding Senior Subordinate Bonds. In calculating the Reserve Fund Requirement, all Bonds to be defeased by a Series of Refunding Bonds shall be deemed not Outstanding as of the date of calculation. Terms of Particular Series. Each Series of Bonds shall be created by and issued pursuant to a Supplemental Indenture and such Supplemental Indenture shall designate Bonds of each Series as Senior Bonds, Senior Subordinate Bonds or Subordinate Bonds. The Bonds of each Series shall bear such date or dates, shall be payable at such place or places, shall have such Stated Maturities and Sinking Fund Redemption Dates on June 1 or December 1, shall bear interest at such rate or rates, from such date or dates, payable in such installments and on Interest Payment Dates and at such place or places, may be redeemable at such Redemption Price or Prices and upon such terms (in addition to the prices and terms herein specified for redemption of all Bonds), and may be prepayable upon such terms, in each case as shall be provided for in the Supplemental Indenture creating that Series. The Supplemental Indenture creating any Series of Bonds may contain a provision limiting the aggregate principal amount of the Bonds of that Series or the aggregate principal amount of Bonds which may thereafter be issued. All Bonds of the same Series shall be substantially identical in tenor and effect, except as to denomination, the differences specified herein or in a Supplemental Indenture between interest rates, Stated Maturities and redemption provisions. Form and Denominations. The Bonds of each Series shall be issued in substantially the form set forth in the Supplemental Indenture providing for the issuance thereof. The Bonds of any Series may be issuable as fully registered Bonds only. The Bonds of each Series shall be issuable in such denominations as shall be provided in the provisions of the Supplemental Indenture creating such Series. In the absence of any such provisions with respect to the Bonds of any particular series, the Bonds of such Series shall be in the denomination of $5,000 or any integral multiple thereof. Execution, Authentication and Delivery. The Bonds shall be executed on behalf of the Issuer by an Authorized Officer of the Issuer and attested by an Authorized Officer of the Issuer, either or both of which signatures may be facsimiles. Conditions Precedent to Delivery of Refunding Bonds. In addition to the other requirements of the Indenture, Refunding Bonds of any Series shall be issued under the Indenture only upon the receipt by the Trustee of: (i) if Bonds to be refunded are to be redeemed prior to their Stated Maturity, evidence of the receipt by the Trustee of instructions (subject to a Conditional Redemption) (conditioned on the issuance of the Refunding Bonds) from Issuer to the Trustee to so redeem such Bonds on one or more specified Redemption Dates and to give due notice of the redemption of such Bonds in accordance with the provisions of the Indenture. (ii) (A) moneys (which may include all or a portion of the proceeds of the Refunding Bonds to be issued) or (B) Government Obligations (which are noncallable by the issuer thereof prior to maturity) the principal of and interest on which when due (without reinvestment thereof), together with any moneys referred to in the preceding clause (A)contemporaneously deposited A-20

133 with the Trustee, will be sufficient to pay the principal amount at Stated Maturity and the Redemption Price on each Redemption Date of the Bonds to be refunded, together with accrued interest on such Bonds payable on and prior to the Stated Maturity or Redemption Date. Limited Obligation. The Issuer shall not be obligated to pay the Bonds or the interest thereon, other than from the property and income constituting the Trust Estate; no recourse shall be had for the payment thereof against the State or the property or funds of the State; and, no recourse shall be had for the payment thereof against the Issuer or the property or funds of the Issuer, except to the extent of the property and income constituting the Trust Estate. GENERAL TERMS AND PROVISIONS OF THE BONDS Medium of Payment. All payments of principal of, premium, if any, and interest on the Bonds shall be made in lawful money of the United States of America. Registration, Transfer and Exchange. The Issuer shall cause to be kept at the Principal Office of the Bond Registrar a Bond Register in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Bonds and of transfers of Bonds as herein provided. The Trustee is hereby appointed Bond Registrar for the purpose of registering Bonds and transfer of Bonds as herein provided. At reasonable times and under reasonable regulations established by the Bond Registrar, the Bond Register may be inspected and copied by the Issuer or by the Owners (or a designated representative thereof) of ten percent (10%) or more in principal amount of Bonds then Outstanding. Redemption of Bonds. (A) The Bonds of any Series shall be subject to redemption prior to Stated Maturity, upon notice as provided in the Indenture, at such times and upon such terms as specified in the Bonds and in the Supplemental Indenture with respect to such Series. Bonds which may be redeemed before their Stated Maturity shall be redeemed in accordance with their terms, the Indenture and (except as otherwise provided with respect to the Bonds of any particular Series by the provisions of the Supplemental Indenture creating such Series) in accordance with the Indenture. (B) The election of the Issuer to redeem any Bonds or cause any Bonds then subject to redemption to be purchased by the Trustee shall be evidenced by an Issuer Order, received by the Trustee no later than twenty-five (25) days prior to the date on which notice of redemption must be given in order to effect a redemption on the Redemption Date established with respect to a Series of Bonds in the Supplemental Indenture authorizing the issuance of the Bonds of such Series, stating the Redemption Date, the principal amount, the Series of Bonds, and, if applicable, the Stated Maturities to be redeemed (which Redemption Dates, principal amounts, Series and Stated Maturities to be redeemed shall be determined by the Issuer in its sole discretion, subject to any requirements or limitations with respect thereto contained in or permitted by the Indenture or any Supplemental Indenture). (C)(i) Subject to Section (B) hereof, balances deposited to provide for the redemption of Bonds otherwise than at the Issuer s election and direction shall be applied to the payment of Bonds of all Series subject to such redemption in such order of priority as may be established by the Supplemental Indenture pursuant to which such Bonds have been issued or, in the absence of direction from such Supplemental Indenture, in the order of the Stated Maturities of such Bonds. A-21

134 (ii) If less than all Bonds of a Stated Maturity are to be redeemed, the Trustee shall select the particular Bonds to be redeemed as provided in the Supplemental Indenture providing for the issuance of such Bonds. The Trustee may provide for the selection for redemption of portions of the principal of Bonds which are in Authorized Denominations larger than the smallest Authorized Denomination for that Series. (iii) For all purposes of the Indenture, unless the context otherwise requires, all provisions relating to the redemption of Bonds shall relate, in the case of any Bond to be redeemed only in part, to the portion of the principal of such Bond which has been or is to be redeemed. (D) When the Trustee shall receive notice from the Issuer of its election or direction to redeem Bonds, or when Bonds are otherwise required to be redeemed in accordance with the Indenture, the Trustee shall give notice of redemption with respect to Bonds to be redeemed by first-class mail, postage prepaid, mailed by the date specified in the Supplemental Indenture creating such Bonds to each Owner of such Bonds at the address of the Owner appearing in the Bond Register; but neither failure to give such notice nor any defect in any notice so given shall affect the validity of the proceedings for redemption of any Bond not affected by such failure or defect. All notices of redemption shall state: (a) (b) the Redemption Date; the Redemption Price; (c) the name (including Series designation), Stated Maturity and CUSIP numbers of the Bonds to be redeemed, the principal amount of Bonds of each Series to be redeemed, and, if less than all outstanding Bonds of a Series are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the Bonds of each Series to be redeemed; (d) that, on the Redemption Date, the Redemption Price of and accrued interest on each such Bond will become due and payable and that interest on each such Bond shall cease to accrue on and after such date; (e) the place or places where such Bonds are to be surrendered for payment of the Redemption Price thereof and accrued interest thereon; and (f) if it be the case, that such Bonds are to be redeemed by the application of certain specified trust moneys and for certain specified reasons. In addition, in the case of an optional redemption, the notice may state (1) that it is conditioned upon the deposit of moneys, in an amount equal to the amount necessary to effect the redemption, with the Trustee no later than the redemption date, or (2) that the Issuer retains the right to rescind such notice on or prior to the scheduled Redemption Date (in either case, a Conditional Redemption ), and such notice and optional redemption shall be of no effect if such moneys are not so deposited or if the notice is rescinded as described in the Indenture. (E) Notice of redemption having been given as aforesaid, the Bonds so to be redeemed shall, on the Redemption Date, subject (in the case of any Conditional Redemption) to satisfaction of any conditions to such Conditional Redemption and the Indenture hereof, become due and payable at the Redemption Price specified plus accrued interest thereon to the Redemption Date and on and after such A-22

135 date (unless the Issuer shall default in the payment of the Redemption Price and accrued interest) such Bonds (or portions thereof) shall cease to bear interest. Upon surrender of any such Bond for redemption in accordance with such notice (unless, in the case of a Conditional Redemption, such notice and the related optional redemption are of no effect, as provided in the Indenture), such Bond shall be paid at the Redemption Price thereof plus (unless the Redemption Date is a regularly scheduled Interest Payment Date, in which event interest will be paid in the ordinary manner) accrued interest to the Redemption Date. Installments of interest whose Stated Maturity is on or prior to the Redemption Date shall continue to be payable to the applicable Bondowner. (F) Any Bond which is to be redeemed only in part shall (except as otherwise provided in the Supplemental Indenture pursuant to which the Bonds of such series were issued) be surrendered to the Paying Agent (with, if the Paying Agent so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Paying Agent duly executed by, the Owner thereof or his, her or its attorney duly authorized in writing) and the appropriate officers of the Issuer shall execute and the Trustee shall authenticate and deliver to the Owner of such Bond, without service charge, a new Bond or Bonds of the same Series, of any Authorized Denomination or Denominations, having the same Stated Maturity and interest rate, in aggregate principal amount equal to and in exchange for the unredeemed portion of the principal of the Bond so surrendered. (G) Unless otherwise specified in a Supplemental Indenture for a particular Series, notwithstanding any provision hereof to the contrary but apart from the redemption of Bonds which are no longer Outstanding by reason of the Indenture hereof or the redemption of Senior Bonds on a Sinking Fund Payment Date, no redemption or purchase of Bonds by the Trustee shall be effected hereunder unless prior to the Trustee giving notice of redemption or soliciting such purchase, the Issuer furnishes the Trustee an Issuer Certificate to the effect that, as of the date Bonds are to be selected for redemption or purchase, (1) if Senior Bonds are to be redeemed (other than by mandatory redemption on a Sinking Fund Payment Date) or purchased, either (A) after giving effect to such redemption or purchase, the Senior Asset Requirement will be met, or (B) (i) prior to such redemption or purchase, the Senior Asset Requirement was not being met, (ii) no Senior Subordinate Bonds or Subordinate Bonds will be redeemed on the Redemption Date or purchase date for the Senior Bonds then proposed to be redeemed or purchased, and (iii) after giving effect to such redemption or purchase, the Senior Percentage used in determining the Senior Asset Requirement will be greater than it would have been without such redemption or purchase; (2) if Senior Subordinate Bonds are to be redeemed or purchased, after giving effect to such redemption or purchase, the Senior Asset Requirement will be met; and (3) if Subordinate Bonds are to be redeemed or purchased, after giving effect to such redemption or purchase, the Senior Asset Requirement will be met and there shall be no deficiency then existing in the Reserve Fund or the Rebate Fund. Such Bonds may be redeemed or purchased on the Redemption Date or purchase date therefor if the foregoing conditions are met on the date such Bonds are selected for redemption or purchase, whether or not such conditions are met on the Redemption Date or the date of purchase. Any election to redeem Bonds of a Series may also be conditioned upon such additional requirements as may be set forth in the Supplemental Indenture authorizing the issuance of such Bonds. Redemption Payments. (A) On or prior to the date fixed for redemption, funds shall be deposited with the Trustee to pay, and the Trustee is hereby authorized and directed to apply such funds to the payment of, the Bonds called, together with accrued interest and premium, if any, thereon to the Redemption Date. Upon the deposit of funds for redemption, unless the Issuer has given notice of rescission as described in subsection (B) below, interest on the Bonds thus called shall no longer accrue after the date fixed for redemption. No payment shall be made by the Trustee upon any Bond called for redemption until such Bond shall have A-23

136 been delivered for payment or cancellation or the Trustee shall have received the items required by the Indenture with respect to any mutilated, lost, stolen or destroyed Bond. (B) Any Conditional Redemption may be rescinded in whole or in part at any time prior to the Redemption Date if an Issuer Certificate is delivered to the Trustee instructing the Trustee to rescind the redemption notice. The Trustee shall give prompt notice of such rescission to the affected Owners. Any Bonds subject to Conditional Redemption where redemption has been rescinded shall remain Outstanding, and the rescission shall not constitute an Event of Default. Further, in the case of a Conditional Redemption, the failure of the Issuer to make funds available in whole or in part on or before the Redemption Date shall not constitute an Event of Default, and the Trustee shall give Immediate Notice to the Securities Depository and the affected Bondowners that the redemption did not occur and that the Bonds called for redemption and not so paid will remain Outstanding. (C) Notice of the completion of any such redemption shall be delivered to the Rating Agencies following such redemption. Purchase of Bonds. The Issuer may at any time, authorize and direct the Trustee to purchase Bonds in the open market out of any funds available for such purpose in the Revenue Fund or the Student Loan Fund, such purchases to be made at a price not in excess of the price specified in the Indenture or, if no price is specified at a price determined by the Issuer, which is not in excess of the principal amount thereof plus accrued interest and any redemption premium that would be payable upon the redemption thereof on such date of purchase; provided however, the Issuer shall have previously provided to the Trustee an Issuer Certificate certifying that the purchase of such Bonds will not adversely affect the payment of all Debt Service, Program Expenses and Servicing Fees, and the deposit of all amounts required to be deposited in the Rebate Fund from amounts available therefor from the Trust Estate under the Indenture. All such Bonds purchased by the Trustee pursuant to the Indenture shall be canceled and not reissued. PLEDGE OF INDENTURE; FUNDS Pledge. To the fullest extent provided by applicable laws, the Trust Estate shall immediately be pledged and subject to the lien of the Indenture without any physical delivery thereof or further act, and such pledge and lien shall be valid and binding against all parties having claims of any kind in tort, contract or otherwise, irrespective of whether such parties have notice hereof. Pursuant to the Granting Clauses, a pledge of and security interest in the Trust Estate has been granted to the Trustee for the benefit and security of the Owners of the Bonds and for the benefit of any Derivative Product Counterparty. The Bonds, including the principal thereof and premium, if any, and interest thereon, and the Other Obligations shall be secured hereunder by the foregoing pledge of the Trust Estate and lien thereon, subject to the priorities expressly provided in the Indenture. The pledge and security interest in the Granting Clauses hereof shall constitute a prior and paramount lien and charge on the Trust Estate from time to time held hereunder (subject only to the valid exercise of the constitutional powers of the United States of America, valid bankruptcy, insolvency, reorganization, moratorium and other laws affecting creditors rights, and to the provisions of the Indenture permitting the application of the Trust Estate for the purposes and on the terms and conditions hereof), over and ahead of any claims (whether in tort, contract or otherwise irrespective of whether the parties possessing such claims have notice of the foregoing pledges or charges), encumbrances or obligations of any nature hereafter arising or incurred, and over and ahead of all other indebtedness payable from or secured by such revenues which may hereafter be created or incurred. A-24

137 Funds. (A) The Issuer hereby directs the Trustee to establish the following trust funds and accounts: (1) Revenue Fund; (2) Student Loan Fund (and, within the Student Loan Fund, the Acquisition Account); (3) Reserve Fund; (4) Rebate Fund (and, within the Rebate Fund, the Rebate Account and the Excess Earnings Account); and (5) Capitalized Interest Fund. (B) All such Funds shall be held and maintained by the Trustee or its agent and shall be identified by the Issuer and the Trustee according to the designations herein provided in such manner as to distinguish such Funds from the funds or accounts established by the Issuer for any other of its obligations. All moneys or securities held by the Trustee or any Depositary pursuant to the Indenture (other than any Payment Account for any Bonds in connection with the payment thereof on the Stated Maturity thereof or with respect to which a call for redemption has been given and funds for such redemption have been deposited with the Trustee and, if a Conditional Redemption, the rescission date has passed) shall be held in trust for the equal and ratable benefit and security of the Owners of the Bonds, and all moneys or securities held by the Trustee or any Depositary pursuant to the Indenture shall be applied only in accordance with the provisions of the Indenture. Revenue Fund (A) The Issuer shall cause any Counterparty Derivative Product Payments (but excluding all or any portion of a Replacement Counterparty Upfront Payment used to pay a Termination Payment due from the Issuer to a Derivative Product Counterparty pursuant to Section 4.2 above), and all Revenues to be paid directly to or, to the extent not paid directly, to be deposited within 2 Business Days after receipt by the Servicer with the Trustee in the Revenue Fund. There shall be deposited in the Revenue Fund any Counterparty Derivative Product Payments and all Revenues any other amount required to be deposited therein pursuant to this Indenture and any other amounts available therefor and determined by the Issuer to be deposited therein from time to time and not inconsistent with this Indenture. (B) The Trustee shall pay out of the Revenue Fund moneys deposited therein, based solely on written direction of the Issuer, as follows and in the following order of priority: FIRST: Upon instruction from the Issuer to the Trustee, moneys in the Revenue Fund shall be used on any date by the Trustee to pay, when due, any amounts required by the Act or the HEAL Act to be paid to the Department, any Guaranty Agency, or the Insurer with respect to Financed Eligible Loans including, without limitation, any Rebate Fees and any Department Rebate Interest Amounts owing to the Department. SECOND: On each date on which the same is required in accordance with Section 5.6 of the General Indenture and the Tax Certificate, into the Rebate Fund, an amount to be calculated by or on behalf of the Issuer (as set forth in an Issuer Certificate delivered to the Trustee) which, when added to the amount already within the Rebate Fund, will equal the amount then required to be on deposit therein. A-25

138 THIRD: On each Monthly Payment Date, (i) to the Servicer for payment (or to reimburse the Issuer for payment previously made to another Servicer from moneys not constituting a part of the Trust Estate and not theretofore reimbursed to the Issuer from the Trust Estate) in respect of Servicing Fees with respect to the Financed Loans that are due and payable, and not otherwise provided for, as set forth in an Issuer Certificate delivered to the Trustee; provided that the amount of any such Servicing Fees so paid or reimbursed shall not exceed the amount permitted under the related Supplemental Indenture; (ii) to the Trustee for payment in respect of Trustee Fees that are due and payable; and (iii) to the Issuer (and to a successor Administrator, if applicable) an amount necessary to pay Program Expenses then unpaid or thereafter becoming payable within the next 30 days (as set forth in an Issuer Certificate), provided that the amount of any such payment to the Issuer shall not exceed the amount permitted under the related Supplemental Indenture. FOURTH: On each Monthly Payment Date preceding each regularly scheduled Interest Payment Date and Principal Payment Date, into the Payment Account and to be used by the Trustee therefor, an amount equal to: (i) 1/6 th of the amount due with respect to (A) interest on the Senior Bonds and (B) Other Senior Obligations (except, with respect to Senior Derivative Product Agreements, Termination Payments that are not Priority Termination Payments) on such Interest Payment Date; provided that if, with respect to a Series of Senior Bonds or Other Senior Obligations, there are less than six (6) Monthly Payment Dates preceding the first related Interest Payment Date, the Trustee shall make equal monthly deposits to the credit of the Payment Account on each Monthly Payment Date to aggregate the amount due on such Interest Payment Date; provided, further, with respect to any Senior Bonds accruing interest or Other Senior Obligations accruing payments at a variable rate, deposits shall be made in an amount equal to the interest or payment accrued on such Bonds or Other Senior Obligations from the last previous Monthly Payment Date or regularly scheduled Interest Payment Date therefor, whichever is later, to that Monthly Payment Date or, in the case of the last Monthly Payment Date preceding a regularly scheduled Interest Payment Date, to such regularly scheduled Interest Payment Date); (ii) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (i) above; (iii) 1/6 th (if the principal of Bonds of such Series is payable semiannually) or 1/12 th (if the principal of Bonds of such Series is payable annually) of the amount due with respect to principal and premium, if any (such amounts to include all amounts attributable to mandatory sinking fund redemptions on a Sinking Fund Payment Date required under the related Supplemental Indenture, but no other redemptions), on the Senior Bonds on such Principal Payment Date, commencing with the 6 th or 12 th Monthly Payment Date, as applicable, preceding such Principal Payment Date; and (iv) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (iii) above. FIFTH: On the last Monthly Payment Date preceding each regularly scheduled Interest Payment Date and Principal Payment Date, into the Payment Account and to be used by the Trustee therefor, the amount, if any, which, when added to the amount already within such account and available for such purpose, will be sufficient to pay (i) first, on a pro rata basis, (A) the interest due on the Senior Bonds and (B) Other Senior Obligations (except, with respect to Senior Derivative Product Agreements, Termination Payments that are not Priority Termination Payments) on such Interest Payment Date, and (ii) thereafter, the principal and premium, if any, due (such amounts to include all amounts attributable to mandatory sinking fund redemptions on a Sinking Fund Payment Date required under the related Supplemental Indenture but no other types of redemptions) on the Senior Bonds on such Principal Payment Date. A-26

139 SIXTH: On each Monthly Payment Date preceding each regularly scheduled Interest Payment Date and Principal Payment Date, into the Payment Account and to be used by the Trustee therefor, an amount equal to: (i) 1/6 th of the amount due with respect to (A) interest on the Senior Subordinate Bonds and (B) Other Senior Subordinate Obligations (except, with respect to Senior Subordinate Derivative Product Agreements, Termination Payments that are not Priority Termination Payments) on such Interest Payment Date; provided that if, with respect to a Series of Senior Subordinate Bonds or Other Senior Subordinate Obligations, there are less than six (6) Monthly Payment Dates preceding the first related Interest Payment Date, the Trustee shall make equal monthly deposits to the credit of the Payment Account on each Monthly Payment Date to aggregate the amount due on such Interest Payment Date; provided, further, with respect to any Senior Subordinate Bonds accruing interest or Other Senior Subordinate Obligations accruing payments at a variable rate, deposits shall be made in an amount equal to the interest or payment accrued on such Bonds or Other Senior Subordinate Obligations from the last previous Monthly Payment Date or regularly scheduled Interest Payment Date therefor, whichever is later, to that Monthly Payment Date or, in the case of the last Monthly Payment Date preceding a regularly scheduled Interest Payment Date, to such regularly scheduled Interest Payment Date); (ii) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (i) above; (iii) 1/6 th (if the principal of Bonds of such Series is payable semiannually) or 1/12 th (if the principal of Bonds of such Series is payable annually) of the amount due with respect to principal and premium, if any (such amounts to include all amounts attributable to mandatory sinking fund redemptions on a Sinking Fund Payment Date required under the related Supplemental Indenture, but no other redemptions), on the Senior Subordinate Bonds on such Principal Payment Date, commencing with the 6 th or 12 th Monthly Payment Date, as applicable, preceding such Principal Payment Date; and (iv) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (iii) above. SEVENTH: On the last Monthly Payment Date preceding each regularly scheduled Interest Payment Date and Principal Payment Date, into the Payment Account and to be used by the Trustee therefor, the amount, if any, which, when added to the amount already within such account and available for such purpose, will be sufficient to pay (i) first, on a pro rata basis, (A) the interest due on the Senior Subordinate Bonds and (B) Other Senior Subordinate Obligations (except, with respect to Senior Subordinate Derivative Product Agreements, Termination Payments that are not Priority Termination Payments) on such Interest Payment Date, and (ii) thereafter, the principal and premium, if any, due (such amounts to include all amounts attributable to mandatory sinking fund redemptions on a Sinking Fund Payment Date required under the related Supplemental Indenture but no other types of redemptions) on the Senior Subordinate Bonds on such Principal Payment Date. EIGHTH: On each Monthly Payment Date preceding each regularly scheduled Interest Payment Date and Principal Payment Date, into the Payment Account and to be used by the Trustee therefor, an amount equal to: (i) 1/6 th of the amount due with respect to (A) interest on the Subordinate Bonds and (B) Other Subordinate Obligations (except, with respect to Subordinate Derivative Product Agreements, Termination Payments that are not Priority Termination Payments) on such Interest Payment Date; provided that if, with respect to a Series of Subordinate Bonds or Other Subordinate Obligations, there are less than six (6) Monthly Payment Dates preceding the first related Interest Payment Date, the Trustee A-27

140 shall make equal monthly deposits to the credit of the Payment Account on each Monthly Payment Date to aggregate the amount due on such Interest Payment Date; provided, further, with respect to any Subordinate Bonds accruing interest or Other Subordinate Obligations accruing payments at a variable rate, deposits shall be made in an amount equal to the interest or payment accrued on such Bonds or Other Subordinate Obligations from the last previous Monthly Payment Date or regularly scheduled Interest Payment Date therefor, whichever is later, to that Monthly Payment Date or, in the case of the last Monthly Payment Date preceding a regularly scheduled Interest Payment Date, to such regularly scheduled Interest Payment Date); (ii) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (i) above; (iii) 1/6 th (if the principal of Bonds of such Series is payable semiannually) or 1/12 th (if the principal of Bonds of such Series is payable annually) of the amount due with respect to principal and premium, if any (such amounts to include all amounts attributable to mandatory sinking fund redemptions on a Sinking Fund Payment Date required under the related Supplemental Indenture, but no other redemptions), on the Subordinate Bonds on such Principal Payment Date, commencing with the 6 th or 12 th Monthly Payment Date, as applicable, preceding such Principal Payment Date; and (iv) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (iii) above. NINTH: On the last Monthly Payment Date preceding each regularly scheduled Interest Payment Date and Principal Payment Date, into the Payment Account and to be used by the Trustee therefor, the amount, if any, which, when added to the amount already within such account and available for such purpose, will be sufficient to pay (i) first, on a pro rata basis, (A) the interest due on the Subordinate Bonds and (B) Other Subordinate Obligations (except, with respect to Subordinate Derivative Product Agreements, Termination Payments that are not Priority Termination Payments) on such Interest Payment Date, and (ii) thereafter, the principal and premium, if any, due (such amounts to include all amounts attributable to mandatory sinking fund redemptions on a Sinking Fund Payment Date required under the related Supplemental Indenture but no other types of redemptions) on the Subordinate Bonds on such Principal Payment Date. TENTH: On each Monthly Payment Date, to the extent the balance of the Reserve Fund is less than the Reserve Fund Requirement, to the Reserve Fund in an amount equal to such deficiency. ELEVENTH: On each Monthly Payment Date preceding each Sinking Fund Payment Date with respect to the conditional or cumulative sinking fund redemption of Senior Bonds on such date, into the Payment Account and to be used by the Trustee therefor, an amount equal to: (i) 1/6 th (if the Sinking Fund Payment Dates are semiannual) or 1/12 th (if the Sinking Fund Payment Dates are annual) of the amount due with respect to the principal amount of Senior Bonds to be redeemed on such Sinking Fund Payment Date in accordance with the related Supplemental Indenture, commencing with the 7 th or 13 th Monthly Payment Date, as applicable, preceding such Sinking Fund Payment Date; and (ii) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (i) above. A-28

141 TWELFTH: On each Monthly Payment Date preceding each Sinking Fund Payment Date with respect to the conditional or cumulative sinking fund redemption of Senior Subordinate Bonds on such date, into the Payment Account and to be used by the Trustee therefor, an amount equal to: (i) 1/6 th (if the Sinking Fund Payment Dates are semiannual) or 1/12 th (if the Sinking Fund Payment Dates are annual) of the amount due with respect to the principal amount of Senior Subordinate Bonds to be redeemed on such Sinking Fund Payment Date in accordance with the related Supplemental Indenture, commencing with the 7 th or 13 th Monthly Payment Date, as applicable, preceding such Sinking Fund Payment Date; and (ii) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (i) above. THIRTEENTH: On each Monthly Payment Date preceding each Sinking Fund Payment Date with respect to the conditional or cumulative sinking fund redemption of Subordinate Bonds on such date, into the Payment Account and to be used by the Trustee therefor, an amount equal to: (i) 1/6 th (if the Sinking Fund Payment Dates are semiannual) or 1/12 th (if the Sinking Fund Payment Dates are annual) of the amount due with respect to the principal amount of Subordinate Bonds to be redeemed on such Sinking Fund Payment Date in accordance with the related Supplemental Indenture, commencing with the 7 th or 13 th Monthly Payment Date, as applicable, preceding such Sinking Fund Payment Date; and (ii) an amount equal to any deficiency in the transfers made to the Payment Account on prior Monthly Payment Dates pursuant to clause (i) above. FOURTEENTH: At the direction of the Issuer, on each Monthly Payment Date occurring during the Recycling Period with respect to a Series of Bonds, to the Student Loan Fund to make subsequent disbursements on Financed Eligible Loans (as to which a previous disbursement on such Financed Eligible Loans has been made) only to the extent funds in the Student Loan Fund are insufficient for such purpose. FIFTEENTH: On each Interest Payment Date for the payment first toward any unpaid Termination Payments, indemnity or other similar or extraordinary payments due under Senior Derivative Product Agreements. SIXTEENTH: On each Interest Payment Date for the payment first toward any unpaid Termination Payments, indemnity or other similar or extraordinary payments due under Senior Subordinate Derivative Product Agreements. SEVENTEENTH: On each Interest Payment Date for the payment first toward any unpaid Termination Payments, indemnity or other similar or extraordinary payments due under Subordinate Derivative Product Agreements. EIGHTEENTH: At the direction of the Issuer, on each Monthly Payment Date occurring during the Recycling Period with respect to a Series of Bonds, to the Student Loan Fund for the origination, purchase or refinancing of Eligible Loans, to the extent permitted under the Supplemental Indenture providing for the issuance of such Bonds. NINETEENTH: On any date Excess Revenue is determined with respect to the redemption of Senior Bonds from such Excess Revenue in accordance with the Supplemental Indenture providing for A-29

142 the issuance of such Senior Bonds, into the Payment Account and to be used by the Trustee therefor, an amount equal to such Excess Revenue. TWENTHIETH: On any date Excess Revenue is determined with respect to the redemption of Senior Subordinate Bonds from such Excess Revenue in accordance with the Supplemental Indenture providing for the issuance of such Senior Subordinate Bonds, into the Payment Account and to be used by the Trustee therefor, an amount equal to such Excess Revenue. TWENTY-FIRST: On any date Excess Revenue is determined with respect to the redemption of Subordinate Bonds from such Excess Revenue in accordance with the Supplemental Indenture providing for the issuance of such Subordinate Bonds, into the Payment Account and to be used by the Trustee therefor, an amount equal to such Excess Revenue. TWENTY-SECOND: On any date Senior Bonds are to be purchased in accordance with the provisions of Section 3.10 of the General Indenture, or on any date Senior Bonds are to be redeemed pursuant to any redemption (other than redemption on a Sinking Fund Payment Date or mandatory redemption from Excess Revenue) under the related Supplemental Indenture, after taking into account all amounts payable pursuant to the preceding clauses FIRST through TENTH (including, in the case of clauses FOURTH through NINTH, (i) all interest due on the next succeeding Interest Payment Date, (ii) if the next succeeding Principal Payment Date occurs six months or less after such date, all principal due on such Principal Payment Date, and (iii) if the next succeeding Principal Payment Date occurs between six and twelve months after such date, one-half of the principal due on such Principal Payment Date), into the Payment Account and to be used by the Trustee therefor, the amount required for such purpose as specified in the related Supplemental Indenture or otherwise in an Issuer Order. TWENTY-THIRD: On any date Senior Subordinate Bonds are to be purchased in accordance with the provisions of Section 3.10 of the General Indenture, or on any date Senior Subordinate Bonds are to be redeemed pursuant to any redemption (other than redemption on a Sinking Fund Payment Date or mandatory redemption from Excess Revenue) under the related Supplemental Indenture, after taking into account all amounts payable pursuant to the preceding clauses FIRST through TENTH (including, in the case of clauses FOURTH through NINTH, (i) all interest due on the next succeeding Interest Payment Date, (ii) if the next succeeding Principal Payment Date occurs six months or less after such date, all principal due on such Principal Payment Date, and (iii) if the next succeeding Principal Payment Date occurs between six and twelve months after such date, one-half of the principal due on such Principal Payment Date), into the Payment Account and to be used by the Trustee therefor, the amount required for such purpose as specified in the related Supplemental Indenture or otherwise in an Issuer Order. TWENTY-FOURTH: On any date Subordinate Bonds are to be purchased in accordance with the provisions of Section 3.10 of the General Indenture, or on any date Subordinate Bonds are to be redeemed pursuant to any redemption (other than redemption on a Sinking Fund Payment Date or mandatory redemption from Excess Revenue) under the related Supplemental Indenture, after taking into account all amounts payable pursuant to the preceding clauses FIRST through TENTH (including, in the case of clauses FOURTH through NINTH, (i) all interest due on the next succeeding Interest Payment Date, (ii) if the next succeeding Principal Payment Date occurs six months or less after such date, all principal due on such Principal Payment Date, and (iii) if the next succeeding Principal Payment Date occurs between six and twelve months after such date, one-half of the principal due on such Principal Payment Date), into the Payment Account and to be used by the Trustee therefor, the amount required for such purpose as specified in the related Supplemental Indenture or otherwise in an Issuer Order. TWENTY-FIFTH: Provided the Issuer has first paid any indemnification amounts owing to a Transaction Party under Section 10.4 herein, then on each Interest Payment Date, after taking into account A-30

143 all amounts payable pursuant to the preceding clauses FIRST through TWENTY-FOURTH, if, as certified in an Issuer Certificate, the Parity Percentage exceeds the percentage specified in a Supplemental Indenture, and any additional conditions set forth in a Supplemental Indenture are met, to the Issuer, free and clear of the lien and pledge of this Indenture, an amount as set forth in an Issuer Order, to the extent that the payment of such amount would not cause the Parity Percentage to fall below such percentage, or such lower percentage for which a Rating Agency Notification has been given. (C) All moneys in the Payment Account shall be applied by the Trustee to the payment of principal of, premium, if any, and interest on the Bonds in the priority set forth in Section 5.3(B) of the General Indenture. Student Loan Fund. (A) On any day on which amounts are on deposit in the Student Loan Fund pursuant to Section 5.3(B) of the General Indenture, and subject to the provisions of Section 5.4(D) of the General Indenture, such amounts shall be transferred to the Acquisition Account and expended to originate, purchase or refinance (at par plus interest accrued thereon and less any origination fees received in connection with the origination, purchase or refinancing of such Eligible Loans) Eligible Loans and, to the extent permitted by the related Supplemental Indenture, to pay the fees and expenses paid or incurred by the Issuer in connection with the origination, purchase or refinancing of such Eligible Loans. To the extent permitted by a Supplemental Indenture providing for the issuance of a Series of Bonds, the Issuer may transfer Financed Loans in the Student Loan Fund to any other account of the Issuer, free and clear of the lien of this Indenture, provided that simultaneously with such transfer the Issuer shall cause there to be delivered to the credit of the Student Loan Fund free of all other liens and encumbrances, other than the lien of this Indenture, Eligible Loans meeting the requirements of such Supplemental Indenture. (B) There shall be deposited in the Student Loan Fund any amounts which are required to be deposited therein pursuant to this Indenture (including, without limitation, proceeds of a Series of Bonds as set forth in the Supplemental Indenture providing for the issuance thereof), and any other amounts available therefor and determined by the Issuer to be deposited therein and not inconsistent with this Indenture. That portion of any such deposit from proceeds of a Series of Bonds for the purpose of paying Costs of Issuance shall be applied to the payment of Cost of Issuance of such Bonds upon receipt by the Trustee of an Issuer Order with respect thereto. Any such proceeds not so used to pay Costs of Issuance shall, upon receipt by the Trustee of an Issuer Order, be transferred to the Revenue Fund. (C) Any amounts on deposit in the Student Loan Fund shall be transferred to the Revenue Fund on any date that the funds on deposit in the Revenue Fund, after taking into account any transfers first from the Capitalized Interest Fund, are insufficient to make the payments or transfers required to be made pursuant to clauses FIRST, SECOND, THIRD, FIFTH, SEVENTH and NINTH of Section 5.3(B) of the General Indenture. The Issuer may, at any time, direct the Trustee to transfer amounts on deposit in the Student Loan Fund to the Revenue Fund, and shall do so if required under the provisions of a Supplemental Indenture. (D) The Trustee shall, subject to any restrictions contained in a Supplemental Indenture, transfer moneys to the Acquisition Account and pay out and permit the withdrawal thereof at any time for the purpose of origination, purchase or refinancing Eligible Loans pursuant to clause (i) of Section 5.4(A), but only upon receipt of: A-31

144 (1) an Issuer Request setting forth the amount to be paid, the Person or Persons to whom such payment is to be made (which may be or include the Issuer) and, in reasonable detail, a description of the Eligible Loans to be originated, purchased or refinanced; (2) an Issuer Certificate identifying such origination, purchase or refinancing and stating that the amount to be withdrawn from the Acquisition Account pursuant to the Issuer Request is a proper charge thereon and that (i) such Eligible Loans and the financing thereof comply with the covenants and requirements of Article VI of the General Indenture, and (ii) the charge to the Acquisition Account of financing such Eligible Loans does not exceed the amounts permitted by this Indenture; and (3) receipt by the Trustee of (i) the original promissory note and all other documentation, in each case, with respect to each Eligible Loan, or written acknowledgement by the Servicer (if other than the Issuer) or a Custodian of the receipt by the Servicer or such Custodian, in each case as bailee and custodian for the Trustee, of the foregoing with respect to each such Eligible Loan; and (ii) the amount, if any, required by the related Supplemental Indenture to be deposited in the Student Loan Fund in respect of origination fees in connection with the origination or purchase of such Eligible Loans. Only Eligible Loans may be Financed under this Indenture. No Eligible Loan may be Financed under this Indenture if it would constitute a Zero Value Loan at the time it would be Financed. All Financed Loans shall be owned by the Issuer, subject to the pledge and lien of this Indenture, and shall be credited to the Student Loan Fund. The Trustee shall maintain a list of all Financed Loans. The Issuer shall coordinate with the Trustee no less often than once during each calendar quarter to ensure that the list maintained by the Trustee of all Financed Loans is accurate and complete. Reserve Fund. (A) A deposit shall be made to the credit of the Reserve Fund from the proceeds of each Series of Bonds to the extent provided in the Supplemental Indenture providing for the issuance of such Bonds. In addition, on each Monthly Payment Date on which the balance of the Reserve Fund is less than the Reserve Fund Requirement, the Trustee shall transfer to the Reserve Fund from the Revenue Fund an amount equal to such deficiency to the extent moneys are available therefor in accordance with the Indenture. (B) In lieu of or in addition to cash or in lieu of Investment Securities, the Issuer shall be permitted to obtain a Credit Facility for funds on deposit in the Reserve Fund, provided that: (1) the Credit Facility (including any replacement Credit Facility) is issued by a bank, trust company, national banking association or insurance company provided the Rating Agency Condition is satisfied; (2) the issuer of the Credit Facility does not receive as security for any reimbursement obligation in respect of the Credit Facility any lien, security interest or other similar right or interest in any property within the Trust Estate which is superior to the rights of the Trustee in respect of such property; (3) the Credit Facility (including any replacement Credit Facility, if provided by a different issuer) has an initial term of not less than three (3) years and any extension, renewal or replacement (if provided by the same issuer) thereof has a term of not less than one year; A-32

145 (4) the Trustee is authorized and has the duty and right to draw on the Credit Facility to satisfy the purposes for which the Reserve Fund was established; and (5) in the event of a substitution of a Credit Facility for funds on deposit in the Reserve Fund, the Trustee shall receive an opinion of Counsel to the effect that all of the requirements set forth above have been satisfied and a Bond Counsel Opinion to the effect that the substitution of the Credit Facility will not, in and of itself, adversely affect the tax-exempt status of the Bonds. Rebate Fund. The Issuer and the Trustee recognize that the exclusion from gross income for purposes of federal income taxation of the interest paid on Tax-Exempt Bonds of any Series is dependent upon compliance with the provisions of Section 148 of the Code. For each issue (as defined in the Regulations) of Tax-Exempt Bonds, a separate Subaccount shall be established in the Rebate Account and the Excess Earnings Account. (A) The Issuer and the Trustee shall, unless and until the Issuer delivers to the Trustee a Bond Counsel Opinion as described in the last paragraph of the Indenture, make the determinations and take the actions hereinafter required by the Indenture and make such further or different determinations and take such further or different actions as are necessary to comply with the requirements of Section 148(f) of the Code and the Treasury Regulations pertaining thereto with respect to each Series of Tax-Exempt Bonds. In respect of each Series of Tax-Exempt Bonds, the Trustee, on behalf of, and as agent for, the Issuer, shall rebate to the United States, not later than sixty (60) days after the end of the five-bond Year period for such Series, and not later than sixty (60) days after the end of each five-bond Year period thereafter for such Series, an amount which ensures that at least ninety percent (90%) of the Rebate Amount (as hereinafter defined) for such Series at the time of such payment will have been paid to the United States, and within sixty (60) days after the payment or redemption of all principal of the Bonds of such Series, an amount sufficient to pay the remaining unpaid balance of the Rebate Amount, all in the manner and as required by Section 148 of the Code and the Treasury Regulations pertaining thereto. As used herein, Rebate Amount means, with respect to a Series of Tax-Exempt Bonds, the amount described in Section 148(f)(2) of the Code, computed in accordance with the provisions of said Section 148(f)(2) and the Arbitrage Regulations. (B) At each Computation Date (as defined in the applicable Tax Certificate for each Series of Tax-Exempt Bonds issued under the Indenture), the Issuer shall calculate the Excess Earnings with respect to each Series of Tax-Exempt Bonds to which such Bonds were issued. The Issuer shall furnish the Trustee upon each such calculation with an Issuer Certificate verifying such calculation and with any supporting documentation required to calculate or evidence the Excess Earnings in accordance with the Arbitrage Regulations. Upon each such calculation and a determination pursuant to the related Supplemental Indenture, the Issuer may give the Trustee written direction as to what extent, if any, transfers are to be made to the Excess Earnings Account in respect of the Excess Earnings so calculated; provided that transfers shall always be made to the extent that the principal balance of Financed Loans allocated to a Series of Tax-Exempt Bonds under the Arbitrage Regulations is less than the Excess Earnings so calculated with respect to such Series. To the extent such transfers are to be made, the Trustee shall transfer to the Excess Earnings Account (but only after any required transfers to the Rebate Account have been made or taken into account), from the balances in the Revenue Fund and the Student Loan Fund (other than that portion of the balance therein consisting of Eligible Loans), in that order of priority, the amount so determined. To the extent that at each Computation Date the balance of the Excess Earnings Account with respect to a given Series of Tax-Exempt Bonds is less than the Excess Earnings so calculated for such Series, a Loan Excess Earnings Value Reduction will result with respect to such Series and the Value of the Financed Loans allocable to such Series under the Arbitrage Regulations will be reduced by the amount thereof; provided, however, that in determining any such Loan A-33

146 Excess Earnings Value Reduction, any related Forgiveness Amount shall be taken into account and reduce the applicable Excess Earnings. The Issuer may, at its option, allocate any such Loan Excess Earnings Value Reduction, in whole or in part, to particular Financed Loans of the applicable Series by notice in writing to the Trustee. All amounts in the Excess Earnings Account, including all investment earnings thereon, shall remain therein until transferred to the Revenue Fund or paid by the Trustee to the United States Department of the Treasury or for such other purpose, as the Issuer shall specify, upon receipt by the Trustee of (a) an Issuer Order directing the Trustee to so transfer or pay a specified amount, and (b) a Bond Counsel Opinion to the effect that any such transfer or payment, upon satisfaction of any conditions set forth in such opinion (e.g., forgiveness of indebtedness on all or a portion of the related Financed Loans or the allocation of Loan Excess Earnings Value Reduction to Financed Loans), would not cause interest on the related Series of Tax-Exempt Bonds to be includable in the gross income of any owners thereof for federal income tax purposes. The Issuer shall consult with Bond Counsel on or within thirty (30) days before each date on which, pursuant to the Arbitrage Regulations or otherwise, amounts are required to be paid to the United States Department of the Treasury with respect to Excess Earnings, to determine what, if any, action may be necessary to be taken with respect to disposition of any amounts in the Excess Earnings Account or Financed Loans to prevent each applicable Series of Tax-Exempt Bonds from becoming arbitrage bonds under Section 148 of the Code, and the Issuer agrees to take any such action as shall be necessary to prevent each such Series of Tax-Exempt Bonds from becoming arbitrage bonds. In any event, the Issuer and the Trustee shall comply with all provisions and restrictions, including, but not limited to, those with respect to the Excess Earnings Account, set forth in the Tax Certificate furnished by the Issuer in connection with the issuance of each Series of Tax-Exempt Bonds. Amounts in the Excess Earnings Account shall be used only for the purposes specified in the preceding paragraph, and shall not be available for any other purpose, including, but not limited to, payment of Debt Service on the Bonds. Notwithstanding the foregoing, in the event the Trustee is furnished with a Bond Counsel Opinion to the effect that it is not necessary under existing laws, regulations, rulings and decisions and any then pending federal legislation to pay any portion of Excess Earnings to the United States (or take any other action with respect thereto) in order to assure the exclusion from gross income for federal income tax purposes of interest on one or more Series of Tax-Exempt Bonds, the requirements set forth in the preceding portion of the Indenture with respect to such Series of Bonds (but only with respect to the portion of such Excess Earnings specified in such opinion) need not be complied with and shall no longer be effective and all amounts at the time on deposit in the Excess Earnings Account (to the extent covered by such opinion) shall be transferred to the Revenue Fund. Program Expenses. Pursuant to the Indenture, amounts shall be used to pay the Issuer reasonable and necessary Program Expenses and Servicing Fees. Capitalized Interest Fund. There shall be deposited in the Capitalized Interest Fund all amounts to be deposited therein pursuant to a Supplemental Indenture and any other amount available therefor and determined by the Issuer to be deposited therein. Amounts in the Capitalized Interest Fund shall be applied as provided in the related Supplemental Indenture, and any amounts remaining therein after such application shall be transferred to the Revenue Fund. Investment of Certain Funds. (A) Subject to the provisions of the Indenture and the Issuer s direction of the investment or deposit of funds hereunder in Investment Securities, moneys in any Fund shall be continuously invested and reinvested or deposited and redeposited by the Trustee. The Issuer shall direct the Trustee by Issuer Order (or, if time does not permit, by oral direction of an Authorized A-34

147 Officer, confirmed in writing) to invest and reinvest the moneys in any Fund in Investment Securities so that the maturity or date of redemption at the option of the owner thereof shall coincide as nearly as practicable with, but in no event later than, the times at which moneys are needed to be expended therefrom in accordance with the provisions of the Indenture; provided however, in no event shall such Investment Securities mature later than the Business Day prior to the date such funds are required to be distributed. The failure of the Trustee to invest such moneys in the absence of direction from the Issuer shall not result in any liability of the Trustee. The Trustee shall not be responsible for or held liable for any depreciation in the value of any investment or loss on investments provided the Trustee shall have followed the directions of the Issuer or the terms of the Indenture. The Investment Securities purchased shall be held by the Trustee in trust for the equal and ratable benefit and security of the Owners of the Bonds and shall be deemed at all times to be part of the appropriate Fund or Account, except as provided in subsection (B) hereof, and the Trustee shall keep the Issuer advised as to the details of all such investments as set forth in subsection (C) hereof. (B) Investment Securities purchased as an investment of moneys in any Fund or Account held by the Trustee under the provisions of the Indenture shall be deemed at all times to be a part of such Fund or Account but, except with respect to moneys in the Rebate Fund (with respect to which all income or earnings and shall be retained therein), the income or earnings and gains realized in excess of losses suffered due to the investment thereof shall be deposited in the Revenue Fund. (C) The Trustee, as directed by the Issuer, shall sell, or present for redemption or exchange, any Investment Security purchased by it pursuant to the Indenture whenever it shall be necessary in order to provide moneys to meet any payment. Such Investment Security shall either (i) mature within sixty (60) days or (ii) shall be sold without a loss to the Trust Estate. Any Investment Security may be credited on a pro rata basis to more than one Fund or Account (other than moneys in the Rebate Fund) and need not be sold in order to provide for the transfer of amounts from one Fund or Account to another. The Trustee shall advise the Issuer in writing, on or before the tenth day of each calendar month, of all investments held for the credit of each Fund, Account and Subaccount in its custody under the provisions of the Indenture as of the end of the preceding month. (D) Anything herein to the contrary notwithstanding, neither the Trustee nor any Depositary shall make any investment of moneys in any Fund or Account which would cause any Series of Tax- Exempt Bonds to be arbitrage bonds within the meaning of Section 148 of the Code or which would cause any Series of Tax-Exempt Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code; and, to this end, the Trustee and each Depositary shall comply with all provisions with respect to investment of moneys in the Funds and Accounts specified in the Tax Certificate furnished by the Issuer in connection with the issuance of each Series of Tax-Exempt Bonds. PARTICULAR COVENANTS The Issuer covenants and agrees with the Trustee and the Owners of the Bonds as follows: Payment of Bonds. The Issuer shall duly and punctually pay or cause to be paid, solely from Trust Estate, the principal of every Bond and the interest and premium, if any, thereon at the dates and places and in the manner stated in the Bonds according to the true intent and meaning thereof. Extension of Payment of Bonds. The Issuer shall not directly or indirectly extend or consent to the extension of the Stated Maturity of any of the Bonds or claims for interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement. In the event that the Stated Maturity of any of the Bonds or the time for payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled to any payment (a) out of the Funds or Accounts established A-35

148 pursuant to the Indenture, including the investments, if any, thereof, or (b) out of any assets or revenues pledged hereunder, prior to the payment of the principal of all Bonds the Stated Maturity of which has not been extended and the payment of such portion of the accrued interest on the Bonds as shall not be represented by such extended claims for interest. Nothing herein shall be deemed to limit the right of the Issuer to issue refunding obligations and such issuance shall not be deemed to constitute an extension of the Stated Maturity of the Bonds being refunded. Issuer Representations and Warranties. Pursuant to the Indenture, the Issuer represents, warrants and covenants as follows: 1. The Indenture creates a valid and continuing security interest in the Trust Estate in favor of the Trustee, which security interest is prior to all other liens, and is enforceable as such against creditors of and purchasers from the Issuer. 2. Pursuant to Section (A) of the Iowa Code, the security interest granted to the Trustee pursuant to the Indenture in the Financed Loans shall attach, be perfected and be assigned priority in the manner provided under the UCC for perfection of security interests in accounts. 3. The Issuer owns and has good and marketable title to the Trust Estate free and clear of any lien, claim or encumbrance of any Person. 4. The Issuer has caused or will have caused, within ten days, the filing of a financing statement in the office of the Secretary of State of Iowa in order to perfect the security interest in the Trust Estate granted to the Trustee hereunder. 5. Other than the security interest granted to the Trustee pursuant to the Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Trust Estate. The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer that include a description of collateral covering the Trust Estate other than any financing statement relating to the security interest granted to the Trustee hereunder or that has been terminated. The Issuer is not aware of any judgment or tax lien filings against the Issuer. 6. The securities intermediary for each Fund or Account constituting a securities account has agreed to treat all assets credited to the securities account as financial assets. 7. The Issuer has received all consents and approvals required by the terms of the Trust Estate to the transfer to the Trustee of its interest and rights in the Trust Estate hereunder. 8. The Issuer has taken all steps necessary to cause each securities intermediary to identify in its records the Trustee as the person having a security entitlement against the securities intermediary in each of the Funds or Accounts constituting securities accounts. 9. No Fund or Account constituting a securities account is in the name of any person other than the Issuer or the Trustee. The Issuer has not consented to the securities intermediary of any Fund or Account constituting a securities account to comply with entitlement orders of any Person other than the Trustee. 10. The Issuer has taken all steps necessary to cause the Trustee to become the account holder of each Fund or Account that constitutes a deposit account. A-36

149 11. No Fund or Account constituting a deposit account is in the name of any person other than the Issuer or the Trustee. The Issuer has not consented to the bank maintaining any Fund or Account constituting a deposit account to comply with instructions of any Person other than the Trustee. 12. Other than Financed Loans and the Funds and Accounts (including amounts on deposit or credited thereto), the Trust Estate constitutes general intangibles. All terms not otherwise defined herein have the meanings assigned to them by Articles 1 and 9 of the UCC, as it may be amended, reenacted or otherwise in effect from time to time. Power to Issue Bonds and Pledge Revenues, Funds and Other Property; Protection of Security. The Issuer is duly authorized under all applicable law to create and issue the Bonds, to enter into the Indenture and to pledge the Trust Estate purported to be pledged by the Indenture in the manner and to the extent provided in the Indenture. 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, or of equal rank with, the pledge created by the Indenture, except as otherwise expressly provided herein, and all action on the part of the Issuer to that end has been duly and validly taken. The Bonds and the provisions of the Indenture and each Supplemental Indenture are and will be valid and legally enforceable obligations of the Issuer in accordance with their terms and the terms of the Indenture and each Supplemental Indenture. The Issuer shall at all times, to the extent permitted by law, defend, preserve and protect the pledge of the Trust Estate pledged under the Indenture and each Supplemental Indenture and all the rights of the Bondowners against all claims and demands of all Persons whomsoever. The pledge of the Trust Estate made hereby includes the pledge of any contract or any evidence of indebtedness or other rights of the Issuer to receive any of the same, whether now existing or hereafter coming into existence, and whether now or hereafter acquired, and the proceeds thereof. In consideration of the purchase and acceptance of the Bonds by those who shall hold the same from time to time, the provisions of the Indenture shall be a part of the contract of the Issuer with the Bondowners and shall be deemed to be and shall constitute a contract among the Issuer, the Trustee and the Bondowners. Further Assurance. The Issuer shall at any and all times, insofar as it may be authorized so to do, pass, make, do, execute, acknowledge and deliver all and every such further resolutions, indentures, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary or desirable for the better assuring, conveying, granting, assigning and confirming any and all of the Trust Estate hereby pledged or charged with or assigned to the payment of the Bonds, or intended so to be, or which the Issuer may hereafter become bound to pledge or charge or assign. Tax Covenants. (A) The Issuer recognizes that the Owners of Tax-Exempt Bonds from time to time will have accepted them on, and paid therefor a price which reflects, the understanding that interest on such Bonds is excludable from the gross income of the owner thereof for federal income tax purposes under laws in force at the time such Bonds shall have been delivered. In this connection, the Issuer covenants that (a) it will not take or omit to take any action which may render the interest on any of the Tax-Exempt Bonds includable in gross income for purposes of federal income taxation, (b) it will use the proceeds (as such term is defined in the Arbitrage Regulations) of the Bonds in such a manner that the use thereof would not cause the Tax-Exempt Bonds to be arbitrage bonds under Section 148 of the Code and the Treasury Regulations pertaining thereto, and (c) it will not permit at any time any proceeds (as such term is defined in the Arbitrage Regulations) of the Bonds to be used, directly or indirectly, in a manner which would result in the inclusion of the interest on any Tax-Exempt Bond in A-37

150 gross income for purposes of federal income taxation otherwise afforded by the Code (including, without limitation, by reason of the violation of any limitation imposed by Sections 141 through 150 of the Code). In particular, the Issuer shall not use, or permit the use of, any proceeds of the Bonds or any other moneys in the Funds and Accounts if, unless, after giving effect to such use, as to each Series of Tax-Exempt Bonds, (i) at least ninety-five percent (95%) of the net proceeds of such Series will, at the time of such use, have been used directly or indirectly to make or finance student loans described in Section 144(b)(1)(B) of the Code, or (ii) at least ninety percent (90%) of the net proceeds of such Series will, at the time of such use, have been used directly or indirectly to make or finance student loans described in Section 144(b)(1)(A) of the Code, all within the meaning of such Section 144(b) of the Code. The foregoing covenants shall remain in full force and effect notwithstanding the defeasance of the Tax- Exempt Bonds of any Series pursuant to the Indenture and notwithstanding any other provision hereof. In furtherance of the foregoing covenants, the Issuer covenants to comply with each Tax Certificate. Accounting and Reports. (A) The Issuer 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 Loans and all Funds and Accounts, which shall at all reasonable times be subject to the inspection of the Trustee, and the Owners of an aggregate of not less than five percent (5%) in principal amount of Bonds then Outstanding or their representatives duly authorized in writing, and within one hundred eighty (180) days after the end of each Fiscal Year shall cause such books of record and account to be audited by an Accountant. (B) The Issuer shall annually, within one hundred eighty (180) days after the close of each Fiscal Year, file with the Trustee and the Rating Agencies a copy of its financial statements for such Fiscal Year, setting forth in reasonable detail: (1) the balance sheet for the Issuer at the end of such Fiscal Year; (2) a statement of the Issuer s revenues and expenses during such Fiscal Year; and (3) a statement of changes in financial position, as of the end of such Fiscal Year; (4) an Issuer statement as to any Events of Default under the Indenture. The financial statements shall be accompanied by an Accountant s Certificate stating that the financial statements examined present fairly the financial position of the Issuer at the end of the Fiscal Year and that the results of its operations and the changes in financial position for the period examined are in conformity with generally accepted accounting principles. Student Loan Program. (A) The Issuer shall from time to time, with all practical dispatch and in a sound and economical manner consistent in all respects with the provisions of the Indenture sound practices and principles, (i) use and apply proceeds of the Bonds and other moneys in the Student Loan Fund to finance Eligible Loans pursuant to the Indenture or to pay other obligations of the Issuer required to be paid under the Indenture, (ii) do all such acts and things as shall be necessary to receive and collect Revenues and Recoveries of Principal sufficient to pay the Bonds plus all Servicing Fees and Program Expenses, (iii) enforce and take all steps, actions and proceedings reasonably necessary in the judgment of the Issuer to protect its rights with respect to Financed Loans, and to enforce all terms, covenants and conditions of the A-38

151 Financed Loans, and (iv) execute, deliver, record and file or cause to be filed such instruments as are necessary to create a first priority perfected security interest of the Trustee in the Trust Estate, including, without limitation, the Financed Loans and proceeds thereof. (B) No amount in the Student Loan Fund shall be expended or applied for the purpose of financing an Eligible Loan, and no Eligible Loan shall be financed, unless the Issuer has determined that: (1) the interest borne by the Eligible Loan and payable on such Eligible Loan at the time of its financing will be a rate permitted under applicable law at the time the particular Eligible Loan was made, provided however that the Issuer may, to the extent provided in the related Supplemental Indenture, apply amounts in the Student Loan Fund to the financing of specific Eligible Loans providing interest rate reductions for borrowers; and (2) if not originated by the Issuer, the Eligible Loan has been purchased by the Issuer from a seller pursuant to a Loan Purchase Agreement. The Issuer shall provide the Trustee with a copy of each Loan Purchase Agreement pursuant to which a Financed Loan has been sold to the Issuer. (C) The Issuer may not sell a Financed Loan except as otherwise permitted pursuant to a Supplemental Indenture providing for the issuance of a Series of Bonds. (D) The Issuer will use its best efforts to evaluate the reinvestment of principal and interest receipts with respect to Financed Loans to ensure that it will continue to be able to fulfill its debt service requirements hereunder. (E) The Issuer shall administer, operate and maintain the Program in such manner as to ensure that the Student Loan Program and the Financed Eligible Loans will benefit from the benefits available under the Act, the HEAL Act and the federal programs of reimbursement for student loans pursuant to the Act, the HEAL Act or from any other federal statute providing for such federal programs. (F) The Issuer will duly and punctually keep, observe and perform each and every term, covenant and condition on its part to be kept, observed and performed, with respect to the Guarantee Agreements and the Certificate of Insurance. Personnel and Servicing of Financed Loans. (A) All Financed Student Loans shall be administered and collected either by the Issuer or by a Servicer selected by the Issuer in a competent and orderly fashion and in accordance with all requirements of applicable federal and state laws. The Issuer shall cause to be enforced, and shall take, or cause to be taken, all steps, actions and proceedings reasonably necessary for the enforcement of, all terms, covenants and conditions of all Financed Loans and agreements in connection therewith, including the prompt payment of all principal and interest payments and all other amounts due the Issuer or the Trustee thereunder; provided that this Section shall not preclude the forgiveness of principal or interest on Financed Loans nor preclude the Issuer (or the Trustee as directed by the Issuer) from extending repayment terms or collecting a rate of interest lower than the highest permissible rate on such Eligible Loan to the extent (i) such forgiveness, extension of payment terms, or reduced interest rate is necessary to comply with the Indenture (including, without limitation, to prevent interest on any Series of Tax- Exempt Bonds from being includable in the gross income of the owners thereof for federal income tax purposes), or (ii) the Trustee has received an Issuer Certificate certifying that any such forgiveness or reduced interest rate will not adversely affect the payment of all Debt Service, Program Expenses and Servicing Fees, and the deposit of all amounts required to be deposited in the Rebate Fund, from amounts A-39

152 available therefor from the Trust Estate under the Indenture. Furthermore, the Issuer may amend the terms of a Financed Loan to provide for a different rate of interest thereon to the extent required by applicable law. The Issuer shall not consent or agree to or permit any amendment or modification of any Financed Loan or agreement in connection therewith which will in any manner materially adversely affect the rights or security of the Bondowners. Nothing shall be construed to prevent the Issuer from settling a default or curing a delinquency on any Financed Loan. (B) Upon the occurrence of a Servicer Termination Event, the Trustee may, or (if (1) directed to do so by the Acting Bondowners Upon Default, or (2) such Servicer Termination Event is described in clause (ii) or (iii) of the definition thereof) shall, remove the Servicer by written notice from the Trustee to the Servicer, provided however, no removal of the Servicer pursuant to this subsection (B) shall be effective until (i) the Trustee or a successor servicer shall have been appointed by the Trustee and (ii) the Trustee or such successor servicer shall have agreed in writing to be bound by the terms of a Servicing Agreement in the same manner as the Issuer, in its capacity as Servicer is bound hereunder; and provided further that if the Trustee is unable or unwilling to act as successor servicer, the Trustee shall appoint, or petition a court of competent jurisdiction to appoint, a successor servicer whose regular business includes the servicing of loans for post-secondary education. The Issuer, in its capacity as Servicer, agrees that if a Servicer Termination Event shall occur with respect to the Issuer, it shall give written notice thereof to the Trustee within 3 Business Days after the happening of such event. The Trustee shall give prompt written notice to the Bondowners of any Servicer Termination Event of which it has knowledge. Notice of the replacement of any Servicer with a successor servicer shall be given by the Trustee to the Bondowners and each Rating Agency. No Encumbrances. The Issuer will not create, or permit the creation of, any pledge, lien, charge or encumbrance upon the Trust Estate pledged under the Indenture, except only as to a lien subordinate to the lien of the Indenture created by any other indenture authorizing the issuance of bonds, notes or other evidences of indebtedness of the Issuer the proceeds of which have been or will be used to refund or otherwise retire all or a portion of the Outstanding Bonds (but only upon receipt by the Trustee of a Bond Counsel Opinion that the creation of such lien will not be prejudicial to the Trustee or the Owner of any Outstanding Bonds) or as otherwise provided in or permitted by the Indenture. The Issuer will not issue any bonds or other evidences of indebtedness, other than the Bonds as permitted by the Indenture, secured by a pledge of the Trust Estate herein pledged or held aside by the Issuer or by a Transaction Party under the Indenture, creating a lien or charge on the Trust Estate equal or superior to the lien of the Indenture; provided that nothing in the Indenture shall prevent the Issuer from issuing obligations secured by assets and revenues of the Issuer other than the Trust Estate pledged in the Indenture. Compliance With Conditions Precedent. Upon the date of issuance of any Series of Bonds, all conditions, acts and things required by law or by the Indenture to exist, to have happened or to have been performed precedent to or in the issuance of such Bonds shall exist, have happened and have been performed, or will have happened or been performed, and such Bonds, together with all other indebtedness of the Issuer, shall be within every debt and other limit prescribed by law. General. The Issuer 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 Issuer under the provisions of the Indenture in accordance with the terms of such provisions. A-40

153 Waiver of Laws. The Issuer shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of any stay or extension of law now or at any time hereafter in force which may affect the covenants and agreements contained in the Indenture or in the Bonds and all benefits or advantage of any such law or laws is hereby expressly waived by the Issuer. Continuing Disclosure. The Issuer and the Trustee hereby covenant and agree that they will comply with and carry out all of the provisions of each Continuing Disclosure Agreement. Notwithstanding any other provision of the Indenture, failure of the Issuer or the Trustee to comply with this covenant or any Continuing Disclosure Agreement shall not be considered an Event of Default; however, subject to the Indenture provisions, and if the Trustee shall have been indemnified as provided in the Indenture, then the Trustee may (and, at the request of any Participating Underwriter (as defined in the Continuing Disclosure Agreement) or the Owners of the Bonds of at least twenty-five percent (25%) in aggregate principal amount of Outstanding Bonds, shall) or any Owner or Beneficial Owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Issuer or the Trustee, as the case may be, to comply with its obligations under the Indenture. Continuing Existence and Qualification. The Issuer will maintain its existence as an Iowa nonprofit corporation and will take no action or suffer any action to be taken by others which will alter, change or destroy, and will take all affirmative action necessary to maintain, its status as a nonprofit corporation and its status as an organization described in Section 501(c)(3) of the Code and exempt from federal income taxation under Section 501(a) of the Code (or any successor sections of a subsequent federal income tax statute or code), to the extent necessary so that the interest on any of the Tax-Exempt Bonds will not be includable in gross income for purposes of federal income taxation. The Issuer will remain duly qualified to do business in the State of Iowa and will not dispose of all or substantially all of its assets (by sale, lease or otherwise), except as otherwise specifically authorized under the Indenture or under comparable provisions of any future indenture of the Issuer with respect to subsequent issues of bonds, notes or other obligations of the Issuer, or consolidate with or merge into another corporation or permit any other corporation to consolidate with or merge into it unless: A. the surviving, resulting or transferee corporation, as the case may be, shall (i) be organized under the laws of the United States or one of the states thereof, (ii) be an organization described in Section 501(c)(3) of the Code and exempt from federal income taxation under Section 501(a) of the Code (or any successor sections of a subsequent federal income tax statute or code), (iii) have a total unrestricted fund balance at least equal to that of the Issuer as of the date of such consolidation, merger or transfer and (iv) be qualified to do business in the State of Iowa; B. at least thirty (30) days before any merger, consolidation or transfer of assets becomes effective, the Issuer shall give the Trustee written notice of the proposed transaction; C. prior to any merger, consolidation or transfer of assets, an a Bond Counsel Opinion shall be delivered to the Trustee stating that such merger, consolidation or transfer of assets will not cause interest on any Series of Tax-Exempt Bonds to become includable in the gross income for federal income tax purposes of recipients thereof; and D. prior to or concurrently with any merger, consolidation or transfer of assets, the surviving, resulting or transferee corporation, as the case may be, if other than the Issuer, shall deliver to the Trustee an instrument assuming all of the obligations of the Issuer under the Indenture, any Bonds, any Derivative Product Agreement, any Backup Servicing Agreement, any A-41

154 Student Loan Purchase Agreements, any Servicing Agreement and any Custodial Agreement, together with the consent of the other parties, if any, to each such instrument to such assumption. Notwithstanding any other provision in the Indenture, the Issuer, as part of its continuing operations, may enter into arrangements whereby any portion of its student loan assets are sold to, or the benefits of ownership are transferred to, a third party for value in accordance with the Issuer s bylaws and articles of incorporation, as amended from time to time. SUPPLEMENTAL INDENTURES Supplemental Indentures Effective Without Consent of Owners of the Bonds. The Issuer and the Trustee, without the consent of or notice to any of the Owners of the Bonds, may enter into an agreement or agreements supplemental to the Indenture for any one or more of the following purposes: (1) to provide limitations and restrictions in addition to the limitations and restrictions contained in the Indenture on the authentication and delivery of Bonds or the issuance of other evidences of indebtedness; (2) to add to the covenants and agreements of the Issuer in the Indenture other covenants and agreements to be observed by the Issuer which are not contrary to or inconsistent with the Indenture as then in effect; (3) to add to the limitations and restrictions in the Indenture other limitations and restrictions to be observed by the Issuer which are not contrary to or inconsistent with the Indenture as then in effect; (4) to surrender any right, power or privilege reserved to or conferred upon the Issuer by the terms of the 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 Issuer contained in the Indenture; (5) to confirm, as further assurance, any pledge under, and the subjection to any lien or pledge created or to be created by, the Indenture, the pledge of the Trust Estate, including Revenues, Recoveries of Principal or of any other revenues or assets; (6) to cure any ambiguity, supply any omission, or cure or correct any defect or inconsistent provision in the Indenture; (7) to insert such provisions clarifying matters or questions arising under the Indenture as are necessary or desirable and are not contrary to or inconsistent with the Indenture as then in effect; (8) to provide for additional duties of the Trustee in connection with the Financed Loans or for a successor Trustee; (9) to provide for the issuance of one or more Series of Bonds, subject to the satisfaction of a Rating Agency Condition; (10) to make any other change in the Indenture which, in the judgment of the Trustee, shall not prejudice in any material respect the rights of the Owners of the Bonds; A-42

155 (11) to make any change which, in the judgment of the Trustee, acting in reliance on a Bond Counsel Opinion, is necessary or desirable to maintain the tax-exempt status of a Series of Tax-Exempt Bonds; or (12) to modify any of the provisions of the Indenture in any respect whatsoever, but only if (i) such modification shall be, and be expressed to be, effective only after all Bonds Outstanding at the date of execution and delivery of such Supplemental Indenture shall cease to be Outstanding, and (ii) such Supplemental Indenture shall specifically apply to all Bonds initially delivered after the date of execution and delivery of such Supplemental Indenture and of any Bonds issued in exchange therefor or in place thereof. Supplemental Indentures Effective Only Upon Consent of Owners of the Bonds. At any time or from time to time, a Supplemental Indenture may be entered into by the Issuer and the Trustee subject to consent by Owners of the Bonds in accordance with and subject to the provisions of the Indenture. Any such Supplemental Indenture shall become fully effective in accordance with its terms only upon the execution thereof and upon compliance with the provisions of the Indenture. AMENDMENTS Powers of Amendment. Any modification of or amendment to the Indenture and of the rights and obligations of the Issuer and of the Owners of the Bonds hereunder, in any particular, in each case, which is not permitted by the provisions of the Indenture, may be made by a Supplemental Indenture, but only with the written consent of the Owners of at least a majority in principal amount of the Bonds Outstanding (including at least a majority in principal amount of the Owners of all Outstanding Senior Bonds) at the time such consent is given, as provided in the Indenture. The Issuer or the Trustee shall provide written notice of such proposed modification or amendment to the Rating Agencies. If any such modification or amendment will not take effect so long as any particular Bonds remain Outstanding, however, the consent of the Owners of such Bonds shall not be required and such Bonds shall not be deemed to be Outstanding for the purpose of any calculation of Outstanding Bonds under this Section. No such modification or amendment shall permit a change in the terms of Stated Maturity of any Outstanding Bond or of any installment of interest thereon or a reduction in the principal amount thereof or in the rate of interest thereon without the written consent of the Owner of such Bonds (the consent of the Owner of which is required to effect any such modification or amendment). The Trustee may in its sole discretion determine whether or not in accordance with the foregoing powers of amendment Bonds would be affected by any modification or amendment hereof and any such determination shall be binding and conclusive on the Issuer and all Owners of Bonds. A-43

156 Consent of Owners of the Bonds. (A) The Issuer shall mail a copy of any Supplemental Indenture (or brief summary thereof or reference thereto in form approved by the Trustee) making a modification or amendment which is not permitted by the provisions of the Indenture, together with a request to Owners of the Bonds for their consent thereto in form satisfactory to the Trustee, to the Owner of any Bond; provided, however, that failure to mail such copy and request shall not affect the validity of the Supplemental Indenture when consented to as provided in this Section. Such Supplemental Indenture shall not be effective unless and until there shall have been filed with the Trustee (a) the written consents of the Owners of the percentages of Outstanding Bonds specified in the Indenture and (b) a Bond Counsel Opinion stating that such Supplemental Indenture has been duly and lawfully adopted by the Issuer in accordance with the provisions of the Indenture, is authorized or permitted hereby, is valid and binding upon the Issuer and will not adversely affect the exclusion from gross income for federal income tax purposes of interest on any Tax-Exempt Bonds. (B) The consent of a Owner to any modification or amendment shall be effective only if accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to which such consent is given, which proof shall be such as is permitted by the Indenture. A Certificate of the Trustee that it has examined such proof and that it is sufficient shall be conclusive proof that the consents have been given by and are binding on the consenting Owners and upon any subsequent Owner of such Bonds and of any Bonds issued in exchange therefor (whether or not such subsequent Owner thereof has notice thereof), unless such consent is revoked in writing by the consenting Owner or a subsequent Owner thereof by filing such revocation with the Trustee, prior to the time when the written statement of the Trustee hereinafter provided for in this Section is filed. Such a revocation shall be effective only if accompanied by proof that such Bonds are held by the signer of such revocation in the manner permitted by the Indenture. The fact that a consent has not been revoked may likewise be proved by a Certificate of the Trustee to the effect that no such revocation is on file with the Trustee. Modifications by Unanimous Consent. The terms and provisions of the Indenture and the rights and obligations of the Issuer and of the Owners of the Bonds hereunder may be modified or amended in any respect upon the entry by the Issuer and the Trustee into a Supplemental Indenture, and upon the consent of the Owners of all the Bonds then Outstanding of the affected Series, such consent to be given as provided in the Indenture. The Issuer or the Trustee shall provide written notice of such proposed modification or amendment to the Rating Agencies. Exclusion of Bonds. Bonds owned or held by or for the account of the Issuer shall not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding Bonds provided for in the Indenture, and the Issuer shall not be entitled with respect to such Bonds to give any consent or take any other action provided for in this the Indenture. DEFAULTS, ACCELERATIONS AND REMEDIES Events of Default. Each of the following events is hereby declared an Event of Default : (1) the failure to pay the principal of or any installment of interest on any Senior Bond when and as the same shall become due, whether at Stated Maturity or otherwise; or (2) if no Senior Bonds are Outstanding, the failure to pay the principal of or any installment of interest on any Senior Subordinate Bond when and as the same shall become due, whether at Stated Maturity or otherwise; or A-44

157 (3) if no Senior Subordinate Bonds are Outstanding, the failure to pay the principal of or any installment of interest on any Subordinate Bond when and as the same shall become due, whether at Stated Maturity or otherwise; or (4) default in the performance or observance of any other of the covenants, agreements or conditions on the part of the Issuer in the Indenture or in the Bonds contained, and such default shall have continued for a period of forty-five (45) days after written notice thereof, specifying such default, shall have been given (a) by the Trustee to the Issuer, or by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of (a) the Outstanding Senior Bonds (if Senior Bonds are Outstanding), (b) the Outstanding Senior Subordinate Bonds (if no Senior Bonds are Outstanding, but Senior Subordinate Bonds are Outstanding), or (c) the Outstanding Subordinate Bonds (if no Senior Bonds or Senior Subordinate Bonds are Outstanding, but Subordinate Bonds are Outstanding), to the Issuer and the Trustee; provided that, except with respect to the Issuer s covenants contained in the Indenture, if the default is such that it can be corrected, but not within such forty-five (45) days, it shall not constitute an Event of Default if corrective action is instituted by the Issuer within such forty-five (45) days and is diligently pursued until the default is corrected; or (5) if the Issuer shall or (a) admit in writing its inability to pay its debts generally as they become due; (b) consent to the appointment of a custodian (as that term is defined in the federal Bankruptcy Code) for or assignment to a custodian of the whole or any substantial part of the Issuer s property, or fail to stay, set aside or vacate within ninety (90) days from the date of entry thereof any order or decree entered by a court of competent jurisdiction ordering such appointment or assignment; or (c) commence any proceeding or file a petition under the provisions of the federal Bankruptcy Code for liquidation, reorganization or adjustment of debts, or under any insolvency law or other statute or law providing for the modification or adjustment of the rights of creditors or fail to stay, set aside or vacate within ninety (90) days from the date of entry thereof any order or decree entered by a court of competent jurisdiction pursuant to an involuntary proceeding, whether under federal or state law, providing for liquidation or reorganization of the Issuer or modification or adjustment of the rights of creditors. Acceleration. (A) Whenever any Event of Default (except with respect to an Event of Default under Section 9.1(4) of the Indenture) shall have occurred and be continuing, the Trustee upon the written request of the Acting Bondowners Upon Default, shall, by notice in writing delivered to the Issuer, declare the principal of and interest accrued on all Bonds then Outstanding due and payable. (B) In the event that the Trustee shall declare the principal of and interest accrued on all Bonds then Outstanding due and payable in accordance with subsection (A), such principal and interest shall become immediately due and payable on the date of declaration. At any time after such a declaration of acceleration has been made, but before a judgment or decree for payment of the money due has been obtained by the Trustee, the Acting Bondowners Upon Default may, by written notice to the Issuer and the Trustee, rescind and annul such declaration and its consequences if: A-45

158 (1) there has been paid to or deposited with the Trustee by or for the account of the Issuer, or provision satisfactory to the Trustee has been made for the payment of, a sum sufficient to pay: (a) if Senior Bonds are Outstanding: (i) all overdue installments of interest on all Senior Bonds; (ii) the principal of (and premium, if any, on) any Senior Bonds which have become due otherwise than by such declaration of acceleration, together with interest thereon at the rate or rates borne by such Senior Bonds; (i) to the extent that payment of such interest is lawful, interest upon overdue installments of interest on the Senior Bonds at the rate or rates borne by such Senior Bonds; (ii) all other sums required to be paid to satisfy the Issuer s obligations with respect to the transmittal of moneys to be credited to the Revenue Fund, the Rebate Fund and the Student Loan Fund under the provisions of the Indenture; and (iii) all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other Transaction Parties; or (b) if no Senior Obligations are Outstanding but Senior Subordinate Obligations are Outstanding: (i) all overdue installments of interest on all Senior Subordinate Bonds; (ii) the principal of (and premium, if any, on) any Senior Subordinate Bonds which have become due otherwise than by such declaration of acceleration, together with interest thereon at the rate or rates borne by such Senior Subordinate Bonds; (iv) to the extent that payment of such interest is lawful, interest upon overdue installments of interest on the Senior Subordinate Bonds at the rate or rates borne by such Senior Subordinate Bonds; (v) all other sums required to be paid to satisfy the Issuer s obligations with respect to the transmittal of moneys to be credited to the Revenue Fund, the Rebate Fund and the Student Loan Fund under the provisions of the Indenture; and (vi) all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other Transaction Parties; or (c) if no Senior Obligations or Subordinate Obligations are Outstanding: (i) all overdue installments of interest on all Senior Subordinate Bonds; A-46

159 (ii) the principal of (and premium, if any, on) any Senior Subordinate Bonds which have become due otherwise than by such declaration of acceleration, together with interest thereon at the rate or rates borne by such Senior Subordinate Bonds; (iii) to the extent that payment of such interest is lawful, interest upon overdue installments of interest on the Senior Subordinate Bonds at the rate or rates borne by such Senior Subordinate Bonds; (iv) all other sums required to be paid to satisfy the Issuer s obligations with respect to the transmittal of moneys to be credited to the Revenue Fund, the Rebate Fund and the Student Loan Fund under the provisions of the Indenture; and (v) all sums paid or advanced by the Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel and any other Transaction Parties. (2) All Events of Default, other than the non-payment of the principal of Bonds which have become due solely by, or as a direct result of, such declaration of acceleration, have been cured or waived as provided in the Indenture. No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon. Remedies. If an Event of Default has occurred and is continuing, the Trustee may pursue any available remedy by suit at law or in equity to enforce the covenants of the Issuer herein, including, without limitation, any remedy of a secured party under the Iowa Uniform Commercial Code, foreclosure and mandamus, and may pursue such appropriate judicial proceedings as the Trustee shall deem most effective to protect and enforce, or aid in the protection and enforcement of, the covenants and agreements herein. If an Event of Default shall have occurred and is continuing, and if it shall have been requested so to do by the Owners of not less than twenty-five percent (25%) in aggregate principal amount of all Bonds then Outstanding and the Trustee shall have been indemnified as provided in the Indenture, the Trustee shall be obliged to exercise such one or more of the rights and powers conferred by the Indenture as the Trustee, being advised by its Counsel, shall deem most expedient in the interests of the Bondowners; provided, however, that the Trustee shall have the right to decline to comply with any such request if the Trustee shall be advised by Counsel that the action so requested may not lawfully be taken or if the Trustee receives, before exercising such right or power, contrary instructions from the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding. If an Event of Default shall have occurred and is continuing under the Indenture, the Trustee shall either assume the Issuer s obligations or appoint a third party to assume such obligations to the extent permitted by law to ensure such obligations can be satisfied. No remedy by the terms of the Indenture conferred upon or reserved to the Trustee or to the Bondowners is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or to the Bondowners hereunder or now or hereafter existing at law or in equity or by statute. The assertion or employment of A-47

160 any right or remedy hereunder shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver of any such Event of Default or acquiescence therein; and every such right and power may be exercised from time to time and as often as may be deemed expedient by the Trustee or the Acting Bondowners Upon Default, as the case may be. Direction of Proceedings by Acting Bondowners Upon Default. The Acting Bondowners Upon Default shall have the right, at any time, by an instrument or instruments in writing executed and delivered to the Trustee, to direct the method and place of conducting all proceedings to be taken in connection with the enforcement of the terms and conditions of the Indenture; provided that (a) such direction shall not be otherwise than in accordance with the provisions of law and of the Indenture; (b) the Trustee shall not determine that the action so directed would be unjustly prejudicial to the Owners of Bonds not taking part in such direction, other than by effect of the subordination of any of their interests hereunder; and (c) the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction Waiver of Stay or Extension Laws. To the extent that such rights may lawfully be waived, neither the Issuer nor anyone claiming through it or under it shall or will set up, claim, or seek to take advantage of any stay or extension laws now or hereafter in force, which may affect the covenants or agreements contained in the Indenture, or in the Bonds, and the Issuer, for itself and all who may claim through or under it, hereby waives, to the extent that it lawfully may do so, the benefit of all such laws. Application of Moneys. All moneys received by the Trustee pursuant to any right given or action taken under the provisions of the Indenture shall, after payment of the cost and expenses of the proceedings resulting in the collection of such moneys and of the expenses, liabilities and advances incurred or made by the Trustee with respect thereto (provided that any moneys or Investment Securities held pursuant to the Indenture with respect to Bonds no longer deemed Outstanding hereunder shall not be available for, nor be applied to, the payment of any such costs, expenses, liabilities or advances), be applied, based solely on the written direction of the Issuer, as follows: (A) Unless the principal of all the Outstanding Bonds shall have become or shall have been declared due and payable, all such moneys shall be applied: FIRST, to the Department, any Guaranty Agency, or the Insurer any amounts required by the Act to be paid thereto with respect to Financed Eligible Loans; SECOND, to the deposit into the Rebate Fund in an amount calculated by or on behalf of the Issuer (as set forth in an Issuer Certificate delivered to the Trustee) which, when added to the amount already within the Rebate Fund, will equal the amount then required to be on deposit therein in accordance with the requirements of Section 5.6 of the General Indenture and the Tax Certificate; THIRD, to the payment to (i) the Servicer for payment (or to reimburse the Issuer for payment previously made to another Servicer from moneys not constituting a part of the Trust Estate and not theretofore reimbursed to the Issuer from the Trust Estate) in respect of Servicing Fees with respect to the Financed Loans that are due and payable, and not otherwise provided for, as set forth in an Issuer Certificate delivered to the Trustee; provided that the amount of any such Servicing Fees so paid or reimbursed shall not exceed the amount permitted under the related Supplemental Indenture; (ii) to the A-48

161 Trustee for payment in respect of Trustee Fees that are due and payable and all other amounts due the Trustee under Section 10.4 of the General Indenture; and (iii) to the Issuer an amount necessary to pay Program Expenses then unpaid (as set forth in an Issuer Certificate), provided that the amount of any such payment to the Issuer shall not exceed the amount permitted under the related Supplemental Indenture; FOURTH, to the payment of the Owners of the Senior Bonds of all installments of interest (other than interest on overdue principal) and to Senior Derivative Product Counterparties of all Other Senior Obligations (except with respect to Senior Derivative Product Agreements, Termination Payments that are not Priority Termination Payments), then due and payable in the order in which such installments or other amounts became due and payable, and if the amount available shall not be sufficient to pay in full any particular installment, then to the payment, ratably, according to the amounts due on such installment and other amounts, to the Persons entitled thereto, without any discrimination or preference; FIFTH, to the payment to the Owners of the Senior Bonds of the unpaid principal of any of the Senior Bonds which shall have become due and payable in the order of their stated payment dates, with interest on the principal amount of such Bonds at the respective rates specified therein from the respective dates upon which such Senior Bonds became due and payable, and, if the amount available shall not be sufficient to pay in full the principal of the Senior Bonds by their stated terms due and payable on any particular date, then to the payment of such principal, ratably, according to the amount of such principal then due on such date, to the Persons entitled thereto without any discrimination or preference; SIXTH, to the payment of the Owners of the Senior Subordinate Bonds of all installments of interest (other than interest on overdue principal) and to Senior Subordinate Derivative Product Counterparties of all Other Senior Subordinate Obligations (except with respect to Senior Subordinate Derivative Product Agreements, Termination Payments that are not Priority Termination Payments), then due and payable in the order in which such installments or other amounts became due and payable, and if the amount available shall not be sufficient to pay in full any particular installment, then to the payment, ratably, according to the amounts due on such installment and other amounts, to the Persons entitled thereto, without any discrimination or preference; SEVENTH, to the payment to the Owners of the Senior Subordinate Bonds of the unpaid principal of any of the Senior Subordinate Bonds which shall have become due and payable in the order of their stated payment dates, with interest on the principal amount of such Bonds at the respective rates specified therein from the respective dates upon which such Senior Subordinate Bonds became due and payable, and, if the amount available shall not be sufficient to pay in full the principal of the Senior Subordinate Bonds by their stated terms due and payable on any particular date, then to the payment of such principal, ratably, according to the amount of such principal then due on such date, to the Persons entitled thereto without any discrimination or preference; EIGHTH, to the payment of the Owners of the Subordinate Bonds of all installments of interest (other than interest on overdue principal) and to Subordinate Derivative Product Counterparties of all Other Subordinate Obligations (except with respect to Subordinate Derivative Product Agreements, Termination Payments that are not Priority Termination Payments), then due and payable in the order in which such A-49

162 installments or other amounts became due and payable, and if the amount available shall not be sufficient to pay in full any particular installment, then to the payment, ratably, according to the amounts due on such installment and other amounts, to the Persons entitled thereto, without any discrimination or preference; NINTH, to the payment to the Owners of the Subordinate Bonds of the unpaid principal of any of the Subordinate Bonds which shall have become due and payable in the order of their stated payment dates, with interest on the principal amount of such Subordinate Bonds at the respective rates specified therein from the respective dates upon which such Subordinate Bonds became due and payable, and, if the amount available shall not be sufficient to pay in full the principal of the Subordinate Bonds by their stated terms due and payable on any particular date, then to the payment of such principal, ratably, according to the amount of such principal then due on such date, to the Persons entitled thereto without any discrimination or preference. TENTH, to the payment to the Owners of the Senior Bonds of the principal of the Senior Bonds upon the optional or other permitted redemption thereof in accordance with the provisions of the applicable Supplemental Indenture, until the principal balance of all Senior Bonds has been reduced to zero, and, if the amount available shall not be sufficient to redeem all Senior Bonds, then to the redemption, ratably, of the Senior Bonds based upon their respective principal balances, without any discrimination or preference; ELEVENTH, to the payment to the Owners of the Senior Subordinate Bonds of the principal of the Senior Subordinate Bonds upon the optional or other permitted redemption thereof in accordance with the provisions of the applicable Supplemental Indenture, until the principal balance of all Senior Subordinate Bonds has been reduced to zero, and, if the amount available shall not be sufficient to redeem all Senior Subordinate Bonds, then to the redemption, ratably, of the Senior Subordinate Bonds based upon their respective principal balances, without any discrimination or preference; TWELFTH, to the payment to the Owners of the Subordinate Bonds of the principal of the Subordinate Bonds upon the optional or other permitted redemption thereof in accordance with the provisions of the applicable Supplemental Indenture, until the principal balance of all Subordinate Bonds has been reduced to zero, and, if the amount available shall not be sufficient to redeem all Subordinate Bonds, then to the redemption, ratably, of the Subordinate Bonds based upon their respective principal balances, without any discrimination or preference; THIRTEENTH, to the extent the balance of the Reserve Fund is less than the Reserve Fund Requirement, to the deposit into the Reserve Fund in an amount equal to such deficiency; FOURTEENTH, if Bonds are to be purchased in accordance with the provisions of Section 3.10 of the General Indenture, or any Bonds are to be redeemed pursuant to any optional redemption under the related Supplemental Indenture, after taking into account all amounts payable pursuant to the preceding clauses FIRST through TENTH, to the deposit into the Payment Account and used by the Trustee therefor in the amount required for such purpose; A-50

163 FIFTEENTH, to the payment of Termination Payments that are not Priority Termination Payments to Senior Derivative Product Counterparties, ratably, according to the amounts due on such date, to the Senior Derivative Product Counterparties entitled thereto, without any discrimination or preference; SIXTEENTH, to the payment of Termination Payments to Senior Subordinate Derivative Product Counterparties, ratably, according to the amounts due on such date, to the Senior Subordinate Derivative Product Counterparties entitled thereto, without any discrimination or preference; and SEVENTEENTH, to the payment of Termination Payments to Subordinate Derivative Product Counterparties, ratably, according to the amounts due on such date, to the Subordinate Derivative Product Counterparties entitled thereto, without any discrimination or preference. (B) If the principal of all Outstanding Bonds shall have become due or shall have been declared due and payable and such declaration has not been annulled and rescinded under the provisions of the Indenture, all such moneys shall be applied, as follows: FIRST, to the Department, any Guaranty Agency, or the Insurer any amounts required by the Act to be paid thereto with respect to Financed Eligible Loans; and SECOND, to the deposit into the Rebate Fund in an amount calculated by or on behalf of the Issuer (as set forth in an Issuer Certificate delivered to the Trustee) which, when added to the amount already within the Rebate Fund, will equal the amount then required to be on deposit therein in accordance with the requirements of Section 5.6 of the General Indenture and the Tax Certificate; and THIRD, to the payment (i) to the Servicer for payment (or to reimburse the Issuer for payment previously made to another Servicer from moneys not constituting a part of the Trust Estate and not theretofore reimbursed to the Issuer from the Trust Estate) in respect of Servicing Fees with respect to the Financed Loans that are due and payable, and not otherwise provided for, as set forth in an Issuer Certificate delivered to the Trustee; provided that the amount of any such Servicing Fees so paid or reimbursed shall not exceed the amount permitted under the related Supplemental Indenture; (ii) to the Trustee for payment in respect of Trustee Fees that are due and payable and all other amounts due the Trustee under Section 10.4 of the General Indenture; and (iii) to the Issuer an amount necessary to pay Program Expenses then unpaid, provided that the amount of any such payment to the Issuer shall not exceed the amount permitted under the related Supplemental Indenture; and FOURTH, to the payment to the Senior Bondowners of the principal and interest then due and unpaid upon the Senior Bonds and to Senior Derivative Product Counterparties of all Other Senior Obligations (except Termination Payments that are not Priority Termination Payments), without preference or priority of principal over interest or Other Senior Obligations or of interest over principal or Other Senior Obligations, or of any installment of interest over any other installment of interest, any Senior Bondowner over any other Senior Bondowner, or any Other Senior Obligation over any other Other Senior Obligation, ratably, according to the amounts due, to the Persons entitled thereto without any discrimination or preference; and A-51

164 FIFTH, to the payment to the Senior Subordinate Bondowners of the principal and interest then due and unpaid upon the Senior Subordinate Bonds and to Senior Subordinate Derivative Product Counterparties of all Other Senior Subordinate Obligations (except Termination Payments that are not Priority Termination Payments), without preference or priority of principal over interest or Other Senior Subordinate Obligations or of interest over principal or Other Senior Subordinate Obligations, or of any installment of interest over any other installment of interest, any Senior Subordinate Bondowner over any other Senior Subordinate Bondowner, or any Other Senior Subordinate Obligation over any other Other Senior Subordinate Obligation, ratably, according to the amounts due, to the Persons entitled thereto without any discrimination or preference; and SIXTH, to the payment to the Subordinate Bondowners of the principal and interest then due and unpaid upon the Subordinate Bonds and to Subordinate Derivative Product Counterparties of all Other Subordinate Obligations (except Termination Payments that are not Priority Termination Payments), without preference or priority of principal over interest or Other Subordinate Obligations or of interest over principal or Other Subordinate Obligations, or of any installment of interest over any other installment of interest, any Subordinate Bondowner over any other Subordinate Bondowner, or any Other Subordinate Obligation over any other Other Subordinate Obligation, ratably, according to the amounts due, to the Persons entitled thereto without any discrimination or preference; and SEVENTH, to the payment of Termination Payments that are not Priority Termination Payments, indemnity or other similar or extraordinary payments then due and unpaid to Senior Derivative Product Counterparties, ratably, according to the amounts due on such date, to the Senior Derivative Product Counterparties entitled thereto, without any discrimination or preference; and EIGHTH, to the payment of Termination Payments, indemnity or other similar or extraordinary payments then due and unpaid to Senior Subordinate Derivative Product Counterparties, ratably, according to the amounts due on such date, to the Senior Subordinate Derivative Product Counterparties entitled thereto, without any discrimination or preference; and NINTH, to the payment of Termination Payments, indemnity or other similar or extraordinary payments then due and unpaid to Subordinate Derivative Product Counterparties, ratably, according to the amounts due on such date, to the Subordinate Derivative Product Counterparties entitled thereto, without any discrimination or preference. (C) If the principal of all the Outstanding Bonds shall have been declared due and payable and if such declaration shall thereafter have been rescinded and annulled under the provisions of the Indenture, then (subject to the provisions of paragraph (B), in the event that the principal of all the Outstanding Bonds shall later become or be declared due and payable) the money held by the Trustee hereunder shall be applied in accordance with the provisions of paragraph (A). Whenever moneys are to be applied by the Trustee pursuant to the provisions of this Section, such moneys shall be applied by it at such times, and from time to time, as the Trustee shall determine, having due regard to the amount of such moneys available for application and the likelihood of additional moneys becoming available for such application in the future. Whenever the Trustee shall apply such A-52

165 funds, it shall fix the date (which shall be an Interest Payment Date unless it 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 shall cease to accrue. The Trustee shall give such notice as it may deem appropriate of the deposits with it of any such moneys and of the fixing of any such date, and shall not be required to make payment to the Owner of any unpaid Bond until such Bond shall be presented to the Trustee for appropriate endorsement or for cancellation if fully paid. Whenever all Bonds and interest thereon and all Other Obligations have been fully paid under the provisions of this Section, and all expenses and charges of the Trustee have been paid, the Issuer and the Trustee shall be restored to their former positions hereunder Remedies Vested in Trustee. All rights of action, including the right to file proof of claims under the Indenture or under any of the Bonds may be enforced by the Trustee without the possession of any of the Bonds or the production thereof in any trial or other proceedings relating thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its name as Trustee without the necessity of joining as plaintiffs or defendants any Bondowners, and any recovery of judgment shall be for the equal benefit of all Bondowners in respect of which such judgment has been recovered. Limitation on Suits by Bondowners. No Owner of any Bond shall have any right to institute any suit, action or proceeding in equity or at law for the enforcement of the Indenture or for the execution of any trust hereof or for the appointment of a receiver or any other remedy hereunder unless (1) an Event of Default shall have occurred and be continuing, (2) the Owners of not less than twenty-five percent (25%) in aggregate principal amount of Bonds then Outstanding shall have made written request to the Trustee, (3) such Bondowners shall have offered to the Trustee indemnity, as provided in the Indenture, (4) the Trustee shall have thereafter failed for a period of sixty (60) days after the receipt of the request and indemnification or refused to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name and (5) no direction inconsistent with such written request shall have been given to the Trustee during such sixty (60)-day period by the Owners of not less than a majority in aggregate principal amount of the Bonds then Outstanding; it being understood and intended that no one or more Owners of the Bonds shall have any right in any manner whatsoever to affect, disturb or prejudice the lien of the Indenture by its, his, her or their action or to enforce any right hereunder 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 the Owners of all Outstanding Bonds as their interests may appear hereunder; provided, however, that, notwithstanding the foregoing provisions of this Section, the Acting Bondowners Upon Default may institute any such suit, action or proceeding in their own names for the benefit of the Owners of all Outstanding Bonds hereunder. Unconditional Right of Bondowners To Enforce Payment. Notwithstanding any other provision in the Indenture, the Owner of any Bond shall have the right, which is absolute and unconditional, to receive payment of the principal of, premium, if any, and interest on such Bond in accordance with the terms thereof and hereof and, upon the occurrence of an Event of Default with respect thereto, to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Owner. Trustee May File Proofs of Claims. In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Issuer or the property of the Issuer, the Trustee (irrespective of whether the principal of the Bonds shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Issuer for the payment of overdue principal or interest) shall be entitled and empowered, by intervention in such proceeding or otherwise, A-53

166 A. to file and prove a claim for the whole amount of principal, premium, if any, and interest owing and unpaid in respect of the Bonds then Outstanding and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and Counsel and any other Transaction Parties) and of the Bondowners allowed in such judicial proceeding, and B. to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Bondowner to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Bondowners, to pay to the Trustee any amount due to it for the reasonable compensation, expenses and disbursements of the Trustee, its agents and Counsel and any other Transaction Parties. Undertaking for Costs. The Issuer and the Trustee agree, and each Owner of any Bond by his acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under the 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 costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys fees, against any party litigant in 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 Section shall not apply to any suit instituted by the Trustee, to any suit instituted by the Acting Bondowners Upon Default, or to any suit instituted by any Bondowner for the enforcement of the payment of the principal of, premium, if any, or interest on any Bond in accordance with the Indenture. Termination of Proceedings. In case the Trustee or any Bondowner shall have proceeded to enforce any right under the Indenture by the appointment of a receiver, or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely to the Trustee or such Bondowner, then and in every such case the Issuer and the Trustee or such Bondowner shall, subject to any final determination in such proceedings, be restored to their former positions and rights hereunder with respect to the Indenture, and all rights, remedies and powers of the Trustee and the Bondowners shall continue as if no such proceedings had been taken. Waiver of Defaults and Events of Default. The Trustee shall, unless the Trustee has declared the principal of and interest on all Outstanding Bonds immediately due and payable in accordance with the Indenture and a judgment or decree for payment of the money due has been obtained by the Trustee, waive any default or Event of Default hereunder and its consequences but only upon written request of the Acting Bondowners Upon Default; provided, however, that there shall not be waived (a) any Event of Default arising from the acceleration of the maturity of the Bonds, except upon the rescission and annulment of such declaration as described in the Indenture hereof; (b) any Event of Default in the payment when due of any amount owed to any Bondowner (including payment of principal of or interest on any Bond) except with the consent of such or unless, prior to such waiver, the Issuer has paid or deposited (or caused to be paid or deposited) with the Trustee a sum sufficient to pay all amounts owed to such Bondowner (including, to the extent permitted by law, interest upon overdue installments of interest); (c) any Event of Default arising from the failure of the Issuer to pay unpaid expenses of the Trustee, its agents and counsel, and any other Transaction Party as required by the Indenture, unless, prior to such waiver, the Issuer has paid or deposited (or caused to be paid or deposited) with the Trustee sums required to satisfy such obligations of the Issuer under the provisions of the Indenture; or (d) any default in respect of a covenant or provision hereof which under the Indenture hereof cannot be modified or A-54

167 amended without the consent of the Owner of each Bond affected thereby. No such waiver shall extend to any subsequent or other default or Event of Default, or impair any right consequent thereon. Inspection of Books and Records. The Issuer covenants that if an Event of Default shall have happened and shall not have been remedied, the books of record and account of the Issuer relating to the Financed Loans shall, during normal business hours of the Issuer, be subject to the inspection and use of the Trustee and any Owner of at least twenty five percent (25%) of the principal amount of any Series of Bonds any of which are then Outstanding and of their respective agents and attorneys. The Issuer covenants that if an Event of Default shall have happened and shall not have been remedied, the Issuer will continue to account, as a trustee of an express trust, for all other money, securities and property pledged under the Indenture Notice of Event of Default. (A) As soon as practicable, the Trustee shall give notice to each Rating Agency and to the Owners of the Bonds of each Event of Default hereunder known to the Trustee after actual knowledge of the occurrence thereof of an officer of its corporate trust department, unless such Event of Default shall have been remedied or cured before the giving of such notice; provided that, except in the case of default in the payment of the principal of or interest on any of the Bonds, the Trustee shall be protected in withholding such notice to the Owners of the Bonds if and so long as the board of directors or the responsible officer or officers of the Trustee in good faith determines that the withholding of such notice is in the interest of the Owners of the Bonds. The Trustee shall not be deemed to have actual knowledge of an Event of Default (other than an Event of Default under Section 9.1(1), (2) or (3) of the Indenture) unless notice of such Event of Default shall have been given to or learned of by an officer of its corporate trust department. Each such notice of Event of Default shall be given by the Trustee by mailing written notice thereof to all Owners of Bonds, as the names and addresses of such Owners appear upon the Bond Register. (B) As soon as practicable, the Trustee shall give notice to the Owners of the Bonds upon the occurrence of any event described in Section 9.1(4) of the Indenture which upon passage of the forty-five (45) day period referenced therein would give rise to an Event of Default known to the Trustee after actual knowledge of the occurrence thereof of an officer of its corporate trust department. CONCERNING THE TRANSACTION PARTIES Appointment and Acceptance of Duties of Trustee. Wells Fargo Bank, National Association is hereby appointed as Trustee. The Trustee shall signify its acceptance of the duties and obligations of Trustee by executing the Indenture.. Responsibility of Transaction Parties. (A) The recitals of fact herein and in the Bonds contained shall be taken as the statements of the Issuer and no Transaction Party assumes any responsibility for the correctness of the same. No Transaction Party makes any representations as to the validity or sufficiency of the Indenture or of any Bonds issued hereunder or in respect of the security afforded by the Indenture, and no Transaction Party shall incur any responsibility or duty with respect to the issuance of the Bonds or the application of the proceeds thereof or the application of any moneys paid to any other Transaction Party. No Transaction Party shall be under any obligation or duty to expend or risk its own funds or 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 reasonable satisfaction. No Transaction Party shall be liable in connection with the performance of its duties hereunder except for its own negligence or willful misconduct. 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 other Transaction Party. A-55

168 Any provisions hereunder permitting a Transaction Party to act shall not be construed as requiring such action. (B) The Trustee accepts and agrees to execute the trusts imposed upon it by this Indenture, but only upon the following terms and conditions: (1) Except during the continuance of an Event of Default, (a) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. (2) If an Event of Default has occurred and is continuing, 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 corporate trustee would exercise or use under the circumstances. Evidence on Which Transaction Parties May Act. Each Transaction Party shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee shall not, however, comply with such notice, resolution, request, consent, order, certificate, report, opinion, bond or other paper or document which does not comply with the terms and provisions of the Indenture or which directs the Trustee to take an action which is not permitted by the terms and provisions of the Indenture. Each Transaction Party may consult with counsel, who may be counsel to the Issuer, and the opinion 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 Transaction Party 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 a Fund or Account, such matter (unless other evidence thereof is specifically prescribed herein) may be deemed to be conclusively proved and established by a Certificate signed by an Authorized Officer of the Issuer, and such Certificate shall be full warrant for any action taken or suffered in good faith under the provisions of the Indenture, but in its sole discretion the Transaction Party may in lieu thereof accept other evidence of such fact or matter or may require such further or additional evidence as it may deem reasonable. Neither the Trustee nor any other Transaction Party nor any successor Trustee or Transaction Party shall be liable to the Issuer, the Owners of any of the Bonds or any other Person for any act or omission done or omitted to be done by such Trustee or Transaction Party in reliance upon any instruction, direction or certification received by the Trustee or Transaction Party pursuant to the Indenture or for any act or omission done or omitted in good faith and without willful or reckless misconduct or negligence. 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 Issuer to any Transaction Party shall be sufficiently executed if executed in the name of the Issuer by an Authorized Officer. The duties of any Transaction Party are those expressly set forth in the Indenture, and no additional duties shall be implied or inferred. The Trustee may execute any of the trusts or powers hereof and perform any duty either itself or by or through independent agents appointed by it; provided, however, the Trustee shall not be answerable and accountable for any default, negligence or willful misconduct of any such agents appointed by it with due care. Notwithstanding the foregoing, upon a Rating Agency Notification having been given with respect to the appointment of any such independent agent, the Trustee may execute any of the trusts or powers hereof and perform any duty hereunder by or A-56

169 through such agent of the Trustee, and it shall not be answerable or accountable for any default, negligence or willful misconduct of any such agent. All reasonable costs incurred by the Trustee and all reasonable compensation to all such persons as may be appointed by the Trustee in connection with the trusts hereof shall be paid by the Issuer. The Trustee shall not be deemed to have knowledge of any matter or circumstance the occurrence of which would require it to take action hereunder unless an officer of the Trustee responsible for the administration of the Indenture actually knows. A permissive right or power to act hereunder shall not be construed as a requirement to act. Delivery of any reports, information and documents to the Trustee provided for herein is for information purposes only and the Trustee s receipt of such shall not constitute constructive knowledge of any information contained therein or determinable from information contained therein, including the Issuer s compliance with any of its representations, warranties or covenants hereunder (as to which the Trustee is entitled to rely exclusively on Issuer Certificates). Compensation. The Issuer shall pay to each Transaction Party from time to time reasonable compensation for all services rendered under the 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 the Indenture, including, without limitation those incurred in connection with the Indenture, and each Transaction Party shall have a lien therefor on any and all funds at any time held by it under the Indenture. The Issuer further agrees to indemnify and save each Transaction Party harmless against any loss, claim, damage, cost, expense or liabilities which it may incur in the exercise and performance of its powers and duties hereunder, and which are not due to its gross negligence or willful misconduct; provided however, that the amount of such indemnification shall not exceed $100,000 per annum prior to the occurrence of an Event of Default. The terms of this Section shall survive the term of the Indenture and the resignation or removal of the Trustee. Permitted Acts and Functions. Any Transaction Party may become the Owner of any Bonds, with the same rights it would have if it were not a Transaction Party. Any Transaction Party may act as Depositary for, and 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 Owners of the Bonds or to affect or aid in any reorganization growing out of the enforcement of the Bonds or the Indenture, whether or not any such committee shall represent the Owners of a majority in principal amount of the Bonds then Outstanding. Any Transaction Party may be a participant in the Student Loan Program and may sell Eligible Loans to the Issuer. Any Transaction Party may be an underwriter or a financial advisor in connection with the sale of the Bonds or of any other securities offered or issued by the Issuer. Resignation of Trustee. The Trustee may at any time resign and be discharged of the duties and obligations created by the Indenture by giving not less than sixty (60) days written notice to the Issuer, and the Owners of the Bonds specifying the date when such resignation shall take effect, and such resignation shall take effect upon any day specified in such notice unless (i) a successor shall have been appointed previously, as provided in the Indenture in which event such resignation shall take effect immediately on the acceptance of such successor or (ii) no such successor shall have been appointed in which event such resignation shall take effect immediately upon, but not until, the acceptance of a successor. In the event a successor is not appointed within thirty days (30) of a notice of resignation, the Trustee may petition a court of competent jurisdiction for the appointment of a successor. Removal of Trustee. The Trustee shall be removed by the Issuer if at any time by a written instrument or concurrent written instruments, filed with the Trustee and the Issuer and signed by the Owners (or their attorney-in-fact duly authorized) of a majority in principal amount of Bonds Outstanding. The Issuer may remove the Trustee at any time, upon the giving of thirty (30) days written notice by an Authorized Officer of the Issuer to the Trustee, except during the existence of an Event of A-57

170 Default, by filing with the Trustee an instrument of appointment signed by an Authorized Officer and the acceptance by a successor Trustee. The removal of the Trustee shall not become effective until a successor Trustee has been appointed by the Issuer and such successor Trustee has accepted such appointment. Appointment of Successor Trustee. (A) In case at any time the Trustee shall resign or shall be removed or shall become incapable of acting, or shall be adjudged a 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 Issuer covenants and agrees that (unless an Event of Default shall have occurred and be continuing) it will thereupon appoint a successor Trustee. (B) If in a proper case no appointment of a successor Trustee shall be made pursuant to the foregoing provisions of this Section within thirty (30) days after the Trustee shall have given to the Issuer written notice of resignation, as provided in the Indenture or after a vacancy in the office of the Trustee shall have occurred by reason of its inability to act, or an Event of Default shall have occurred and be continuing as described in (A) above, the Trustee or the Owner of any Bond may, apply to any court of competent jurisdiction to appoint a successor Trustee. Said court may thereupon, after such notice as such court may deem proper and prescribe, appoint a successor Trustee. (C) Any Trustee appointed under the provisions of this Section in succession to the Trustee shall (i) be a trust company or bank having the powers of a trust company within or outside the State, and (ii) have capital, surplus and undivided profits aggregating at least $100,000,000 (if there be such a trust company or bank willing and able to accept the office on reasonable and customary terms and authorized by law to perform all the duties imposed upon it by the Indenture). (D) Notice of such successor Trustee shall be delivered to the Rating Agencies. DEFEASANCE; MONEYS HELD FOR PAYMENT OF DEFEASED BONDS Discharge of Liens and Pledges; Bonds No Longer Outstanding and Deemed To Be Paid Hereunder. The obligations of the Issuer under the Indenture, and the liens, pledges, charges, trusts, covenants and agreements of the Issuer herein made or provided for, shall be fully discharged and satisfied as to any Bond and such Bond shall no longer be deemed to be Outstanding hereunder: (i) when such Bond shall have been cancelled, or shall have been purchased by the Trustee from moneys held by it under the Indenture; or (ii) as to any Bond not cancelled or so purchased, when payment of the principal of and the applicable redemption premium, if any, on such Bond, plus interest on such principal to the due date thereof (whether such due date be by reason of Stated Maturity or upon redemption or prepayment, or otherwise), either (a) shall have been made or caused to be made in accordance with the terms hereof, or (b) shall have been provided for by irrevocably depositing with the Trustee and irrevocably appropriating and setting aside exclusively for such payment, (1) moneys sufficient to make such payment or (2) Government Obligations maturing as to principal and interest in such amount and at such times as will ensure the availability of sufficient moneys to make such payment and, if payment of all then Outstanding Bonds of an issue (as defined in the Arbitrage Regulations) is to be so provided for, all payments required to be made to the United States Treasury or otherwise with respect to Rebate Amounts and Excess Earnings under the Indenture hereof, any amount payable, if any, by the Issuer to any Underwriter in respect of A-58

171 indemnification pursuant to the related Contract of Purchase, and all necessary and proper fees, compensation and expenses of the Trustee, the Depositaries and the Paying Agents pertaining to the Bond with respect to which such deposit is made shall have been paid or the payment thereof provided for to the satisfaction of the Trustee, said Depositaries and said Paying Agents. Any deposit under the preceding clause (b) shall be accompanied by an Issuer Certificate certifying that the moneys and Government Obligations so appropriated and set aside are sufficient, and will mature as needed, to pay the principal, premium, if any, and interest due on the Bond with respect to which such deposit has been made on the Stated Maturity or Redemption Date thereof and on each Interest Payment Date on and prior to such Stated Maturity or Redemption Date. At such time as a Bond shall be deemed to be no longer Outstanding hereunder, as aforesaid, such Bond shall cease to draw interest from the due date thereof (whether such due date be by reason of maturity, or upon redemption or prepayment or by declaration as aforesaid, or otherwise) and, except for the purposes of any such payment from such moneys or Investment Securities, shall no longer be secured by or entitled to the benefits of the Indenture. Notwithstanding the foregoing, in the case of Bonds which by their terms may be redeemed or otherwise prepaid prior to their Stated Maturities, no deposit under clause (b) of subparagraph (ii) above shall constitute such payment, discharge and satisfaction as aforesaid, as to all such Bonds which are to be redeemed or prepaid prior to their respective Stated Maturities, until proper notice of such redemption or prepayment shall have been previously given in accordance with the Indenture or provision satisfactory to the Trustee shall have been irrevocably made for the giving of such notice. Any such moneys so deposited with the Trustee as provided in this Indenture may at the direction of the Issuer also be invested and reinvested in Government Obligations maturing in the amounts and time as hereinbefore set forth, and all income from all Government Obligations in the hands of the Trustee pursuant to the Indenture which is not required for the payment of the Bonds and interest and premium thereon with respect to which such moneys shall have been so deposited shall be deposited in the Rebate Fund, to the extent required by the Indenture hereof, and thereafter (A) if any Bonds are then Outstanding, be deposited in the Revenue Fund as and when realized and collected, for use and application as are other moneys credited to such Fund, and (B) if no Bonds are then Outstanding and no amounts are owed to any Bondowners hereunder, be paid to the Issuer. Notwithstanding any provision of any other Section of the Indenture which may be contrary to the provisions of the Indenture all moneys or Investment Securities set aside and held in trust pursuant to the provisions of the Indenture for the payment of the principal of, premium, if any, and interest on Bonds shall be applied to and used solely for the payment of the principal of, premium, if any, and interest on the particular Bond with respect to which such moneys and Investment Securities have been so set aside in trust. If moneys or Government Obligations have been deposited or set aside with the Trustee pursuant to the Indenture for the payment of Bonds and such Bonds shall be deemed to have been paid and to be no longer Outstanding hereunder as provided in the Indenture, but such Bonds shall not have in fact been actually paid in full, no amendment to the provisions of the Indenture shall be made without the consent of the Owner of each Bond affected thereby. The Issuer may at any time cause to be cancelled any Bonds previously executed and delivered, which the Issuer may have acquired in any manner whatever, and such Bonds upon such surrender for cancellation shall be deemed to be paid and no longer Outstanding hereunder. A-59

172 MISCELLANEOUS Optional Purchase of all Financed Eligible Loans. The Issuer shall have the option to purchase all of the Financed Eligible Loans on the date that is the tenth (10th) Business Day preceding the Interest Payment Date on which the then outstanding principal balance of the Bonds is 10% or less of the initial outstand principal balance of all Financed Loans financed under this Indenture (the "Optional Purchase Date"). To exercise the option described in this Section 12.1, the Issuer shall deposit in the Revenue Fund on the Optional Purchase Date, an amount equal to the aggregate purchase amount for the Financed Eligible Loans, plus the appraised value of any such other property held in the Trust Estate other than the Funds and Accounts, such value to be determined by an appraiser mutually agreed upon by the Issuer and the Trustee. No Recourse Under Indenture or on Bonds. All covenants, stipulations, promises, agreements and obligations of the Issuer contained in the Indenture shall be deemed to be the covenants, stipulations, promises, agreements and obligations of the Issuer and not of any officer, director or employee of the Issuer in his individual capacity, and no recourse shall be had for the payment of the principal of or interest on the Bonds or for any claim based thereon or on the Indenture against any officer, director or employee of the Issuer or against any natural person executing the Bonds. Conflict. All resolutions or other proceedings of the Issuer in conflict herewith be and the same are repealed insofar as such conflict exists. Security Instrument. To the extent permitted by law, the Indenture, when executed and delivered by the parties hereto, shall constitute a security agreement pursuant to and for all purposes of the Uniform Commercial Code of the State. Perfection of Security Interest. (A) The Issuer has caused or will have caused, within ten (10) days of the date of issuance of each Series of Bonds issued pursuant to the Indenture, the filing of a financing statement in the office of the Secretary of State of Iowa in order to perfect the security interest in the Financed Loans, including the notes evidencing the same and all other documentation relating to the same, and all other assets comprising the Trust Estate. (B) All original copies of the student loan credit agreements or other documentation that constitute or evidence the Financed Loans, including the notes evidencing the same, shall be in the possession of a Custodian or a Servicer other than the Issuer. The Financed Loans, including the notes evidencing the same, and all other documentation relating to the same, shall not have been pledged, subjected to a lien or security interest, assigned or otherwise conveyed to any Person other than the Trustee, except, in the case of a pledge, lien or security interest, as to which the Trustee has received written evidence of the release thereof. All financing statements filed or to be filed against the Issuer in favor of the Trustee in connection herewith describing the Financed Loans, the notes evidencing the same and all other documentation relating to the same, shall contain a statement to the following effect: A purchase of or security interest in any collateral described in this financing statement will violate the rights of the Trustee. (C) The Issuer has taken all steps necessary to cause Trustee to become the account holder of the Funds and Accounts established under the Indenture. A-60

173 Priority of Security Interest. (A) Other than the security interest granted to the Trustee pursuant to the Indenture, the Issuer has not pledged, assigned, sold, granted a security interest in, or otherwise conveyed any of the Trust Estate. (B) The Issuer has not authorized the filing of and is not aware of any financing statements against the Issuer that include a description of collateral covering the Financed Loans, the notes evidencing the same and all other documentation relating to the same, or any other asset comprising a portion of the Trust Estate, other than any financing statement relating to the security interest granted to the Trustee hereunder or that has been terminated. The Issuer is not aware of any judgment or tax lien filings against the Issuer. (C) The (a) Investment Securities and (b) Funds and Accounts established under the Indenture are not in the name of any Person other than the Issuer or the Trustee. Recordation of Financing Statements; Filing of Certain Continuation Statements. (A) The Trustee shall cause all Financing Statements to be continuously recorded and filed in such manner and in such places as may be required by law in order to fully protect and preserve the priority of the interest of the Owners in the Trust Estate conveyed hereunder and the rights, privileges and options of the Trustee hereunder. (B) From time to time, the Trustee shall file or cause to be filed continuation statements for the purpose of continuing without lapse the effectiveness of (i) each Financing Statement which shall have been filed at or prior to the issuance of a Series of Bonds in connection with the security for the Bonds issued pursuant to a Supplemental Indenture pursuant to the authority of the UCC and (ii) any previously filed continuation statements which shall have been filed as herein required. Rating Agencies. The Issuer agrees to cooperate in providing the Rating Agencies any information (not privileged or otherwise required to be kept private) relating to the Issuer or the Indenture reasonably requested in writing by the Rating Agencies, including without limitation notice of any replacement or change in the identity of a Transaction Party. Governing Law. The Indenture shall be governed by and be construed in accordance with the laws of the State without giving effect to the conflicts-of-laws principles thereof. Third Party Beneficiaries. Each of the Underwriters is a third party beneficiary under the Indenture with respect to the provisions of the Indenture relating to payment of indemnification pursuant to the related Contract of Purchase. No amendment to the Indenture which adversely affects such rights accorded to the Underwriters shall be made or be effective without the prior written consent of each Underwriter, or successor thereof, if any, affected thereby. A-61

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175 APPENDIX B FORM OF BOND COUNSEL OPINION 100 COURT AVENUE, SUITE 600 DES MOINES, IOWA PHONE: FAX: Iowa Student Loan Liquidity Corporation Des Moines, Iowa May, 2015 Wells Fargo Bank, National Association, as Trustee Minneapolis, Minnesota RE: $ - Iowa Student Loan Liquidity Corporation Student Loan Revenue Bonds Senior Series 2015-A Ladies and Gentlemen: We have acted as bond counsel in connection with the issuance by the Iowa Student Loan Liquidity Corporation (the "Issuer") of (i) $ aggregate principal amount of Student Loan Revenue Bonds, Senior Series 2015-A (the "Series 2015 Bonds"), issued pursuant to the Trust Indenture dated as of May 1, 2015 (the "Trust Indenture") by and between the Issuer and Wells Fargo Bank, National Association, as Trustee (the "Trustee"), as further supplemented by the First Supplemental Trust Indenture dated as of May 1, 2015 (the "First Supplemental Indenture"), between the Issuer and the Trustee. The Trust Indenture, as supplemented by the First Supplemental Indenture, is herein referred to as the "Indenture". Capitalized terms not otherwise defined herein shall have the meanings set forth in the Indenture. In such connection, we have reviewed the Indenture, the Tax Certificate and Agreement, dated as of the date hereof (the "Tax Certificate"), the General Certificate of the Issuer dated the date hereof (the "Issuer's Certificate"), certified copies of certain proceedings taken and certain affidavits and certificates of the Issuer, the Trustee, and others, and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Series 2015 Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to the effect on any Series 2015 Bond or the interest thereon of an action taken that is contrary to the terms and conditions set forth in such documents or as to any change to such documents or action taken in reliance on a required opinion of Bond Counsel if such Bond Counsel is not ourselves. B-1

176 We have assumed the genuineness of all documents and signatures presented to us (whether as originals or as copies) and the due and legal execution and delivery thereof by any parties other than the Issuer. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents. Furthermore, we have assumed compliance by the Issuer with all covenants and agreements contained in the Indenture, the Tax Certificate and the Issuer's Certificate, including without limitation covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Series 2015 Bonds to be included in gross income for federal income tax purposes. Based on the foregoing, we are of the opinion that, under existing law: 1. The Series 2015 Bonds have been duly authorized, executed and delivered by the Issuer and are valid and binding limited obligations of the Issuer. 2. The Trust Indenture and First Supplemental Indenture have been duly authorized, executed and delivered by the Issuer and are valid and binding obligations of the Issuer. The Indenture creates the valid pledge that it purports to create on the Revenues and any other amounts (including proceeds of the sale of the Series 2015 Bonds) held by the Trustee in any fund or account established pursuant to the Indenture, except the Rebate Fund, subject to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein. Such pledge secures the repayment of the principal of and interest on the Series 2015 Bonds on a parity with other bonds which may be issued under the Indenture. 3. Interest on the Series 2015 Bonds is excludable from gross income for federal income tax purposes under existing laws as enacted and construed on the date of initial delivery of the Series 2015 Bonds. Interest on the Series 2015 Bonds is a specific preference item for purposes of the individual and corporate federal alternative minimum taxes. The opinions set forth in this paragraph are subject to the condition that the Issuer comply with all requirements of the Internal Revenue Code of 1986, as amended (the "Code") that must be satisfied subsequent to the issuance of the Series 2015 Bonds in order that interest thereon be, and continue to be, excludable from gross income for federal income tax purposes. The Issuer has covenanted to comply with all such requirements. Failure to comply with certain of such requirements may cause interest on the Series 2015 Bonds to be included in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2015 Bonds. 4. Interest on the Series 2015 Bonds is not excluded from income for State of Iowa income tax purposes. We call attention to the fact that the rights of the owners of the Series 2015 Bonds and the enforceability of the Series 2015 Bonds and the Indenture are limited by bankruptcy, insolvency, reorganization, moratorium, and other similar laws affecting creditors' rights generally, and by equitable principles, whether considered at law or in equity. B-2

177 We express no opinion regarding the accuracy, adequacy, or completeness of the disclosure document relating to the Series 2015 Bonds, or regarding the perfection or priority of the lien on Revenues or other funds created by the Indenture. Further, we express no opinion regarding tax consequences arising with respect to the Series 2015 Bonds other than as expressly set forth herein. The opinions expressed herein are given as of the date hereof and are based on an analysis of existing law as of the date hereof. We assume no obligation to revise or supplement this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes in law that may hereafter occur. Respectfully submitted, B-3

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179 APPENDIX C FORM OF CONTINUING DISCLOSURE AGREEMENT THIS CONTINUING DISCLOSURE AGREEMENT (the Continuing Disclosure Agreement ) is executed and delivered by the Iowa Student Loan Liquidity Corporation (the Obligated Person ) in connection with the issuance of $ aggregate principal amount of its Student Loan Revenue Bonds, Senior Series 2015-A (the Bonds ). The Bonds are being issued pursuant to a Trust Indenture, as amended and supplemented by a First Supplemental Trust Indenture, each dated as of May 1, 2015 (the Indenture ), between the Obligated Person and Wells Fargo Bank, National Association, as trustee (the Trustee ). The Obligated Person undertakes and agrees as follows: Section 1. Purpose of the Disclosure Agreement. This Continuing Disclosure Agreement is being executed and delivered by the Obligated Person for the benefit of the Registered Owners and beneficial owners of the Bonds and in order to assist the Underwriter (as defined below) in complying with the Rule (as defined below). Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply to any capitalized term used in this Continuing Disclosure Agreement unless otherwise defined in this Section, the following capitalized terms shall have the following meanings: Annual Financial Information shall mean any Annual Financial Information provided by the Obligated Person pursuant to, and as described in, Sections 3 and 4 of this Continuing Disclosure Agreement. Disclosure Representative shall mean the Treasurer of the Obligated Person or his or her designee, or such other person as the Obligated Person shall designate. Dissemination Agent shall mean any Dissemination Agent designated by the Obligated Person, which shall initially be the Trustee. EMMA means the Electronic Municipal Market Access facility for municipal securities disclosure of the MSRB. Listed Event shall mean any of the events listed in Section 5(a) of this Continuing Disclosure Agreement. MSRB shall mean the Municipal Securities Rulemaking Board, and any successors or assigns, or any other entities or agencies approved under the Rule. Official Statement shall mean the Official Statement, dated, 2015, of the Obligated Person with respect to its offering of the Bonds. Repository shall mean, until otherwise designated by the Securities and Exchange Commission, the EMMA website of the MSRB located at and, if applicable, the State Repository. Rule shall mean Rule 15c2-12 adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, as such rule may be amended from time to time. SEC shall mean the United States Securities and Exchange Commission. C-1

180 State Repository shall mean any public or private repository or entity designated by the State of Iowa as a state information depository for purposes of the Rule and recognized as such by the SEC. As of the date of this Continuing Disclosure Agreement, there is no State Repository. Underwriter means the participating underwriter as that term is defined in the Rule, and in relation to the Bonds, shall mean Morgan Stanley & Co. LLC or any successors known to the Obligated Person. Section 3. Provision of Annual Financial Information. (a) The Obligated Person shall, or shall cause the Dissemination Agent to, not later than 180 days after the end of the Obligated Person s fiscal year, commencing with the report of the fiscal year ending June 30, 2015, provide to the Repository, in such electronic format accompanied by such identifying information (the Prescribed Form ) as shall have been prescribed by the MSRB and which shall be in effect on the date of filing of such information, the Annual Financial Information which is consistent with the requirements of Section 4 of this Continuing Disclosure Agreement. The Dissemination Agent shall only be obligated to provide the Annual Financial Information to the Repository if such information has been provided to the Dissemination Agent by the Obligated Person sufficiently prior to any deadlines for filing set forth herein. (b) The Annual Financial Information may be submitted as a single document or as separate documents comprising a package, or by specific cross reference to other documents which have been submitted to the Repository and available to the public on the Repository s website or filed with the SEC. If the document so referenced is a final offering document within the meaning of the Rule, such final offering document must be available from the Repository. The Obligated Person shall clearly identify each such other document so incorporated by cross-reference. (c) If the financial statements of the Obligated Person are audited, the audited financial statements of the Obligated Person must be submitted if and when available but may be submitted separately from the balance of the Annual Financial Information and later than the date required above for the filing of the Annual Financial Information if they are not available by that date. Section 4. Content of Annual Financial Information. The Obligated Person s Annual Financial Information shall contain or incorporate by reference the following: (a) annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America; (b) an update and discussion of the financial information and operating data in the Official Statement under the headings THE CORPORATION, THE FINANCED LOANS and THE CORPORATION S PRIVATE LOAN PROGRAMS THE CORPORATION S FEDERAL LOAN PROGRAMS; and (c) The following Indenture information: (1) balances in the Student Loan Fund, the Capitalized Interest Fund, the Revenue Fund, the Rebate Fund and the Reserve Fund; (2) the issuance of any additional Bonds; and C-2

181 (3) the outstanding principal amount of the Bonds and other bonds issued under the Indenture. Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the Obligated Person shall give, or cause to be given, on behalf of itself and any other persons providing undertakings under the Rule with respect to the Bonds, notice to the Repository of the occurrence of any of the following events with respect to the Bonds: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) Person; principal and interest payment delinquencies; non-payment related defaults, if material; unscheduled draws on debt service reserves reflecting financial difficulties; unscheduled draws on credit enhancements reflecting financial difficulties; substitution of credit or liquidity providers, or their failure to perform; adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the Bonds; modifications to rights of Registered Owners of the Bonds, if material; any call of any Bonds, if material, and tender offers; defeasances; release, substitution or sale of property securing repayment of the Bonds, if material; rating changes; bankruptcy, insolvency, receivership, or similar event of the Obligated (xiii) the consummation of a merger, consolidation, or acquisition involving an Obligated Person or the sale of all or substantially all of the assets of the Obligated Person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material; and (xiv) appointment of a successor or additional trustee or the change of name of a trustee, if material. (b) If the Obligated Person obtains knowledge of the occurrence of a Listed Event, the Obligated Person shall file, in a timely manner not in excess of ten (10) business days after the occurrence of the Listed Event, a notice of such occurrence in Prescribed Form with EMMA. C-3

182 (c) The Obligated Person shall provide, in a timely manner, to the MSRB in Prescribed Form in accordance with EMMA, notice of any failure of the Obligated Person to timely provide the Annual Financial Information as specified in Section 4 hereof. (d) If the Obligated Person changes its fiscal year, it shall provide in Prescribed Form notice of the change of fiscal year to the Trustee and to the MSRB. Section 6. Termination of Reporting Obligation. The Obligated Person s obligations under this Continuing Disclosure Agreement shall terminate upon the earliest to occur of (a) the legal defeasance, prior redemption or payment in full of all of the Bonds; (b) the date that the Obligated Person shall no longer constitute an obligated person with respect to the Bonds within the meaning of the Rule (or, if later, the date on which the Obligated Person determines to no longer voluntarily comply with the Rule in the event that the Rule does not apply to the Bonds at the time). The Obligated Person shall file a notice of any such termination with the Repository in the Prescribed Form in accordance with EMMA. Section 7. Dissemination Agent. The Obligated Person may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Continuing Disclosure Agreement, and may discharge any such Dissemination Agent, with or without appointing a successor Dissemination Agent. Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Obligated Person may amend this Continuing Disclosure Agreement, and any provision of this Continuing Disclosure Agreement may be waived, if such amendment or waiver is consistent with the Rule, as determined by an opinion of counsel experienced in federal securities laws selected by the Obligated Person. Written notice of any such amendment or waiver shall be provided by the Obligated Person to the MSRB in Prescribed Form in accordance with EMMA, and the next Annual Financial Information shall explain in narrative form the reasons for the amendment and the impact of any change in the type of information being provided. If any amendment changes the accounting principles to be followed in preparing financial statements, the Annual Financial Information for the year in which the change is made will present a comparison between the financial statement or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. Section 9. Additional Information. Nothing in this Continuing Disclosure Agreement shall be deemed to prevent the Obligated Person from disseminating any other information, using the means of dissemination set forth in this Continuing Disclosure Agreement or any other means of communication, or including any other information in any Annual Financial Information or notice of occurrence of a Listed Event, in addition to that which is required by this Continuing Disclosure Agreement. If the Obligated Person chooses to include any information in any Annual Financial Information or notice of occurrence of a Listed Event, in addition to that which is specifically required by this Continuing Disclosure Agreement, the Obligated Person shall have no obligation under this Continuing Disclosure Agreement to update such information or include it in any future Annual Financial Information or notice of occurrence of a Listed Event. Section 10. Default. In the event of a failure of the Obligated Person to comply with any provision of this Continuing Disclosure Agreement, any Registered Owner or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Obligated Person to comply with its obligations under this Continuing Disclosure Agreement. A default under this Continuing Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Continuing Disclosure C-4

183 Agreement in the event of any failure of the Obligated Person to comply with this Continuing Disclosure Agreement shall be an action to compel performance. Section 11. Beneficiaries. This Continuing Disclosure Agreement shall inure solely to the benefit of the Obligated Person, the Dissemination Agent, the Underwriter and Registered Owners and beneficial owners from time to time of the Bonds and shall create no rights in any other person or entity. Date:, 2015 IOWA STUDENT LOAN LIQUIDITY CORPORATION By Its C-5

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185 APPENDIX D FINANCIAL STATEMENTS OF THE CORPORATION IOWA STUDENT LOAN LIQUIDITY CORPORATION Financial Statements As of and for the Years Ended June 30, 2014, and 2013, with Auditors Reports

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187 IOWA STUDENT LOAN LIQUIDITY CORPORATION Financial Statements June 30, 2014 and 2013 (With Independent Auditors Report Thereon)

188 IOWA STUDENT LOAN LIQUIDITY CORPORATION Table of Contents Page(s) Independent Auditors Report 1 3 Management s Discussion and Analysis 4 11 Financial Statements: Statements of Net Position 12 Statements of Revenues, Expenses, and Changes in Net Position 13 Statements of Cash Flows 14 Notes to Financial Statements 15 43

189 KPMG LLP 2500 Ruan Center 666 Grand Avenue Des Moines, IA Independent Auditors Report The Board of Directors Iowa Student Loan Liquidity Corporation West Des Moines, Iowa: Report on the Financial Statements We have audited the accompanying financial statements of Iowa Student Loan Liquidity Corporation (the Corporation), which comprise the statements of net position as of June 30, 2014 and 2013, and the related statements of revenues, expenses, and changes in net position, and cash flows for the years then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with U.S. generally accepted accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Corporation as of June 30, 2014 and 2013, and the changes in its net position and its cash flows for the years then ended in accordance with U.S. generally accepted accounting principles. KPMG LLP is a Delaware limited liability partnership, the U.S. member firm of KPMG International Cooperative ( KPMG International ), a Swiss entity.

190 Emphasis of Matter As discussed in note 1 to the financial statements, for the years ended June 30, 2014 and 2013, the Corporation adopted new accounting guidance established by GASB Statement No. 65, Items Previously Reported as Assets and Liabilities. Our opinion is not modified with respect to this matter. Other Matters U.S. generally accepted accounting principles require that management s discussion and analysis on pages 4-12 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated October 27, 2014 on our consideration of the Corporation s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Corporation s internal control over financial reporting and compliance. Des Moines, Iowa October 27,

191 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 This section of the Iowa Student Loan Liquidity Corporation s (the Corporation) annual financial statements presents management s discussion and analysis of the financial position and results of operations for the fiscal years ended June 30, 2014 (FY14) and 2013 (FY13). This information is being presented to provide additional information regarding the activities of the Corporation, pursuant to the requirements of Governmental Accounting Standards Board Statement No. 34, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments; Statement No. 37, Basic Financial Statements and Management s Discussion and Analysis for State and Local Governments: Omnibus; and Statement No. 38, Certain Financial Statement Note Disclosures. This discussion and analysis should be read in conjunction with the independent auditors report of KPMG LLP, the financial statements, and the accompanying notes. Financial Highlights Purchased or originated over $19.1 million in student loans under both its owned and serviced student loan portfolio. Continued servicing student loans for the U.S. Department of Education and in FY14 converted an additional $2.4 billion in loans to the servicing system. The loans under this serviced portfolio at June 30, 2014 totaled $10.3 billion. Retired over $194 million in bonds and notes payable. Overview of the Financial Statements The financial statements consist of management s discussion and analysis (this section) and the basic financial statements. The basic financial statements include statements of net position; statements of revenues, expenses, and changes in net position; statements of cash flows; and notes to financial statements section. The statements of net position present information on all of the Corporation s assets, deferred outflows, liabilities, and deferred inflows with the difference between the four reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Corporation is improving or deteriorating. The statements of revenues, expenses, and changes in net position present information showing how the Corporation s net position changed during FY14 and FY13. The statements of cash flows report the cash receipts, cash payments, and net changes in cash resulting from operating, capital and related financing activities, and investing activities. 3 (Continued)

192 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Condensed Financial Information The following tables present condensed financial information for FY14, FY13, and FY12 for the Corporation as a whole. The financial information includes net position and revenues, expenses, and changes in net position. Net Position June 30, 2014, 2013, and 2012 (In millions of dollars) 2014 Restated 2013 Restated 2012 Assets: Cash $ Investments Student loans receivable, net 1, , ,095.4 Accrued interest receivable Other receivables Prepaid expenses Capital assets, net Total assets 1, , ,367.6 Deferred outflows of resources: Accumulated decrease in fair value of hedging derivative Total deferred outflows Total assets and deferred outflows $ 1, , ,367.6 Liabilities: Accounts payable and accrued expenses $ Accrued interest payable Arbitrage rebate liability 20.9 Notes payable Bonds payable 1, , ,236.9 Total liabilities 1, , ,754.4 Deferred inflows of resources: Refundable origination fees Deferred gain on refunded debt Accumulated increase in fair value of hedging derivative 2.3 Total deferred inflows (Continued)

193 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Net Position June 30, 2014, 2013, and 2012 (In millions of dollars) 2014 Restated 2013 Restated 2012 Net position: Net investment in capital assets $ Restricted, student loan purchase program Unrestricted, board designated Total net position Total liabilities, deferred inflows, and net position $ 1, , ,367.6 Revenues, Expenses, and Changes in Net Position Years ended June 30, 2014, 2013, and 2012 (In millions of dollars) 2014 Restated 2013 Restated 2012 Operating revenues: Investment income $ 0.2 Net increase in fair value of investments Student loan interest income Other student loan revenue Loss on sale of student loans (22.1) Other income Gain on extinguishment of debt Total operating revenues Operating expenses (income): Interest on bonds and notes payable Amortization of deferred gain on refunded debt (31.8) (38.9) (34.2) Debt-related expenses General and administrative Provision for loan losses Total operating expenses Operating income Net position at beginning of year Net position at end of year $ (Continued)

194 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Financial Analysis 2014 Total Assets Total assets ended in FY14 at $2.0 billion, a decrease of 9.17% ($199.6 million) as compared to the FY13 amount of $2.2 billion. Cash and investments decreased 10.09% ($22.9 million) compared to FY13. Cash used for normal on-going operating expenditures, debt service, and origination loan funding exceeded student loan payment collection accumulations, servicing fee receipts and debt draws. Total Iowa Student Loan owned net student loans have decreased 8.98% ($170.3 million) to $1.7 billion compared to $1.9 billion at June 30, This decrease is primarily due to borrower cash receipts in excess of loan additions and capitalized borrower interest. The decrease in student loans due to cash receipts exceeding new loan additions was partially offset by the allowance for loan losses decreasing approximately $102.7 million. The decrease in the allowance for loan losses is primarily due to a change in write-off policy for private loans. Prior to FY14, the Corporation would reserve for, but not write-off, loans that had been identified as in default. During FY14, the Corporation implemented a policy to write-off the principal balance and related accrued interest receivable on private loans that were 270 or more days past due with no principal or interest payment activity in the most recent 12 month period. The change in policy resulted in an insignificant impact to operating income as all write-offs were recorded as a reduction to the allowance for loan losses. The Corporation has purchased or originated $12.4 million in student loans during FY14, a slight increase from the $11.8 million during the same period in FY13. Total Liabilities Total liabilities decreased 12.71% ($197.7 million) as compared to FY13. Debt activity makes up most of this change. Bond and note maturities exceeded new debt issuances during the year resulting in a net decrease in debt outstanding totaling $193.1 million. Other accounts payable and accrued expenses dropped 27.2% ($4.2 million) with most of this decrease coming from a $3.1 million decrease in the accumulated fair value of a hedging derivative. Deferred inflows of resources, including refundable origination fees and deferred gains on refunded debt activities, was at $128.5 million at the end of FY14 compared to an ending FY13 balance of $163.8 million. This is a 21.53% ($35.2 million) decrease. The refundable origination fee change is primarily to from normal amortization. Deferred gain on refunded debt activity included amortization of deferred gain on refunded debt totaling $31.8 million. Net Position Net position of the Corporation increased 7.27% ($33.3 million) during FY14 to $491.5 million from an ending FY13 balance of $458.2 million. Positive net interest margins, increased servicing fee income, amortization of deferred gains, and lower provisions for loan losses all contributed. Total Operating Revenues The Corporation earned $88.8 million in total operating revenues during FY14, a decrease of 28.08% ($34.7 million) from FY13. Student loan interest income decreased 17.23% ($13.6 million) compared to FY13. The Corporation s average owned outstanding student loan portfolio dropped by 8.01% ($171.5 million) in FY14. Normal pay downs during the year have impacted the average student loan outstanding comparison. Borrower interest allowance adjustments on defaulted private loans reduced student loan interest income by $5.6 million in FY14. Net increase in fair value of investments added $3.8 million to investment income. This is a $12.5 million (76.86%) drop from the FY13 amount. Gain on extinguishment of debt activity in FY14 was significantly below FY13 by $2.6 million as there was no new debt refinancing in FY14. 6 (Continued)

195 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Total Operating Expenses The Corporation s total operating expenses for FY14 decreased 17.19% ($11.3 million) from FY13. Total interest expense on bonds and notes payable during FY14 decreased 14.80% ($5.6 million) from FY13 due primarily due a decrease in average debt outstanding from FY13 to FY14 of $166.1 million (10.63%). Additionally, debt-related expenses in FY13 included new debt issuance costs of $4.4 million, which were not incurred in FY14 due to no significant new debt issuances. The FY14 amortization of deferred gain on refunded debt was $31.8 million, a decrease of 18.13% ($7.0 million). This change comes from the amortization of deferred gains on short-term debt that finished during part of FY14 compared to a full year in FY13. The provision for loan losses (related primarily to private loans) decreased in FY14 by 82.00% ($7.7 million) when compared to FY13. This decrease is mainly due to a more seasoned repayment portfolio and effective management of delinquent loans. 7 (Continued)

196 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Major Financing and Long-Term Debt Activity The following list details the major financing activity of the Corporation during FY14: Date Amount Type of activity 7/10/2013 $ (798,841) Principal payment on notes outstanding. 7/15/2013 (269) Principal payment on notes outstanding. 7/25/2013 (9,549,721) Principal payment on bonds outstanding. 8/12/2013 (987,961) Principal payment on notes outstanding. 8/20/2013 (189) Principal payment on notes outstanding. 8/26/2013 (4,818,459) Principal payment on bonds outstanding. 9/3/2013 5,500 Funding draw on commercial note used to fund student loans. 9/9/2013 2,250 Funding draw on commercial note used to fund student loans. 9/10/2013 (805,796) Principal payment on notes outstanding. 9/10/ ,000 Funding draw on commercial note used to fund student loans. 9/15/2013 (196) Principal payment on notes outstanding. 9/17/ ,150 Funding draw on commercial note used to fund student loans. 9/25/2013 (16,958,983) Principal payment on bonds outstanding. 9/27/2013 3,512 Funding draw on commercial note used to fund student loans. 10/8/2013 1,400 Funding draw on commercial note used to fund student loans. 10/10/2013 (878,345) Principal payment on notes outstanding. 10/11/2013 2,874 Funding draw on commercial note used to fund student loans. 10/15/2013 (219) Principal payment on notes outstanding. 10/25/2013 (4,100,989) Principal payment on bonds outstanding. 10/29/2013 4,460 Funding draw on commercial note used to fund student loans. 10/31/2013 6,750 Funding draw on commercial note used to fund student loans. 11/8/2013 6,178 Funding draw on commercial note used to fund student loans. 11/12/2013 (744,108) Principal payment on notes outstanding. 11/15/2013 (1,984) Principal payment on notes outstanding. 11/19/2013 2,000 Funding draw on commercial note used to fund student loans. 11/25/2013 (3,855,103) Principal payment on bonds outstanding. 11/25/ ,601 Funding draw on commercial note used to fund student loans. 11/27/2013 6,650 Funding draw on commercial note used to fund student loans. 12/2/2013 (49,005,000) Principal payment on bonds outstanding. 12/6/2013 1,000 Funding draw on commercial note used to fund student loans. 12/10/ ,000 Funding draw on commercial note used to fund student loans. 12/10/2013 (771,531) Principal payment on notes outstanding. 12/15/2013 (215) Principal payment on notes outstanding. 12/26/2013 (14,687,767) Principal payment on notes outstanding. 1/2/2014 6,250 Funding draw on commercial note used to fund student loans. 1/3/ ,101 Funding draw on commercial note used to fund student loans. 1/6/ ,750 Funding draw on commercial note used to fund student loans. 1/10/2014 (942,148) Principal payment on notes outstanding. 1/15/2014 (1,949) Principal payment on notes outstanding. 8 (Continued)

197 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Date Amount Type of activity 1/27/2014 $ 915 Funding draw on commercial note used to fund student loans. 1/27/2014 (5,236,887) Principal payment on bonds outstanding. 1/29/ ,177 Funding draw on commercial note used to fund student loans. 2/10/2014 (993,507) Principal payment on notes outstanding. 2/12/ Funding draw on commercial note used to fund student loans. 2/13/2014 (1,447) Principal payment on notes outstanding. 2/15/2014 (554) Principal payment on notes outstanding. 2/25/2014 (4,977,215) Principal payment on bonds outstanding. 2/28/ ,150 Funding draw on commercial note used to fund student loans. 3/10/2014 (848,920) Principal payment on notes outstanding. 3/25/2014 (16,988,374) Principal payment on bonds outstanding. 4/1/2014 7,000 Funding draw on commercial note used to fund student loans. 4/10/2014 (972,598) Principal payment on notes outstanding. 4/15/2014 (196) Principal payment on notes outstanding. 4/25/2014 (6,367,558) Principal payment on bonds outstanding. 4/28/2014 6,116 Funding draw on commercial note used to fund student loans. 5/6/2014 6,332 Funding draw on commercial note used to fund student loans. 5/12/2014 (907,063) Principal payment on notes outstanding. 5/15/2014 (189) Principal payment on notes outstanding. 5/16/ Funding draw on commercial note used to fund student loans. 5/21/2014 6,700 Funding draw on commercial note used to fund student loans. 5/27/2014 (6,135,987) Principal payment on bonds outstanding. 5/28/2014 7,025 Funding draw on commercial note used to fund student loans. 6/2/2014 (23,385,000) Principal payment on bonds outstanding. 6/9/2014 4,500 Funding draw on commercial note used to fund student loans. 6/10/2014 (787,817) Principal payment on notes outstanding. 6/15/2014 (225) Principal payment on notes outstanding. 6/25/2014 (18,456,290) Principal payment on bonds outstanding. 6/25/2014 2,525 Funding draw on commercial note used to fund student loans. 6/26/2014 9,307 Funding draw on commercial note used to fund student loans. Financial Analysis 2013 Total Assets Total assets ended in FY13 at $2.2 billion, a decrease of 8.44% ($199.8 million) as compared to the FY12 amount of $2.4 billion. Cash and investments decreased 1.56% ($3.6 million) compared to FY12. Cash use for unusual items (including building purchase and payment to settle arbitrage rebate liability) along with normal on-going operating expenditures, debt service, and origination loan funding exceeded student loan payment collection accumulations and servicing fee revenue. Total Iowa Student Loan owned net student loans have decreased 9.53% ($199.7 million) to $1.9 billion compared to $2.1 billion at June 30, This decrease is primarily due to borrower cash receipts in excess of loan additions and capitalized borrower interest. Also, the allowance for bad debts has increased approximately $8.3 million primarily due to in-school private loans shifting to a repayment status. The Corporation has purchased or originated $11.8 million in student loans during FY13 a slight increase from the $11.1 million during the same period in FY12. 9 (Continued)

198 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Total Liabilities Total liabilities decreased 11.32% ($198.6 million) as compared to FY12. Debt activity makes up most of this change. Bond and note maturities exceeded new debt issuances during the year resulting in a net decrease in debt outstanding totaling $188.8 million. Deferred inflows of resources, including refundable origination fees and deferred gains on refunded debt activities, were $163.8 million at the end of FY13 compared to an ending FY12 balance of $211.5 million. This is a 22.58% ($47.8 million) decrease. The refundable origination fee change is primarily due to normal fee amortizations. Deferred gain on refunded debt activity included amortization of deferred gain on refunded debt totaling $38.9 million. Additionally during FY13 the Corporation paid tax-exempt arbitrage liabilities which resulted in a liability reduction of $20.9 million. Net Position Net position of the Corporation increased 14.05% ($56.4 million) during FY13 to $458.1 million from an ending FY12 balance of $401.7 million. Positive net interest margins, increased servicing fee income, amortization of deferred gains on early redemptions of debt, and lower provisions for loan losses all contributed. Total Operating Revenues The Corporation earned $123.2 million in total operating revenues during FY13, a decrease of 54.17% ($145.7 million) from FY12. Student loan interest income decreased 12.96% ($11.7 million) compared to FY12. The Corporation s average owned outstanding student loan portfolio dropped by 17.71% ($460.9 million) in FY13. Normal pay downs during the year along with the impacts from selling a large portfolio midway through FY12 have impacted the average student loan outstanding comparison. Net increase in fair value of investments added $16.3 million. Gain on extinguishment of debt activity in FY13 was significantly below FY12 by $185.7 million due to less debt refinance transactions in FY13. Other income was significantly up in FY13 ($13.6 million) due to a full year of direct loan servicing activity. Total Operating Expenses The Corporation s total operating expenses for FY13 decreased 26.33% ($23.9 million) from FY12. Total interest expense on bonds and notes payable during FY13 increased 3.71% ($1.4 million) from FY12. Debt yields on newer debt issued during FY13 and FY12 has exceeded previously refunded debt. The FY13 amortization of deferred gain on refunded debt was $38.9 million, an increase of 13.74% ($4.6 million) and is due to additional amortization of deferred gain generated during the year from debt refunding transactions. The provision for loan losses (related primarily to private loans) decreased in FY13 by 63.86% ($16.6 million) when compared to FY12. This decrease is mainly due to a more seasoned repayment portfolio and effective management of delinquent loans. 10 (Continued)

199 IOWA STUDENT LOAN LIQUIDITY CORPORATION Management s Discussion and Analysis June 30, 2014 and 2013 Major Financing and Long-Term Debt Activity The following list details the major financing activity of the Corporation during FY13: Date Amount Type of activity 7/10/2012 $ (735,833) Principal payment on notes outstanding. 7/25/2012 (410,987,053) Early redemption of principal on notes payable outstanding. 7/25/ ,000,000 New issue Taxable student loan revenue bonds. 7/25/2012 9,800,000 New issue Commercial note used to fund student loans. 8/6/2012 (129,050,000) Early redemption of principal on bonds outstanding. 8/10/2012 (892,519) Principal payment on notes outstanding. 9/10/2012 (793,760) Principal payment on notes outstanding. 9/25/2012 (41,693,275) Principal payment on bonds outstanding. 10/10/2012 (733,418) Principal payment on notes outstanding. 10/25/2012 (4,914,951) Principal payment on bonds outstanding. 11/13/2012 (774,756) Principal payment on notes outstanding. 11/26/2012 (3,795,170) Principal payment on bonds outstanding. 12/3/2012 (11,725,000) Principal payment on bonds outstanding. 12/10/2012 (921,650) Principal payment on notes outstanding. 12/26/2012 (15,754,951) Principal payment on bonds outstanding. 1/10/2013 (811,293) Principal payment on notes outstanding. 1/25/2013 (3,502,884) Principal payment on bonds outstanding. 2/11/2013 (960,418) Principal payment on notes outstanding. 2/25/2013 (4,652,726) Principal payment on bonds outstanding. 3/11/2013 (886,037) Principal payment on notes outstanding. 3/25/2013 (17,611,515) Principal payment on bonds outstanding. 4/10/2013 (979,975) Principal payment on notes outstanding. 4/25/2013 (5,056,496) Principal payment on bonds outstanding. 4/29/2013 (32,758) Principal payment on notes outstanding. 5/10/2013 (884,650) Principal payment on notes outstanding. 5/15/2013 (750) Principal payment on notes outstanding. 5/28/2013 (6,014,895) Principal payment on bonds outstanding. 6/3/2013 (695,000) Principal payment on bonds outstanding. 6/3/2013 (39,925,000) Early redemption of principal on bonds outstanding. 6/10/2013 (869,542) Principal payment on notes outstanding. 6/15/2013 (736) Principal payment on notes outstanding. 6/25/2013 (19,348,290) Principal payment on bonds outstanding. 11

200 IOWA STUDENT LOAN LIQUIDITY CORPORATION Statements of Net Position June 30, 2014 and 2013 Restated Assets and Deferred Outflows of Resources Current assets: Cash (note 2) $ 9,339,004 9,893,442 Assets held by trustee (substantially restricted) Investments (note 2) 127,935, ,807,240 Student loans receivable, net (note 3) 123,992,247 50,538,710 Accrued interest receivable 7,359,080 13,753,280 Other receivables 1,715,409 1,969,758 Prepaid expenses 1,401,261 1,490,626 Total current assets 271,742, ,453,056 Noncurrent assets: Assets held by trustee (substantially restricted) Investments (note 2) 67,006,533 29,502,028 Student loans receivable, net (note 3) 1,601,343,945 1,845,105,449 Accrued interest receivable 12,656,556 9,945,698 Prepaid expenses 2,178,681 1,582,139 Capital assets, net of accumulated depreciation and amortization 16,370,502 16,205,540 Total noncurrent assets 1,699,556,217 1,902,340,854 Total assets 1,971,298,612 2,167,793,910 Deferred outflows of resources: Accumulated decrease in fair value of hedging derivative 6,712,601 9,828,358 Total deferred outflows of resources 6,712,601 9,828,358 Total assets and deferred outflows of resources $ 1,978,011,213 2,177,622,268 Liabilities, Deferred Inflows of Resources, and Net Position Current liabilities: Other accounts payable and accrued expenses $ 11,196,101 15,399,437 Accrued interest payable 2,197,918 2,528,295 Notes payable, net (note 4) 9,628,882 9,050,917 Bonds payable, net (note 4) 122,703, ,485,854 Total current liabilities 145,726, ,464,503 Noncurrent liabilities: Notes payable, net (note 4) 58,463,811 69,150,756 Bonds payable, net (note 4) 1,153,872,242 1,313,120,358 Total noncurrent liabilities 1,212,336,053 1,382,271,114 Total liabilities 1,358,062,193 1,555,735,617 Deferred inflows of resources: Refundable origination fees 9,573,371 12,968,928 Deferred gain on refunded debt 118,886, ,740,288 Total deferred inflows of resources 128,460, ,709,216 Commitments and contingencies (note 6) Net position (note 8): Net investment in capital assets 16,370,502 16,205,540 Restricted, student loan purchase program 236,945, ,838,293 Unrestricted, board designated 238,172, ,133,602 Total net position 491,488, ,177,435 Total liabilities, deferred inflows of resources, and net position $ 1,978,011,213 2,177,622,268 See accompanying notes to financial statements. 12

201 IOWA STUDENT LOAN LIQUIDITY CORPORATION Statements of Revenues, Expenses, and Changes in Net Position Years ended June 30, 2014 and 2013 Restated Operating revenues: Investment income $ 220,287 31,236 Net increase in fair value of investments 3,775,901 16,321,020 Student loan interest income 65,227,269 78,801,972 Other student loan revenue 3,657,920 3,927,096 Other income 15,896,143 21,614,863 Gain on extinguishment of debt 2,556,040 Total operating revenues 88,777, ,252,227 Operating expenses (income): Interest on bonds and notes payable 34,613,403 40,234,168 Amortization of deferred gain on refunded debt (31,802,165) (38,846,675) Debt-related expenses 793,247 5,252,292 General and administrative 50,172,311 50,796,560 Provision for loan losses (note 3) 1,689,460 9,385,887 Total operating expenses 55,466,256 66,822,232 Operating income 33,311,264 56,429,995 Net position, beginning of year 458,177, ,747,440 Net position, end of year $ 491,488, ,177,435 See accompanying notes to financial statements. 13

202 IOWA STUDENT LOAN LIQUIDITY CORPORATION Statements of Cash Flows Years ended June 30, 2014 and 2013 Restated Cash flows from operating activities: Principal receipts on student loans $ 202,178, ,383,920 Interest receipts on student loans 48,085,133 52,183,506 Origination of student loans (12,449,790) (11,804,122) Cash receipts (refunds) for fees, net 272,362 (581,714) Payments to employees (19,435,215) (19,027,831) Payments to vendors (29,603,784) (28,915,497) Decrease in arbitrage rebate liability (20,904,000) Other 16,168,743 28,937,559 Net cash provided by operating activities 205,216, ,271,821 Cash flows from capital and related financing activities: Acquisition of capital assets (3,083,195) (12,133,597) Proceeds from issuance of bonds 531,000,000 Repayment of bonds (184,523,333) (306,997,379) Interest paid on bonds (33,494,510) (45,600,863) Proceeds from issuance of notes 337,288 9,800,000 Repayment of notes (10,446,267) (417,010,849) Payments for debt service costs (782,305) (838,300) Payments for bond issuance costs (5,419,253) Net cash used in capital and related financing activities (231,992,322) (247,200,241) Cash flows from investing activities: Purchases of investments (72,384,136) (12,164,090) Interest received on investments 88,104 12,752 Maturities of investments 10,437,472 2,603,076 Net cash used in investing activities (61,858,560) (9,548,262) Net decrease in cash and cash equivalents (88,634,715) (29,476,682) Cash and cash equivalents, beginning of year 191,676, ,153,187 Cash and cash equivalents, end of year $ 103,041, ,676,505 Reconciliation of operating income to cash provided by operating activities: Operating income $ 33,311,264 56,429,995 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization on capital assets 2,887,026 2,607,835 Interest income from investments (220,287) (31,236) Amortization of deferred gain on refunded debt (31,802,165) (38,846,675) Gain on extinguishment of debt (2,556,040) Interest expense on bonds and notes payable 34,613,403 40,234,168 Debt-related expenses 793,247 5,252,293 Decrease in student loans receivable, net 170,307, ,745,792 Decrease in accrued interest receivable 3,825, ,234 Decrease in other receivables 245,028 4,657,980 Disposal of capital assets 31,207 22,549 Decrease in employee- and vendor-related prepaid and deferred expenses (516,469) (1,806,370) (Decrease) increase in other accounts payable and accrued expenses (1,087,751) 1,899,778 Decrease in refundable origination fees (3,395,557) (3,934,462) Increase in fair value of investments (3,775,901) (16,321,020) Decrease in arbitrage rebate liability (20,904,000) Net cash provided by operating activities $ 205,216, ,271,821 See accompanying notes to financial statements. 14

203 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 (1) Organization and Summary of Significant Accounting Policies (a) Reporting Entity The Iowa Student Loan Liquidity Corporation (the Corporation) was incorporated in 1979 as a private nonprofit corporation for the purpose of providing funds for the acquisition of student loan notes incurred under the United States Higher Education Act of 1965, as amended, and to provide procedures for servicing such notes. Aspire Resources Inc (AR), formerly ISL Service Corp, a wholly owned subsidiary of the Corporation, was incorporated in 2001 to provide services not related to the Corporation s nonprofit purpose. AR has developed systems and procedures for loan origination and disbursement related processes including supporting the functions of electronic data transmissions management, Web reporting, loan information delivery, and centralized loan disbursement services. AR also provides on-going portfolio servicing for student loan portfolios not owned by the Corporation. The Corporation s board of directors is appointed by the Governor of the State of Iowa. The State of Iowa s accountability does not extend beyond the appointment of the board of directors, and therefore, the Corporation is not a component unit of the State of Iowa. Pursuant to Section 7C.4A(3) of the Code of Iowa, the Corporation has the ability to directly issue debt that pays interest, which is exempt from federal taxation. Pursuant to the action of the Legislature of the State of Iowa, the Corporation is also empowered to finance and originate alternative education loans in addition to those permitted under the United States Higher Education Act of The Corporation has no taxing authority. Bonds and notes issued do not constitute a debt, liability of, obligation of, or a pledge of the faith and credit of the State of Iowa or any agency or political subdivision thereof. There are no other organizations or agencies whose financial statements should be combined and presented with those of the Corporation. (b) (c) Basis of Presentation The accompanying financial statements of the Corporation have been prepared in conformity with U.S. generally accepted accounting principles (GAAP). Basis of Accounting and Accounting Estimates The accounting and financial reporting treatment applied is the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are reported when earned and expenses are reported at the time liabilities are incurred, regardless of when the related cash flows take place. In preparing the accompanying financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 15 (Continued)

204 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 (d) (e) (f) (g) Cash Equivalents For purposes of the statements of cash flows, all highly liquid investments with maturity of three months or less when purchased are considered to be cash equivalents. This includes United States government and agency obligations, corporate notes and bonds, and various money market funds. Investments The Corporation carries its investments at fair value based on available market prices. Changes in fair value are recorded in the statements of revenues, expenses, and changes in net position. Interest on investments is accrued and credited to interest income. Student Loans Receivable Student loans consist of federally insured student loans and alternative (nonfederally insured) student loans. If the Corporation has the ability and intent to hold loans for the foreseeable future, such loans are held for investment and carried at amortized cost. Loans which are held for investment also have an allowance for loan loss as needed. Allowance for Losses on Loans and Uncollected Interest The allowance for loan losses represents management s estimate of probable losses on student loans. This evaluation process is subject to numerous estimates and judgments. The Corporation evaluates the adequacy of the allowance for loan losses on its federally insured loan portfolio separately from its private loan portfolio. The allowance for the federally insured loan portfolio is based on periodic evaluations of the Corporation s loan portfolios considering past experience, trends in student loan claims rejected for payment by guarantors, changes to federal student loan programs, current economic conditions, and other relevant factors. The federal government currently guarantees 97% of the principal of and the interest on federally insured student loans disbursed on and after July 1, 2006 (and 98% for those loans disbursed prior to July 1, 2006), which limits the Company s loss exposure on the outstanding balance of the Corporation s federally insured portfolio. Federal student loans disbursed prior to October 1, 1993 are fully insured. In determining the adequacy of the allowance for loan losses on private loans the Corporation considers several factors including: loans in repayment versus those in a nonpaying status, delinquency status, type of credit, and trends in defaults in the portfolio based on Corporation and industry data. The Corporation considers a private loan to be in a default status when it reaches 120 days delinquent or greater. The defaulted loans are further evaluated and disaggregated based on delinquency and principal and interest payment history. For defaulted loans, a 100% allowance, less a post default collection percentage based on historical experience, is applied to the outstanding principal balance for the allowance calculation. For all other nondefaulted private loans, a net allowance percentage based on historical experience is applied to the outstanding principal balance. Student loans are charged off in the event of a borrower s death, permanent disability, or amounts representing the unguaranteed portion of Federal Family Education Loan Program (FFELP) loans. 16 (Continued)

205 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Additionally, effective for the year ended June 30, 2014, a private loan charge-off is recorded when the loan reaches 270 days delinquent without any principal or interest payment activity during the previous 12 months. The Corporation places a private loan on nonaccrual status when the terms of a loan are restructured, and the Corporation does not resume accrual of interest. Cash receipts on nonaccrual loans are first applied to any accrued and unpaid interest before being applied to principal. At June 30, 2014 and 2013, loans totaling $26,456,209 and $71,450,620, respectively, were greater than 90 days past due and accruing interest. The Corporation assesses accrued and unpaid student loan interest for collectability, and reverses student loan interest income in the period in which it is determined that collection is doubtful. Effective for the year ended June 30, 2014, the Corporation charges off accrued interest receivable when a loan reaches 270 days delinquent without any principal or interest payment activity during the previous 12 months. The evaluation of the allowance for loan losses is inherently subjective, as it requires material estimates that may be subject to significant changes. The provision for loan losses reflects the activity for the applicable period and provides an allowance at a level that the Corporation s management believes is appropriate to cover probable losses inherent in the loan portfolio. The provision for loan losses represents the periodic expense of maintaining an appropriate allowance to absorb probable losses inherent in the portfolio of student loans. Activity in the allowance for loan losses, for the years ended June 30, 2014 and 2013 is shown below. Allowance for Loan Loss Activity Year ended June 30, 2014 Government loans Private loans Total Beginning balance $ 1,007, ,873, ,881,333 Charge-offs (188,897) (104,160,379) (104,349,276) Provision for loan losses 595,247 1,094,213 1,689,460 Ending balance $ 1,414,250 58,807,267 60,221,517 Ending loan balance $ 859,416, ,141,718 1,785,558,485 Allowance for loan losses as a percentage of loans 0.16% 6.35% 17 (Continued)

206 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Allowance for Loan Loss Activity Year ended June 30, 2013 Government loans Private loans Total Beginning balance $ 1,043, ,581, ,624,906 Charge-offs (206,402) (923,058) (1,129,460) Provision for loan losses 170,932 9,214,955 9,385,887 Ending balance $ 1,007, ,873, ,881,333 Ending loan balance $ 967,915,089 1,090,611,179 2,058,526,268 Allowance for loan losses as a percentage of loans 0.10% 14.84% 18 (Continued)

207 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Delinquencies have the potential to adversely impact the Corporation s earnings through increased servicing and collection costs and account charge-offs. The tables below shows the Corporation s student loan delinquency amounts on loans as of June 30, 2014 and Portfolio Summary Year ended June 30, 2014 Government loans Private loans Total Loans in-school/grace $ 7,801,954 30,839,760 $ 38,641,714 Loans in deferment and forbearance: Deferment 77,350,071 63,895, ,246,048 Forbearance 56,512,607 35,398 56,548,005 Total loans in-school/ grace, and deferment and forbearance 141,664,632 94,771, ,435,767 Loans in repayment: Current 656,273, % 725,258, % 1,381,531, % days delinquent 16,462, ,355, ,817, days delinquent 10,792, ,169, ,962, days delinquent 6,937, ,862, ,800, days delinquent 10,712, ,712, days delinquent 10,090, ,090, days or grater delinquent 4,227, ,227, Claims filed but not yet paid and private loan defaults 2,257, ,723, ,980, Total loans in repayment 717,752, % 831,370, % 1,549,122, % Total loans $ 859,416,767 $ 926,141,718 $ 1,785,558, (Continued)

208 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Portfolio Summary Year ended June 30, 2013 Government loans Private loans Total Loans in-school/grace $ 15,779,081 $ 36,137,084 $ 51,916,165 Loans in deferment and forbearance: Deferment 111,088,269 82,729, ,818,154 Forbearance 98,220,768 61,606 98,282,374 Total loans in-school/ grace, and deferment and forbearance 225,088, ,928, ,016,693 Loans in repayment: Current 678,833, % 773,581, % 1,452,414, % days delinquent 16,625, ,654, ,280, days delinquent 12,468, ,696, ,164, days delinquent 7,931, ,282, ,214, days delinquent 9,877, ,877, days delinquent 8,664, ,664, days or grater delinquent 3,068, ,068, Claims filed but not yet paid and private loan defaults 5,357, ,467, ,825, Total loans in repayment 742,826, % 971,682, % 1,714,509, % Total loans $ 967,915,089 $ 1,090,611,179 $ 2,058,526,268 Loan portfolio segments are defined as government loans and private loans. Government loans include loans in the FFELP and under the Health Education Assistance Loan Program (HEAL). Private loans represent loans for students to fund the attendance of certain post-secondary education institutions and these are not guaranteed through any federal program. See additional discussion in note (3) Student Loans Receivable. (h) Revenue Recognition Loan interest is paid by the U.S. Department of Education (the Department) or the borrower, depending on the status of the loan at the time of the accrual. In addition, the Department makes quarterly interest subsidy payments on certain qualified FFELP loans until the student is required under the provisions of the Higher Education Act to begin repayment. The Department provides a special allowance to lenders participating in the FFELP. The special allowance amount is commercial paper rate or the 1-month London InterBank Offered Rate (LIBOR) to the average daily unpaid principal balance and capitalized interest of student loans held by the Corporation. We accrue the special allowance as earned or payable. For loans first disbursed prior to 20 (Continued)

209 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 January 1, 2000, the 91-day Treasury Bill rate is used rather than the 3-month financial commercial paper rate or the 1-month LIBOR. The Corporation recognizes student loan income as earned. Loan income is recognized based upon the expected yield of the loan after giving effect to borrower utilization of incentives such as timely payments (borrower benefits) and other yield adjustments. (i) Capital Assets Furniture, equipment, and leasehold improvements are stated at cost. Depreciation on furniture and equipment is calculated on the straight-line method over the estimated useful lives of three to ten years. Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or estimated useful life of the asset. Capital assets had the following activity during the years ended June 30, 2014 and 2013: June 30, June 30, 2013 Additions Retirements 2014 Furniture, equipment, and leasehold improvements $ 40,211,260 3,083,195 1,203,350 42,091,105 Less accumulated depreciation 24,005,720 2,887,026 1,172,143 25,720,603 Furniture, equipment, and leasehold improvements, net $ 16,205, ,169 31,207 16,370,502 June 30, June 30, 2012 Additions Retirements 2013 Furniture, equipment, and leasehold improvements $ 28,235,676 12,133, ,013 40,211,260 Less accumulated depreciation 21,533,009 2,607, ,124 24,005,720 Furniture, equipment, and leasehold improvements, net $ 6,702,667 9,525,762 22,889 16,205,540 (j) Deferred Revenue Refundable origination fees are received by the Corporation at the time of origination of loans. These fees are amortized over the life of the loan using the sum-of-the-years-digits method, which 21 (Continued)

210 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 approximates the interest method. A portion of the fees are refundable to the borrower in the event the loan is paid in full prior to the scheduled maturity date. (k) Derivative Products During 2012, the Corporation entered into an interest rate swap transaction in connection with the issuance of Series 2011A bonds. The interest rate swap will result in a net floating rate obligation of the Corporation and is reasonably anticipated to better align the Corporation s borrowing costs with the return on the eligible financed loans. The Corporation is receiving payments based on a fixed rate equal to 1.23%. The Corporation is making payments to the counterparty based on a floating rate indexed to three-month LIBOR. This agreement has a current notional amount of $352,000,000 that amortizes to zero on the final termination date of December 1, This swap is subject to optional cancellation on each interest payment date (without a termination payment), in part or in full, from the notional amount down to an amount no less than the minimum notional amount. The minimum notional amount will in all cases be less than or equal to the stated notional amount per the amortization schedule, and is based on the initial schedule of expected redemptions prior to stated maturity. The value of the interest rate swap for 2014 and 2013 is recorded in other accounts payable and accrued expenses in the statement of net position, with accumulated changes in value recorded as a deferred outflow of resources in the statement of net position. As of June 30, 2014 and 2013, the fair value of the swap recorded in the statements of net position was a liability of $6,712,601 and $9,828,358, respectively. During the year ended June 30, 2014 and 2013, the Corporation received payments from the counterparty totaling $3,658,456 and $3,688,097, respectively. This amount is recorded in interest on bonds and notes payable in the statements of revenues, expenses, and changes in net position. The fair value of the interest rate swap was estimated using the zero-coupon method. This method calculates the future net settlement payments required by the swap, assuming that the current forward rates implied by the yield curve correctly anticipate future spot interest rates. These payments are then discounted using the spot rates implied by the current yield curve for hypothetical zero-coupon bonds due on the date of each future net settlement on the swap. Credit Risk The Corporation is exposed to credit risk on the hedging instrument to the extent it is in an asset position. To minimize the exposure to loss related to credit risk, if the counterparty s credit rating falls below certain minimum levels then the counterparty is required to either post collateral, transfer the swap to an eligible transferee, or obtain a guarantee from an eligible guarantor, depending on the level of credit downgrade. There was no exposure to credit risk at June 30, 2014 or 2013 as the derivative had a negative fair value as of that date. The credit ratings of the counterparty to the 2011 swap as of June 30, 2014 and 2013 were A (Fitch Ratings) and A (Standard & Poor s) which were above the minimum level in the swap agreement. The Corporation has no other interest rate swap agreements with the counterparty so there are no master netting arrangements in place. Additionally, no collateral has been posted by the Corporation or the counterparty. Termination Risk Upon the occurrence of any default or termination event the swap agreement terminates and a termination payment may be required to be made by either the Corporation or the counterparty to the other party. The termination payment is based on market quotations and loss 22 (Continued)

211 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 amounts netted against any unpaid amounts. All or a portion of the 2011 swap agreement may be terminated by the Corporation on each June 1 or December 1 through the term of the swap agreement. Interest Rate and Basis Risk The Corporation is exposed to interest rate risk because the swap created synthetic variable-rate debt subject to changes in market interest rates. The Corporation is not exposed to basis risk because the debt being hedged is fixed rate. Rollover Risk The Corporation is not exposed to rollover risk, because the maturity date of the swap agreements closely matches the amortization period of the assets collateralizing the debt. The following table details the estimated future cash flows of the 2011A debt and the 2011 interest rate swap using the 3-month LIBOR interest rate in effect at June 30, 2014, without forecasting forward changes in that rate and using the amortization schedule in the swap agreement. Future increases in the 3-month LIBOR rate could materially affect these expected cash flows. Principal Interest Interest rate Year ending June 30 payments payments swap receipts, net Total 2015 $ 14,455,000 15,723,703 (3,180,183) 26,998, ,170,000 15,043,915 (2,977,890) 38,236, ,875,000 14,127,578 (2,738,650) 33,263, ,620,000 13,398,023 (2,551,944) 26,466, ,235,000 12,738,591 (2,398,301) 25,575, ,645,000 50,090,311 (9,077,653) 147,657, ,930,000 19,346,818 (3,559,347) 126,717, ,625, ,168 (178,938) 16,347,230 Total $ 326,555, ,370,107 (26,662,906) 441,262,201 (l) Income Taxes The Corporation is a tax-exempt organization as described in Section 501(c)(3) of the Internal Revenue Code, and accordingly, no provision for income taxes has been made in the accompanying financial statements. As such, the Corporation is subject to federal and state income taxes only on any net unrelated business income under the provisions of Section 511 of the Internal Revenue Code. AR, a wholly owned taxable subsidiary, of the Corporation has generated cumulative net losses since inception. An income tax benefit has been recorded in the financial statements, along with any related tax assets and liabilities. The income tax effects of AR are not material to the financial statements. (m) Fair Value of Financial Instruments The Corporation holds certain assets that are required to be measured at fair value on a recurring basis. These include the Corporation s investment in United States agency obligations and corporate notes and bonds. The Corporation is required to group its assets and liabilities at fair value in 23 (Continued)

212 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are: Level 1 Valuation is based upon quoted prices for identical instruments traded in active markets. Level 2 Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market. Level 3 Valuation is generated from model-based techniques that use significant assumptions not observable in the market. These unobservable assumptions reflect the Corporation s own estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques. The Corporation s investments in money market mutual funds and investments in United States agency obligations are valued using quoted market prices for identical instruments traded in active markets, and are therefore Level 1 in the fair value hierarchy. The Corporation s interest rate swaps are valued using widely accepted valuation techniques based on observable market-based inputs, and are therefore in Level 2. Corporate notes and bonds are valued using a model based on significant assumptions not observable in the market and are therefore in Level 3. There were no transfers between levels for the years ended June 30, 2014 or The Corporation had no nonfinancial assets or liabilities that were recognized or disclosed in the financial statements at fair value on a nonrecurring basis. The methods and assumptions used by the Corporation to estimate the fair value of its financial instruments not recorded in the financial statements at fair value are set forth below. The fair value disclosures of these financial instruments are included in note 7 to the financial statements. Student Loans Receivable The fair value was estimated by modeling loan cash flows using existing loan terms and assumptions to determine loan yields, average term, and present value. The discount rate is estimated using currently offered yields of similar remaining maturities. Accrued Interest Receivable The carrying amount for accrued interest receivable approximates its fair value. Bonds Payable The fair value of bonds payable is calculated by discounting scheduled cash flows through maturity using estimated market discount rates. The discount rate is estimated using the rates currently offered for debt of similar remaining maturities. Notes Payable The carrying amount for notes payable approximates fair value due to variable interest rates. Accounts Payable and Accrued Expenses The carrying amount for accounts payable and accrued expenses approximates its fair value. 24 (Continued)

213 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Accrued Interest Payable The carrying amount for accrued interest payable approximates its fair value. Limitations Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. Because no market exists for a significant portion of the Corporation s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and, therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates. (n) Restatement of Beginning Net Position For the year ended June 30, 2014, the Corporation adjusted prior period financial statements due to the adoption of GASB Statement No. 65. The Corporation restated beginning net position and other previously presented elements for the removal of deferred debt issuance costs and deferred loan origination fees and expenses for the year ended June 30, The result is a decrease in net position at July 1, 2012 of $43,340,755. Net position, June 30, 2012, as previously reported $ 445,088,195 Removal of deferred debt issuance costs (14,959,899) Removal of deferred loan origination fees and expenses (28,380,856) Net position, June 30, 2012, as restated 401,747,440 Removal of deferred debt issuance costs (1,872,663) Removal of deferred loan origination fees and expenses 8,228,159 Previously reported operating income 50,074,499 Net Position, June 30, 2013, as restated $ 458,177,435 In addition to the restatement of prior period financial statements, the Corporation also reclassified certain financial statement captions from current and noncurrent liabilities to deferred inflows of resources. Refundable origination fees and deferred gain on refunded debt were both reclassified and are now presented as deferred inflows of resources. (2) Deposits and Investments (a) Cash Deposits and Cash Equivalents At June 30, 2014 and 2013, the Corporation s cash deposits of $9,339,004 and $9,893,442, respectively, were covered by federal depository insurance or collateralized trust accounts. Cash equivalents of $93,702,786 and $181,783,063, respectively, were included in investments in the statements of net position. 25 (Continued)

214 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 (b) Investments The following table displays the types of investments, amounts, and the average maturity of the investment: Average Average Face amount Fair value maturity Face amount Fair value maturity United States agency obligations $ 76,000,000 76,547, years $ 12,164,090 12,146, years Corporate notes and bonds 51,900,788 24,691, years 53,327,995 23,379, years Money market mutual funds investing in United States government and agency obligations 93,702,786 93,702,786 Less than 1 year 181,783, ,783,063 Less than 1 year $ 221,603, ,941,927 $ 247,275, ,309,268 (c) Investment Policy Investment portfolio management is the responsibility of the Corporation s management and staff. The Corporation s board of directors has established a general investment policy and specific bond indentures direct investment policy for assets restricted under those bond indentures. Qualified investments under the general investment policy include investments in: U.S. Treasury, agency, and instrumentality obligations; interest-bearing time or demand deposits, certificates of deposits, and repurchase agreements and reverse repurchase agreements with any financial institution provided that such funds are fully insured by an agency of the federal government or collateralized at 100% with securities unconditionally and fully guaranteed by the U.S. government or collateralized with 102% of nongovernmental securities in this policy. Commercial paper rated, at the time of purchase, at least P1 by Moody s, A1 by S & P, and F-1+ by Fitch. Money market funds and corporate notes rated, at the time of purchase, at least in the top two tiers of one of the nationally recognized rating agencies. Investment agreements or guarantee investment contracts, secured by collateral securities that may be entered into with any bank, bank holding company, corporation, or any other financial institution whose outstanding: (i) commercial paper is rated, at the time of purchase, at least the same as commercial paper above for agreements 12 months or less, (ii) unsecured long-term debt is rated, at time of purchase, in the top two rating categories of one of the nationally recognized rating agencies, and commercial paper rated the same as above for agreements greater than 12 months, or (iii) in each case, by an insurance company whose claims paying ability is rated as provided in (ii) above. All investment purchase orders must be authorized by a Corporate Officer, the Board Chairman, or the Board Vice Chairman. 26 (Continued)

215 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Concentration Limits With the exception of treasury and agency securities, no more than 5% of the overall investment portfolio, or 5% of the investment portfolio of any trust estate, may be invested in one asset category. With the exception of treasury and agency securities, no more than 2% of the overall investment portfolio, or 2% of the investment portfolio of any trust estate, may be invested in securities issued by or sponsored by the same entity. In no event will more than $10 million in securities owned or sponsored by a common entity be owned by the Corporation, with the exception of treasury and agency securities. Corporate notes and bonds were in compliance with the policy above as of the purchase date of those investments. Concentration restrictions were not in place at the time of purchase of the current outstanding corporate notes and bonds. Special Considerations Commercial Paper: The Corporation may only invest in commercial paper that is fully guaranteed by a line of credit or a combination of bond insurance and a liquidity provider, all such entities being rated in the top two ratings categories. Money Market Funds: The Corporation may only invest in money market funds that: 1. limit their investments to those which otherwise conform to this policy, and 2. which include special safeguards to collateralize or insure all cash held by the fund. Qualified investments under various bond indentures includes any of the following obligations, which at the time of investment are legal investments under the laws of the State of Iowa for the money proposed to be invested therein: (a) (b) (c) Cash held in a trust account or if not held in a trust account insured at all times by the Federal Deposit Insurance Corporation or otherwise collateralized with obligations described in paragraph (b) below Direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America Obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America: Export-Import Bank Farm Credit System Financial Assistance Corporation Farmers Home Administration General Services Administration U.S. Maritime Administration Small Business Administration 27 (Continued)

216 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 Government National Mortgage Association (GNMA) U.S. Department of Housing & Urban Development (PHA s) Federal Housing Administration (d) (e) (f) (g) (h) Senior debt obligations rated AAA by S&P and Aaa by Moody s issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or senior debt obligations of other government sponsored agencies approved by the Bond Insurer with notice to S&P U.S. dollar denominated deposit accounts, federal funds, and banker s acceptances with domestic commercial banks that have a rating on their short-term certificates of deposit on the date of purchase of A-1 or A-1+ by S&P and P-1 by Moody s and maturing no more than 360 days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank) Commercial paper that is rated at the time of purchase in the single highest classification, A-1+ by S&P and P-1 by Moody s and which matures not more than 270 days after the date of purchase Investments in a money market fund rated AAAm or AAAm-G or better by S&P Pre-refunded Municipal Obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality, or local governmental unit of any such state that are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (A) which are rated, based on an irrevocable escrow account or fund (the escrow), in the highest rating category of S&P and Moody s or any successors thereto; and (B) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (b) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates specified in the irrevocable instructions referred to above, as appropriate (i) Guaranteed investment contracts or surety bonds providing for the investment of funds in an account or insuring a minimum rate of return on investments of such funds, which contract or surety bond shall: (i) be an obligation of or guaranteed by an insurance company or other corporation or financial institution whose debt obligations or insurance financial strength or claims paying ability are rated AAA by S&P, Aaa by Moody s, and AAA by Fitch 28 (Continued)

217 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 (j) A repurchase agreement that satisfies the following criteria: (i) must be between the trustee and a dealer, bank, securities firm, insurance company, or other financial institution described as: (A) primary dealers on the Federal Reserve reporting dealer list, which (x) have a long-term rating of AA- or better by S&P, Aa2 or better by Moody s and A or better by Fitch or (y) have a long-term rating of AA- or better by S&P, A or better by Fitch and Aa3 or better by Moody s and a short-term rating of P-1 by Moody s, or (B) banks, insurance companies, or other financial institutions, which (x) have a long-term rating of AA- or better by S&P, Aa2 or better by Moody s and A or better by Fitch or (y) have a long-term rating of AA- or better by S&P, A or better by Fitch and Aa3 or better by Moody s and a short-term rating of P-1 by Moody s; (ii) the written repurchase agreement must include the following: Securities that are acceptable for the transfer are: (A) direct U.S. government, or (B) federal agencies backed by the full faith and credit of the U.S. government (and Fannie Mae & Freddie Mac); and (iii) the collateral must be delivered to the trustee or third-party custodian acting as agent for the trustee by appropriate book entries and confirmation statements must have been delivered before or simultaneous with payment (perfection by possession of certificated securities) (d) (e) (f) Custodial Credit Risk Custodial credit risk is the risk that in the event of a depository institution failure, the Corporation s deposits may not be returned. Credit Risk Credit risk is the risk that an issuer or counterparty will not fulfill its obligation to the Corporation. The Corporation minimizes credit risk by limiting securities to those authorized in the investment policy; diversifying the investment portfolio to limit the impact of potential losses from any one type of security or issuer; and prequalifying the financial institutions, brokers, dealers, and advisers with which the Corporation does business. Concentration Risk Concentration of risk is the risk of loss that may be attributed to the magnitude of an investment in a single type of security. 29 (Continued)

218 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 The table below addresses credit risk and concentration risk for the Corporation s corporate notes and bonds at June 30, 2014 and 2013: June 30, 2014 June 30, 2013 S&P Percentage Percentage Provider rating* Total of total Total of total Raven Funding Limited (formerly Rhinbridge, PLC) A-1+ $ 7,355,427 30% $ 8,737,893 37% Harbour Limited (formerly Mainsail II, LTD) A-1+ 17,335, ,641, Total $ 24,691, % $ 23,379, % * S&P rating at the time of purchase (g) (h) (i) Interest Rate Risk Interest rate risk is the risk that changes in interest rates may adversely affect the fair value of the portfolio. It is the intent and practice of the Corporation s management to hold investments to maturity, which mitigates interest rate risk. Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely impact the fair value of an investment. The Corporation has no positions in foreign currency or any foreign currency denominated investments. Market Risk Due to the level of risk with certain investment securities, it is at least reasonably possible that changes in the value of investment securities will occur in the near term and that such changes could materially affect the value of the securities. Recent market conditions have resulted in an unusually high degree of volatility and increased the risks with certain investments held by the Corporation which could impact the value of investments after the date of these financial statements. (3) Student Loans Receivable Student loans receivable include eligible student loans acquired by the Corporation that are guaranteed as to principal and interest by any guarantor with which the Corporation has an agreement and whose guarantee is entitled to federal reimbursement. The loans are reinsured by the United States Secretary of Education and are 97% insured as to principal and interest for loans disbursed on or after July 1, 2006 and 98% for those loans disbursed before July 1, 2006 under the Federal Family Education Loan Program. Such guarantees require lenders, servicers, and guarantors to comply with the provisions of the Higher Education Act of 1965 and the applicable regulations thereunder. In addition, the Higher Education Act of 1965, as amended, provides for interest subsidy and special allowance payments by the Secretary of Education. The interest subsidy is a payment of interest for those loans not in repayment status. The special allowance payment, which continues throughout the loan life, provides additional income to holders of student loans or requires a payment to the federal government. 30 (Continued)

219 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 This allowance is calculated on the unpaid principal balance of student loans, based on an annual rate increased by various add-on rates depending upon when the loan was originated. The special allowance amount is commercial paper rate or the 1-month London InterBank Offered Rate (LIBOR) to the average daily unpaid principal balance and capitalized interest of student loans held by the Corporation. For loans first disbursed prior to January 1, 2000, the 91-day Treasury Bill rate is used rather than the 3-month financial commercial paper rate or the 1-month LIBOR. If the special allowance rate is above the loan interest rate then a payment is made to the lender from the federal government on the difference. If the special allowance rate is below the loan interest rate then the difference is paid to the federal government by the lender. The Corporation holds loans under the HEAL. The HEAL loans are 100% insured as to principal and interest by the Secretary of Education of the United States Department of Health and Human Services. The receipt of federal reimbursement payments is subject to compliance with the insurance contracts and the requirements of the Federal Public Services Act. Under the HEAL program, borrowers are eligible to pay interest at a quarterly reset variable rate based upon the 91-day Treasury bill plus a spread of up to 3%. The Corporation also holds loans under the Iowa Partnership Loan Program, which are not subject to the aforementioned federal guarantees. Private loan defaults are covered through an origination fee charged to the borrower. As of June 30, 2014 and 2013, the Corporation serviced loans for others in the amounts of $11.2 billion and $10.2 billion, respectively. The Corporation offers on-time repayment incentives to certain borrowers through a reduction in interest upon meeting program criteria. The reduction in interest is recognized using the effective-interest method over the life of the loan for an estimated percent of loans, which will meet the repayment criteria. The estimate is based on historical repayment data. A summary of the Corporation s student loans receivable by loan program at June 30, 2014 and 2013 is as follows: Federal family education loan program $ 856,389, ,765,849 Health education assistance loan program 3,027,244 4,149,240 Iowa partnership loan program 926,141,718 1,090,611,179 1,785,558,485 2,058,526,268 Allowance for repayment incentive benefits (776) (776) Allowance for loan losses (60,221,517) (162,881,333) Student loans receivable, net $ 1,725,336,192 1,895,644,159 The weighted average yield on student loans receivable at June 30, 2014 and 2013 was 3.28% and 3.60%, respectively. 31 (Continued)

220 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 A summary of changes in the allowance for loan losses for the years ended June 30, 2014 and 2013 is as follows: Beginning allowance for loan losses $ 162,881, ,624,906 Provision for loan losses 1,689,460 9,385,887 Charge-offs (104,349,276) (1,129,460) Ending allowance for loan losses $ 60,221, ,881,333 (4) Bonds and Notes Payable The bonds and notes payable are limited obligations of the Corporation, payable primarily from the principal and interest payments on student loans purchased and originated. The bonds and notes are collateralized by and payable only from the student loans, revenues, and recoveries of principal and all amounts held in any account established under the bond indenture or note documents. In addition, accounts are restricted in accordance with the provisions of the applicable bond indenture or note documents. A summary of bonds and notes payable at June 30, 2014 and 2013 is as follows: $262,000,000 student loan asset-backed notes, 2005 Senior Class A-2 (taxable), final maturity date March 25, 2022 $ 22,112,136 51,885,740 $168,000,000 student loan asset-backed notes, 2005 Senior Class A-3 (taxable), final maturity date September 25, ,000, ,000,000 $35,000,000 student loan asset-backed notes, 2005 Subordinate Class B (taxable), final maturity date September 25, ,494,487 35,000,000 The 2005 Class A-2, A-3, and B notes were issued to bear interest at an annual rate equal to three-month LIBOR plus 0.10%, 0.17%, and 0.35%, respectively. Interest rate resets will occur on the 25th day of each March, June, September, and December. Interest rates ranged from 0.33% to 0.62% during 2014 and were 0.33%, 0.40%, and 0.58% on June 30, 2014, respectively. Interest rates ranged from 0.37% to 0.82% during 2013 and were 0.37%, 0.44%, and 0.62% on June 30, 2013, respectively. 221,606, ,885, (Continued)

221 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $166,085,000 student loan revenue bonds, Series , November 18, 2009 $ 108,410, ,780,000 Less unamortized bond discount (128,198) (34,902) $23,255,000 student loan revenue bonds, Series , November 18, ,255,000 23,255,000 Less unamortized bond discount (77,874) (84,695) $40,830,000 student loan revenue bonds, Series , November 18, ,485,000 4,485,000 Less unamortized bond discount (10,966) (13,157) The Series 2009 bonds are term bonds due December 1, 2010 through December 1, Interest rates on the bonds range from 3.75% to 5.80%, based on maturity. Interest accrues and is payable semiannually. Bonds maturing after December 1, 2020 are subject to early redemption at par value at the option of the Corporation. In addition, certain bonds issued at a premium that are optionally redeemed may have an additional redemption price based on unamortized and outstanding premiums. During 2014 and 2013, a portion of the bonds were redeemed early. 135,932, ,387,246 $249,000,000 student loan asset-backed notes, series, November 22, ,732, ,670,036 Less unamortized discount (10,520,295) (11,359,744) The notes were issued to bear interest at an annual rate equal to three-month LIBOR plus 1.25%. Interest rate resets will occur on the 25th day of each March, June, September, and December. The interest rate ranged from 1.48% to 1.52% during 2014 and was 1.48% on June 30, The interest rate ranged from 1.52% to 1.72% during 2013 and was 1.72% on June 30, ,212, ,310, (Continued)

222 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $244,250,000 student loan revenue bonds, Series 2011A-1 November 22, $ 189,645, ,005,000 $175,250,000 student loan revenue bonds, Series 2011A-2 November 22, ,910, ,570,000 The Series 2011A bonds are term bonds due December 1, 2013 through December 1, The interest rates on the bonds range from 2.60% to 5.85%, based on maturity. Interest accrues and is paid semiannually. Bonds maturing on or after December 20, 2020 are subject to redemption at the option of the Corporation at par plus a redemption premium and accrued interest. Also, there is a special optional redemption from excess revenue at the option of the Corporation during the recycling period at par plus accrued interest. During 2014, a portion of the bonds was redeemed early. 326,555, ,575,000 $521,000,000 student loan asset-backed notes, Series Senior Class A (taxable), final maturity August 25, ,051, ,968,052 $10,000,000 student loan asset-backed notes, Series Subordinate Class B (taxable), final maturity December 26, ,000,000 10,000,000 Less unamortized discount (4,782,682) (5,520,118) The 2012 Class A and B notes were issued to bear interest at an annual rate equal to one-month LIBOR plus 0.80% and 3.50%, respectively. Interest rate resets will occur on the 25th day of each calendar month. Interest rates ranged from 0.95% to 3.69% during 2014 and were 0.95% and 3.65% on June 30, 2014, respectively. Interest rates ranged from 0.99% to 3.84% during 2013 and were 0.99% and 3.69% on June 30, 2013, respectively. 403,268, ,447,934 Total bonds payable, net $ 1,276,575,481 1,459,606, (Continued)

223 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and Notes payable: $2,500,000 promissory note $ 340, ,700 On October 10, 2008, the Corporation entered into a promissory note in an amount not to exceed $2,500,000. Under the agreement, advances were made to fund certain private student loans fully disbursed during the period from October 10, 2008 through August 30, The promissory note matures on March 31, 2026 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the last business day of the previous calendar quarter plus 0.50%. The interest rate was 3.75% throughout the years ended June 30, 2014 and , ,700 $400,000 promissory note 37,175 39,344 On January 6, 2009, the Corporation entered into a promissory note in an amount not to exceed $400,000. Under the agreement, advances were made to fund certain private student loans fully disbursed during the period from January 6, 2009 through August 30, The promissory note matures on March 31, 2030 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the tenth calendar day prior to end of the preceding calendar quarter plus 0.75%. The minimum interest rate is 4.00%. The interest rate was 4.00% throughout the years ended June 30, 2014 and ,175 39, (Continued)

224 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $400,000 promissory note $ 123, ,538 On January 29, 2009, the Corporation entered into a promissory note in an amount not to exceed $400,000. Under the agreement, advances were made to fund certain private student loans fully disbursed during the period from January 29, 2009 through August 30, The promissory note matures on March 31, 2026 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the tenth calendar day prior to end of the preceding calendar quarter plus 0.75%. The minimum interest rate is 4.00%. The interest rate was 4.00% throughout the years ended June 30, 2014 and , ,538 $2,000,000 promissory note 975, ,242 On June 18, 2009, the Corporation entered into a promissory note in an amount not to exceed $2,000,000. Under the agreement, advances were made to fund certain private student loans fully disbursed during the period from June 30, 2009 through August 30, The promissory note matures on May 31, 2026 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the tenth calendar day prior to end of the preceding calendar quarter plus 1.75%. The minimum interest rate is 5.00%. The interest rate was 5.00% throughout the years ended June 30, 2014 and , , (Continued)

225 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $200,000 promissory note $ 99,674 99,674 On July 31, 2009, the Corporation entered into a promissory note in an amount not to exceed $200,000. Under the agreement, advances were made to fund certain private student loans fully disbursed during the period from July 31, 2009 through August 30, The promissory note matures on May 31, 2030 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the tenth calendar day prior to end of the preceding calendar quarter plus 1.75%. The minimum interest rate is 5.00%. The interest rate was 5.00% throughout the years ended June 30, 2014 and ,674 99,674 $300,000 promissory note 294, ,154 On September 1, 2009, the Corporation entered into a promissory note in an amount not to exceed $300,000. Under the agreement, advances were made to fund certain private student loans fully disbursed during the period from September 1, 2009 through August 30, The promissory note matures on May 31, 2027 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the tenth calendar day prior to end of the preceding calendar quarter plus 1.75%. The minimum interest rate is 5.00%. The interest rate was 5.00% throughout the years ended June 30, 2014 and , , (Continued)

226 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $1,500,000 promissory note $ 1,166,461 1,166,461 On March 31, 2010, the Corporation entered into a promissory note in an amount not to exceed $1,500,000. Under the agreement, advances may be made to fund certain private student loans fully disbursed during the period from September 1, 2010 through August 30, The promissory note matures on March 31, 2027 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to New York Prime published on the tenth calendar day prior to end of the preceding calendar quarter plus 0.50%. The minimum interest rate is 5.00%. The interest rate was 5.00% throughout the years ended June 30, 2014 and ,166,461 1,166,461 $82,000,000 promissory note, Series 2011-B 56,837,180 66,299,617 On October 25, 2011, the Corporation entered into a promissory note. The promissory note has a final maturity not to exceed October 10, 2031 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans. The notes were issued to bear interest at an annual rate equal to three-month LIBOR plus 3.50%. Interest rate resets will occur on the 10th day of each January, April, July, and October. Interest rates ranged from 3.73% to 3.77% during 2014 and was 3.73% on June 30, Interest rates ranged from 3.78% to 3.97% during 2013 and was 3.78% on June 30, ,837,180 66,299, (Continued)

227 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $9,800,000 commercial loan, Series 2012-A $ 7,884,747 8,860,943 On July 25, 2012, the Corporation entered into a term credit note. The note has a final maturity date not to exceed June 30, 2032 and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans. The notes were issued to bear interest at an annual rate equal to three-month LIBOR plus 3.45%. Rate resets will occur quarterly each March, June, September, and December. Interest rates ranged from 3.69% to 3.73% during 2014 and was 3.69% on June 30, Interest rates ranged from 3.74% to 3.92% during 2013 and was 3.74% on June 30, ,884,747 8,860,943 $300,000 promissory note 62,106 On July 15, 2013 the Corporation entered into a promissory note in an amount not to exceed $300,000. Under the agreement, advances are made to fund certain private student loans fully disbursed during the period from July 31, 2013 through August 31, The promissory note matures on June 30, 2038, and is a limited obligation of the Corporation payable solely from payments made on the collateralized student loans or from payments made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to the U.S. Prime rate published on the tenth calendar day prior to the end of the preceding calendar quarter plus 0.50%. The minimum interest rate is 4.00%. The interest rate was 4.00% throughout the year ended June 30, , (Continued)

228 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and $300,000 promissory note $ 271,976 On August 1, 2013, the Corporation entered into a promissory note in an amount not to exceed $300,000. Under the agreement, advances are made to fund certain private student loans fully disbursed during the period from August 1, 2013 through August 31, The promissory note matures on June 30, 2037, and is a limited obligation of the Corporation payable solely from the payments made on the collateralized student loans or from payment made pursuant to a school guaranty agreement. The interest rate on outstanding advances is adjusted quarterly and is equal to the U.S. Prime rate published on the tenth calendar day prior to the end of the preceding calendar quarter plus 0.50%. The interest rate was 3.75% throughout the year ended June 30, ,976 Total notes payable, net $ 68,092,693 78,201,673 The following summarizes the activity in the principal balances of bonds and notes payable for the Corporation for the years ended June 30, 2014 and 2013: Due within June 30, 2013 Additions Reductions June 30, 2014 one year Bonds payable, net $ 1,476,618, ,523,333 1,292,095, ,202,789 Notes payable, net 78,201, ,288 10,446,267 68,092,693 9,628,882 $ 1,554,820, , ,969,600 1,360,188, ,831,671 Due within June 30, 2012 Additions Reductions June 30, 2013 one year Bonds payable, net $ 1,249,358, ,000, ,740,153 1,476,618, ,912,440 Notes payable, net 489,666,820 9,800, ,265,148 78,201,672 9,050,917 $ 1,739,025, ,800, ,005,301 1,554,820, ,963, (Continued)

229 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 A summary of the scheduled principal and interest payments as of June 30, 2014 is as follows: Total Total principal Bond principal and Estimated unamortized maturities and Note Unamortized unamortized interest items and redemption maturities discounts items costs interest Year ending June 30: 2015 $ 124,202,789 9,628,882 (1,499,550) 132,332,121 26,373, ,705, ,995,934 7,662,168 (1,565,272) 130,092,830 30,839, ,932, ,223,583 6,594,327 (1,625,122) 114,192,788 28,366, ,559, ,847,508 5,676,143 (1,674,770) 97,848,881 26,150, ,999, ,097,137 4,886,554 (1,712,366) 89,271,325 24,097, ,369, ,114,831 15,956,935 (6,066,608) 327,005,158 93,058, ,064, ,649,170 10,299,278 (1,367,502) 278,580,946 43,019, ,600, ,620,628 7,054,323 (8,825) 109,666,126 10,528, ,194, ,781, ,083 32,115,458 4,017,131 36,132, ,519,922 31,519,922 1,723,945 33,243, ,042,619 2,042, ,119 2,198,738 $ 1,292,095,496 68,092,693 (15,520,015) 1,344,668, ,331,577 1,632,999,751 (5) Retirement Plan The Corporation sponsors a defined contribution retirement plan, the Iowa Student Loan Liquidity Corporation 401(k) Retirement Plan, covering all employees who are 18 years of age or older and meet length-of-service requirements. Corporation contributions are made at the sole discretion of the Corporation s board of directors, and are allocated to active participants by the ratio of their compensation to total compensation of all active participants. The Corporation s contribution for the years ended June 30, 2014 and 2013 was $1,741,060 and $1,760,813, respectively. (6) Leases The Corporation is obligated under a noncancelable operating lease for office space and equipment in the normal course of business. Future minimum lease payments under the noncancelable operating leases as of June 30, 2014 are approximately as follows: 2015 $ 159, , , ,139 Total minimum lease payments $ 385,643 Rent expense for the years ended June 30, 2014 and 2013 totaled $383,415 and $1,358,455, respectively. 41 (Continued)

230 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 (7) Fair Value of Financial Instruments Following are disclosures of the estimated fair value of the Corporation s financial instruments at June 30, 2014 and 2013: June 30, 2014 June 30, 2013 Carrying Carrying amount Fair value amount Fair value Assets: Investments $ 194,941, ,941, ,309, ,309,268 Student loans receivable 1,725,336,192 1,953,100,398 1,895,644,159 2,028,214,036 Accrued interest receivable 20,015,636 20,015,636 23,698,978 23,698,978 June 30, 2014 June 30, 2013 Carrying Carrying amount Fair value amount Fair value Liabilities: Bonds and notes payable $ 1,344,668,174 1,449,724,439 1,537,807,885 1,649,201,763 Accrued interest payable 2,197,918 2,197,918 2,528,295 2,528,295 Accounts payable and accrued expenses 11,196,101 11,196,101 15,399,437 15,399,437 Deferred inflows of resources: Deferred gain on refunded debt $ 118,886, ,886, ,740, ,740,288 (8) General Designated Net Position The board of directors has designated unrestricted net position for items such as future bond issuances, student borrower benefits, and contingent capacity for alternative loans. (9) Risk Management The Corporation is exposed to various risks related to torts, theft, damage to and destruction of assets, errors and omissions, injuries to employees, employee health benefits, and natural disasters. These risks are covered by the purchase of commercial insurance. Settled claims from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. (10) Related Party Transactions The Iowa College Access Network (ICAN) was previously operated as a division of the Corporation and during 2010 was spun-off into a separate unrelated organization. The Corporation s President and CEO is a member of ICAN s board of directors. During the year, ICAN s operations were supported through contributions from the Corporation. 42 (Continued)

231 IOWA STUDENT LOAN LIQUIDITY CORPORATION Notes to Financial Statements June 30, 2014 and 2013 The Corporation and ICAN have entered into a contractual administrative services agreement whereas the Corporation will provide ICAN support services, including but not limited to accounting and financial reporting, payroll processing, human resources, facilities management, information technology, creative support for promotional and informative materials, corporate communications, and public relations. The Corporation will charge a fee for these services based on actual cost plus an overhead factor. During the years ended June 30, 2014 and 2013, the value of some of these services was contributed to ICAN as an in kind donation. Contributions from the Corporation to ICAN during 2014 and 2013 were as follows: In Kind Donation of services $ 14,089 33,597 Other contributions 1,158,911 1,186,403 Administrative service charges 4,376 Total $ 1,177,376 1,220,000 (11) Subsequent Events The Corporation has reviewed subsequent events through October 27, 2014, the date the financial statements were available to be issued, and concluded there were no events or transactions subsequent to June 30, 2014 that would require recognition or disclosure in the financial statements or notes to the financial statements. 43

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236 IOWA STUDENT LOAN LIQUIDITY CORPORATION Student Loan Revenue Bonds, Senior Series 2015-A (AMT)