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EXHIBIT 4.11
KHEAA
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0000 X.X. 000 Xxxxx, Xxxxxxxxx, XX 00000-0000
Telephone (000) 000-0000
Holder
Contract of Insurance
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The Kentucky Higher Education Assistance Authority does not discriminate on the
basis of race, color, national origin, sex, religion, age, or disability in
employment or services and provides, upon request, reasonable accommodations to
afford individuals with disabilities an equal opportunity to participate in all
programs and activities. For further information, call 0-000-000-0000, extension
4-3963. Printed 10/95 with State Funds KRS 57.375.
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KENTUCKY HIGHER EDUCATION ASSISTANCE AUTHORITY
HOLDER
CONTRACT OF INSURANCE
FEDERAL FAMILY EDUCATION LOAN (FFEL) PROGRAMS
Federal Subsidized Xxxxxxxx Loans
Federal Unsubsidized Xxxxxxxx Loans
Federal Supplemental Loans for Students
Federal Parent Loans for Undergraduate Students
Federal Consolidation Loans
The parties to this contract are The First National Bank of Chicago
as Trustee for the PNC Student Loan Trusts (hereinafter known as Holder) and
the Kentucky Higher Education Assistance Authority (hereinafter known as
Authority).
The Holder certifies that it is an Eligible Holder in accordance with
Section 435 (20 U.S.C. Section 1085) of the Federal Act. The Holder and the
Authority hereby agree that the Holder is authorized to participate as an
Eligible Holder in the Authority's Insured Student Loan Program for purposes of
holding the following types of loans:
Federal Subsidized Xxxxxxxx Loans, Federal Unsubsidized
Xxxxxxxx Loans, Federal Supplemental Loans for Students,
Federal Parent Loans for Undergraduate Students and
Federal Consolidation Loans.
Nothing contained in this contract shall obligate the Holder to
certify, acquire, or make any particular loan or number of loans under the
Authority Insured Student Loan programs. It is expressly understood and
agreed by the parties that this contract entitles Holder to acquire Authority
Insured Student Loans from other eligible Lenders or Holders, but does not
entitle Holder to make or originate Authority Insured Student Loans.
In consideration of the mutual promises contained herein, the
Authority hereby agrees and covenants to reimburse the Holder in the amount of
one hundred percent of any proven loss incurred by the Holder arising out of or
resulting from default, death, permanent and total disability, closed school,
false certification, or, under specified conditions, filing of a petition in
bankruptcy of a borrower on any loan held by the Holder and insured pursuant to
the terms of this contract. Notwithstanding the foregoing sentence, the
reimbursement rate applicable to default on loans held by the Holder (other than
those originated under a "Lender-of-Last-Resort" arrangement with the Authority
or with respect to an Exceptional Lender designation under the Federal Act), on
which the first disbursement is made on or after October 1, 1993, shall be not
less than ninety-eight percent. The Holder hereby agrees and covenants to abide
by and comply with the terms and conditions of this contract and state and
federal statutes and regulations applicable to the Federal Family Education Loan
Programs. The Authority hereby agrees and covenants to abide by and comply with
the terms and conditions of this contract, and to perform its obligations under
this contract according to terms established in the Act, regulations, and the
Authority's policies and procedures, and in compliance with all other applicable
federal and state laws and regulations.
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---------------------- TERMS AND CONDITIONS ----------------------
INCORPORATION OF LAW
This contract is subject to, and hereby incorporates by reference, the
current provisions of, and subsequent amendments to, Title 00 Xxxxxx Xxxxxx
Code (U.S.C.) Section 1071 et seq. (the "Federal Act"); Title 34 Code of
Federal Regulations (CFR) Part 668 and Part 682; Kentucky Revised Statutes
(KRS) Chapter 164.740 et seq.; Title 11 of the Kentucky Administrative
Regulations (KAR) Chapters 3 and 4; and all other federal law applicable to the
Holder under this contract including, but not limited to, Title IX of the
Education Amendments of 1972 (20 U.S.C. 1681-1683); Section 504 of the
Rehabilitation Act of 1973 (29 U.S.C. 794); the Age Discrimination Act (42
U.S.C. 6101 et seq.); the Americans with Disabilities Act of 1990 (42 U.S.C.
12101); and the Equal Credit Opportunity Act (15 U.S.C. Section 1691 et seq.),
as amended. Unless generalized or discretionary provisions of the above cited
material are made specific by the following paragraphs, including but not
limited to items such as time, amount, rate, place, or manner of performance,
nothing in this contract is intended to abrogate, modify, or limit the
applicability of any of the above cited material. The terms and conditions set
forth in this contract shall be subject to automatic modification and revision
from time to time by the process of amendment and revision of the above cited
laws and regulations.
ELECTRONICALLY TRANSMITTED DATA
To the extent that the Holder participates in the process of
electronically transmitting data to the Authority in order to expedite the
processing of Authority-insured loans, the following shall apply:
1) Equipment
A) The Holder may, at its sole expense, acquire, use, and maintain equipment
(computer hardware) that is suitable for electronic transmission of data
to the Authority. If the Authority purchases and makes available to the
Holder, at the Authority's expense, computer equipment identified herein,
for electronic transmission of data to the Authority, title and ownership
of the equipment shall remain with the Authority, and replacement or
substitution of the equipment shall be at the Authority's sole discretion.
Repair and maintenance of the equipment shall be the responsibility of the
Authority.
B) The Holder shall safeguard all equipment provided by the Authority from
damage and provide adequate security and control to limit the use of the
equipment exclusively to the proper transmission of data for purposes of
the Authority's insured student loan programs by authorized personnel and
to assure that the equipment remains functional.
C) The computer equipment provided by the Authority pursuant to paragraph 1
is listed on Attachment A.
2) Certification of Data
A) The Holder hereby represents and warrants absolutely that any and all data
transmitted electronically to the Authority for each loan is true,
accurate, and complete to the best knowledge of the Holder and the
designated Loan Program Officer.
B) The Holder has and shall retain all documentation necessary to verify the
data transmitted through this procedure and shall provide access to such
documentation by the Authority or its agents.
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FEDERAL CONSOLIDATION LOANS
To the extent that the Holder acquires Federal Consolidation Loans
insured under the Authority's program made to eligible borrowers under Title
IV, Part B of the Federal Act, then it is agreed by the parties as follows:
1) The originating Lender shall have properly made and disbursed the
consolidation loan to the borrower, pursuant to the pertinent federal law and
regulations.
2) The Holder shall offer an income-sensitive or graduated repayment schedule,
established by the Holder in accordance with the regulations of the Secretary
of the U.S. Department of Education ("Secretary"), to the borrower of any
Federal Consolidation Loan made by a lender on or after July 1, 1994.
3) The Holder agrees to follow such other published terms and conditions as the
Secretary or the Authority specifically requires to carry out the Federal
Consolidation Loan Program.
CERTIFICATE OF COMPREHENSIVE INSURANCE
For any Federal Consolidation Loans held by the Holder and insured by
the Authority against loss of principal and interest, in accordance with the
Federal Act, as amended, the following provisions apply:
1) That this certificate of comprehensive insurance shall be effective and shall
expire in accordance with the paragraph of this agreement entitled Effective
Date. The Federal Consolidation Loan(s) will be made on or after April 7,
1986, but no later than provided for in the Federal Act, as amended;
2) That the Holder shall establish repayment terms which shall include the
establishment of graduated or income-sensitive repayment schedules in
accordance with the regulations of the Secretary;
3) That the Holder's loan consolidation program practices are subject to the
Authority's Insured Student Loan Program Limitation, Suspension or
Termination procedures. The insurance on any Federal Consolidation Loan(s)
held under this certificate prior to the Authority's imposition of a
limitation, suspension or termination action shall not be affected by such
action; and,
4) That the Holder complies with the Authority's reporting requirements. The
Authority's office at 0000 X.X. 000 Xxxxx, Xxxxxxxxx, Xxxxxxxx, is designated
as the office which will process claims and perform other related
administrative functions.
FORMS
Where particular forms pertaining to the performance of obligations
imposed by this contract are approved by the Authority or by the Secretary of
the U.S. Department of Education as common forms, only those forms shall be
used by the Holder. Any addition, substitution, or alteration of these forms
without express written permission of the Authority shall be grounds for
avoidance by the Authority of any insurance obligation that would otherwise be
imposed by this contract. Except as otherwise provided herein, the Holder may
use such additional forms as it deems appropriate for its own purposes,
provided that use of said forms does not violate state or federal law, and
further provided that said forms shall be maintained with the borrower's
records in accordance with retention schedules prescribed by applicable law.
PROMISSORY NOTE
Loans insured under this contract shall be evidenced by a promissory
note provided or approved by the Authority or approved by the Secretary of the
U.S. Department of Education. Interest on any loan insured hereunder shall be
charged to the borrower at a rate which does not exceed the maximum applicable
rate per annum prescribed by the Federal Act and/or regulations governing the
Federal Family Education Loan Programs.
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INSURABILITY
For all loans, the Holder shall assure, and the Authority shall have
determined to its satisfaction, in accordance with reasonable and prudent
business practices, for each loan that: the loan was properly disbursed by the
originating lender; the loan is a legal, valid, and binding obligation of the
borrower; each such loan was made and serviced in compliance with applicable
laws and regulations; and the insurance on such loan is in full force and
effect.
A Holder shall comply with due diligence requirements established by
the U.S. Department of Education and the Authority in servicing and collecting
loans insured pursuant to this contract. Failure to exercise such due
diligence, with regard to any loan insured hereunder, may, without precluding
other remedies, constitute grounds for avoidance by the Authority of its
insurance obligation on that loan. This Holder warrants that it has and will
continue to maintain itself or by contract, sufficient present capacity to
exercise due diligence in the servicing and collection of student loans and the
maintenance of records pertaining thereto.
Compliance by the Holder with the terms and conditions of this
contract and applicable laws and regulations shall be deemed a condition
precedent to the insurance obligation imposed upon the Authority hereunder.
The Authority agrees that its insurance on any loan disbursed
hereunder will remain in full force and effect if the loan becomes ineligible
for federal reinsurance due to the Authority's acts or omissions in performing
its obligations under this contract. If, at any time, any loan is determined to
be either ineligible for reinsurance or legally unenforceable due to the
Holder's acts or omissions in performing its obligations under the applicable
law or this contract, then the Authority's insurance shall be voided and
revoked and the Authority may require the Holder to repurchase the loan.
RECORDS
The Holder shall keep complete and accurate records of each loan
guaranteed under this contract.
The Holder shall, upon reasonable written request, pursuant to a
program review, make available to the Authority, the Secretary, or their duly
designated representative, for inspection and copying, any and all books,
records, documentation (including, but not limited to, memoranda,
correspondence, and computer printouts) necessary to assure compliance with this
contract and any applicable law. Except as otherwise provided below, such books,
records, and documentation shall be available during regular office hours of any
working day, no later than ten (10) working days after the request for
inspection. The Holder shall provide to the Authority loan records of individual
borrowers necessary to respond to borrower disputes, appeals, or inquiries
within five (5) working days of written request. The material may be made
available in whatever form retained (microfilm, computer data, or print).
Notwithstanding the foregoing, in the event that the Authority or the
Secretary shall have reasonable cause to believe that there exists a potential,
substantial impairment of the interests of the Commonwealth, the Authority, the
United States Government, or any eligible student, then the Authority, acting
through its Executive Director or his designee, and the Secretary reserve the
right, upon demand, of immediate inspection of such books, records,
documentation, or other materials as may pertain or be relevant to the accuracy
and completeness of the Holder's records and reports and the Holder's
compliance with the terms and conditions of this contract.
TERMINATION AND OTHER REMEDIES
Unless otherwise provided herein, this contract may be terminated or
suspended by either party upon not less than twenty (20) days written notice,
although such termination or suspension by the Authority shall be for cause and
in accordance with the Federal Act, regulations promulgated thereunder, and the
Authority's policies and procedures, and shall not become final until the
Holder is afforded adequate notice and an opportunity for hearing on the merits
of the Authority's claims and contentions as provided by the Federal Act and 11
KAR 4:020, the provisions of which regulation shall be deemed to apply to
Holders of loans. However, the Authority shall have the power to take emergency
action in accordance with 11 KAR 4:020 to suspend operation of this contract,
pending the outcome of said hearing, if the Authority determines that such
action is necessary to prevent substantial harm to the interest of the
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Commonwealth, the Authority, the United States Government, or any eligible
student. Termination by either party shall not affect the obligations incurred
under this contract prior to the effective date of the termination.
In the event that the Authority shall have probable cause to believe
that any of the assurances or representations made by the Holder are
incomplete, inaccurate, or misleading and deceptive, or that there has been a
failure by the Holder to comply with the terms and conditions of this contract
or applicable laws or regulations, in any material respect, then short of
termination or suspension, the Executive Director of the Authority or his
designee shall have the right to take any reasonable action necessary
including, but not limited to: litigation, withholding of payments, probation,
or limitation of participation, or requiring reimbursement of any funds
expended or obligated to be expended by the Authority as the result of reliance
upon such assurances, representations, or anticipation of compliance. In the
event that the Secretary has assumed the Authority's functions, and if the
Secretary determines that this contract includes an impermissible transfer of
the reserve funds or assets, then the Secretary may terminate this contract
upon 30 days notice.
Unless otherwise provided, any material noncompliance with the terms
and conditions of this contract shall subject the noncomplying party to any and
all forms of remedial action, legal and equitable. No choice of remedies shall
be required of the injured party.
ASSIGNMENT
Except as otherwise specified below, the Holder may, without prior
consent of the Authority, sell, assign, pledge, or otherwise transfer rights,
title, and interests, including specifically the right to receive any insurance
claim payment from the Authority for loans insured pursuant to this contract,
to an Eligible Lender or Holder, as defined in 34 CFR 682.200 and KRS 164.740,
that has in force a Contract of Insurance with the Authority. If the transferee
does not have a Contract of Insurance in place with the Authority, then said
transfer may be made only with the prior written consent of the Authority,
which consent shall not be unreasonably withheld, and in accordance with the
Federal Act and regulations thereunder. If the Holder effects a transfer of
title or of other interests in such loans that include the right to receive
insurance payments from the Authority, the Holder shall give the Authority
written notice of having done not later than the fifteenth (15) day of the
second month of the calendar quarter that begins after said transfer as a
precondition of the Authority's insurance obligation.
Except as specified above, the Holder may transfer or assign rights
accruing under this contract, including particularly the rights to participate
in the Authority's program of Insured Student Loans insurable under this
contract, only to another Eligible Lender, as defined in Section 435 (20 U.S.C.
1085) of the Xxxxxxx Xxx, 00 XXX Section 682.200 and KRS 164.740, and only with
the prior written consent of the Authority.
The terms and conditions of this contract shall be binding upon the
heirs and successors in interest of the respective parties as though original
parties to this contract.
WARRANTY
The Holder hereby warrants and covenants that all assurances and
representations, except those specified in applicable regulations on which the
Holder is given the right to rely in good faith, made by the Holder regarding
any transactions including, but not limited to, the servicing of Insured
Student Loans, pursuant to this contract are complete and accurate statements
of fact at the time of making those assurances and representations. Any
assurances or representations made by the Holder, unless amended, shall be
binding upon and against the Holder as a precondition of the insurability of
any Insured Student Loan for the duration of the period of insurance coverage
provided for herein.
DESIGNATED REPRESENTATIVE
Unless otherwise designated at any time over the duration of this
contract, the person(s) signing this contract on behalf of each party shall be
deemed to be the proper person(s) to whom notices and any other communications
shall be directed.
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SUBROGATION
Upon filing of a claim for reimbursement, and as a condition precedent
to reimbursement under the terms of this contract, the Holder shall assign to
the Authority all rights and responsibilities accruing to the Holder under the
Insured Student Loan promissory note, and the Authority shall be deemed fully
subrogated to the rights and responsibilities of the Holder pursuant to that
note and to this contract as it pertains to that note.
PROCEDURES
Subject to this contract, the specific procedures for servicing and
collecting loans insured under this contract, as well as filing claims for
insurance reimbursement on such loans, are delineated in 34 CFR Part 682.
PARAGRAPHS AND DEFINED TERMS
The paragraph headings contained in this document are included for the
sole purpose of facilitating the reading of this document, and shall have no
binding, substantive effect.
Capitalized terms herein shall indicate defined terms. The definition
of terms shall have the meaning specified in 20 U.S.C. Section 1085 and Section
1088, 34 CFR Section 668.2 and Section 682.200, KRS 164.740, and 11 KAR 3:001,
unless otherwise specified in this contract.
MODIFICATION
Unless otherwise provided herein, any modification of the terms and
conditions of this contract shall not be effective unless evidenced by a
writing signed by both parties.
SEVERABILITY
Should any provision of this contract be found to be inapplicable or
otherwise not binding on the parties, it is the intention of the parties that
the remainder of the contract shall remain in full force and effect upon the
respective rights and obligations of the parties hereto.
It is hereby stated as the intention of the parties hereto that all
prior contracts, both written and oral, consistent and inconsistent, are
hereinafter superseded, except as specified below. No prior understanding,
agreement, contract, or representation shall be effective against either party
unless henceforth made a part of this contract as evidenced by this writing.
Assurances and representations heretofore warranted by the Holder in any prior
contract of insurance respecting the eligibility of the Holder and the
insurability of any loan heretofore insured under such prior contract of
insurance are consolidated into the terms and conditions of this agreement as
expressed in this document. Any contract of insurance between the parties
hereto outstanding at the time of execution of this agreement is herewith
terminated and simultaneously replaced with this contract so as to allow for
continued participation in the Authority's Insured Student Loan program.
RESTRICTIONS
In accordance with the Federal Act and regulations thereunder, the
Holder shall not accept any financial inducement by any educational institution
to make available Authority insured loans to its students.
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------------------- EFFECTIVE DATE AND SIGNATURES ----------------------
This contract shall be effective from the date of execution by the
Authority. Unless otherwise terminated in accordance with the terms and
conditions set forth heretofore, this contract shall remain effective until so
terminated.
The First National Bank of Chicago
as Trustee for the PNC Student
/s/ XXXXX X. WALANIN Loan Trusts
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Authorized Representative Holder
Kentucky Higher Education
Assistance Authority
03/24/97 /s/ XXXXXXX X. XXXXXX
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Effective Date Authorized Representative
(Type or Print)
/S/ XXXXXXX X. XXXXXX
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Authorized Representative Signature
Assistant Vice President
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Title
Xxx Xxxxx Xxxxxxxx Xxxxx Xxxxx 0000
Xxxxxxx, XX 00000
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Address
LID 833364
TIN 00-0000000
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Holder Identification Number
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Designated Holder Representative
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Title
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Other Authorized Signatory
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Other Authorized Signatory
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Other Authorized Signatory
BRANCH OFFICES INCLUDED IN THIS CONTRACT:
Office Address Designated Holder Representative
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ATTACHMENT A
HOLDER CONTRACT OF INSURANCE
The computer equipment provided by the Kentucky Higher Education Assistance
Authority to the Holder is as follows:
None
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I acknowledge receipt of the above listed equipment from the Authority.
FOR THE HOLDER:
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Designated Holder Representative
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Holder Name
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Holder ID
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Effective Date
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KENTUCKY HIGHER EDUCATION ASSISTANCE AUTHORITY
HOLDER CONTRACT OF INSURANCE
ADDENDUM
Whereas, the Authority and Holder are parties to a Holder Contract of Insurance
(hereafter known as the "Contract"); and
Whereas, the Authority has heretofore undertaken to issue a Loan Guarantee on
Insured Student Loans held by Holder that were disbursed on or after June 2,
1995; and
Whereas, the Authority and the Alabama Higher Education Commission (ACHE) have
entered into a Document of Understanding dated February 23, 1995, between
themselves and the U.S. Department of Education providing for the transfer of
Guarantee Commitments from ACHE to the Authority; and
Whereas, pursuant to 20 U.S.C. Section 1078(b)(2)(E) and 34 C.F.R.
Section 682.401(b)(18), the Authority and Holder desire to provide for a
transfer of Guarantee Commitments by the ACHE Alabama Guaranteed Student
Loan Program to the Authority;
The Authority and Holder hereby agree to amend the Agreement as follows:
DEFINITIONS
For purposes of this Addendum, the following terms shall have the specified
meanings:
1) "Guarantee Commitments" means the insurance obligation of ACHE on Insured
Student Loans held by Holder pursuant to a Loan Guarantee Agreement between
ACHE and a Holder.
2) "Insured Student Loan" shall have the meaning specified in KRS 164.740(12).
3) "Loan Guarantee" shall have the meaning specified in KRS 164.740(14).
4) "Loan Guarantee Agreement" shall mean Bank Guarantee Agreement executed and
in force as of December 1, 1995, between ACHE's Alabama Guaranteed Student
Loan Program ("AGSLP") and the Holder.
5) "Outstanding Insured Student Loans" shall mean Insured Student Loans on
which:
A) The loans were initially insurable by ACHE under a Loan Guarantee
Agreement(s) and reinsurable by the U.S. Secretary of Education;
B) The borrower owes a balance of principal or interest;
C) An insurance claim has not been paid by the Authority or ACHE, except for
loans on which a previous default has been rehabilitated in accordance
with 34 C.F.R. Section 682.405; and
D) The Guarantee Commitment by ACHE remains in force and reinsurance by the
U.S. Secretary of Education remains in force or may be reinstated in
accordance with procedures prescribed in Appendix D to 34 C.F.R. Part 682.
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INSURANCE OF PRIOR INSURED STUDENT LOANS
Notwithstanding the paragraph of the Agreement entitled "Effective
Date", the Authority hereby promises to insure, in accordance with the terms
and conditions of the Agreement, all Insured Student Loans held by Holder upon
which the Authority has issued a Loan Guarantee between June 2, 1995, and the
effective date of the Agreement, if:
A) The loans were disbursed in accordance with the federal act and
applicable regulations;
B) The Lender or Holder has paid to the Authority the Premium
specified in the Agreement pertaining to the Insured Student Loans;
C) The borrower owes a balance of principal or interest;
D) An insurance claim has not been paid by the Authority on the loan,
except for loans on which a previous default has been rehabilitated
in accordance with 34 C.F.R. Section 682.405; and
E) The reinsurance by the U.S. Secretary of Education remains in
force or may be reinstated in accordance with procedures prescribed
in Appendix D to 34 C.F.R. Part 682.
ASSUMPTION BY AUTHORITY OF LOAN GUARANTEE COMMITMENTS OF ACHE
The Authority hereby agrees to assume, as of December 1, 1995, subject
to the terms and conditions of the Agreement and the Federal Act and applicable
regulations, the obligation of the ACHE for Guarantee Commitments issued prior
to December 1, 1995, by ACHE Guaranteed Student Loan Program under the Federal
Act and a Loan Guarantee Agreement(s) on Outstanding Insured Student Loans held
by the Holder. Pursuant to 20 U.S.C. Section 1078(b)(2)(E), the Holder hereby
consents to this transfer of said Guarantee Commitments.
HOLDER:
By:
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxxxx X. Xxxxxx
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Authorized Representative Name
Kentucky Higher Education
Assistance Authority
03/24/97 Assistant Vice President
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Date Title
LID 833364
TIN 00-0000000
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Holder Identification Number
The First National Bank of Chicago
as Trustee for the PNC Student
Loan Trusts
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Holder Name
One First National Plaza, Suite 0126
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Address
Xxxxxxx, Xxxxxxxx 00000
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