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Exhibit 10.8
[LOGO] GREAT LAKES HIGHER EDUCATION GUARANTY CORPORATION 0000 XXXXXXXXXXXXX XXXX, XXXXXXX, XX 00000-0000
STUDENT LOAN GUARANTY
(For Loans to Students and Parents Under Title IV Part B of the
Higher Education Act of 1965 as amended)
DEFINITIONS: The term GUARANTOR used herein shall mean the Great Lakes Higher
Education Guaranty Corporation. CORPORATION shall mean Great Lakes Higher
Education Guaranty Corporation. LENDER shall include the undersigned and any
eligible lender who becomes the assignee, pursuant to applicable statutes and
regulations, of loans to students and parents granted under Title IV, Part B of
the Higher Education Act of 1965, as amended (the "Act").
APPLICABILITY. The benefits provided under this guaranty are applicable to any
loan guaranteed under the Act. Within such limits as may be established herein
and/or within such limits as the guarantor shall from time to time establish,
the guarantor agrees to pay, upon proper notice of death, permanent and total
disability or default, the outstanding principal and interest due to the lender
upon any student or parent loan covered by this guaranty.*
LIMITATIONS. This guaranty is subject to all applicable federal statutes and
administrative regulations. This guaranty is further subject to such limitations
and procedures as are, or may be, established by Rules and Regulations of the
Great Lakes Higher Education Guaranty Corporation (the "Corporation Rules and
Regulations"). All applicable federal statutes and regulations and Corporation
Rules and Regulations as they may from time to time be amended are made a part
of this guaranty and incorporated herein.
The obligations of the lender as set forth in this guaranty shall constitute
conditions precedent to any obligation on the part of the guarantor.
OBLIGATIONS OF THE LENDER:
(a) The lender shall be an eligible lender under the Act and federal
regulations.
(b) The lender shall exercise due diligence as defined under the Act and
federal regulations and within the meaning of the Corporation Rules and
Regulations.
(c) The lender shall comply with all applicable federal statutes and
regulations.
(d) The lender shall notify the Corporation promptly of any change of name
by the lender, or assignment of the lender's interest under this
guaranty.
(e) Any assignments of any interest of the lender under this guaranty shall
be only to appropriate eligible lenders and shall be in compliance with
all applicable provisions of federal statutes and regulations and
Corporation Rules and Regulations.
(f) The lender shall cooperate with the Corporation, the department of
education and any other appropriate federal agency in the collection of
any defaulted student or parent loan.
(g) The lender shall assist eligible borrowers in securing reductions on
obligations to pay interest on loans made by, or assigned to, the
lender which reductions the borrowers may be eligible to receive under
applicable federal statutes and regulations and the Corporation Rules
and Regulations.
TERMINATION. This guaranty may be terminated by the lender as to any loans made
by the lender following not less than thirty days written notice to the
Corporation. This guaranty may be terminated by the Great Lakes Higher Education
Guaranty Corporation in the manner provided for by the Corporation Rules and
Regulations. The termination of this guaranty shall not affect the coverage of
any loans subject to this guaranty which were made prior to the date of
termination.
* Notwithstanding the foregoing, default claims with respect to loans first
disbursed on or after October 1, 1993, shall be paid at ninety-eight percent
(98%) of the outstanding principal and interest due to the lender, or such
lesser rate, if any, as may be provided in Section 428(b)(1)(G) of the Higher
Education Act of 1965, as amended. Specifically, and without limitation, this
guaranty shall not apply to any loan which is not eligible for reinsurance as a
result of school based defenses or other defenses to enforceability under State
or federal law. Payment hereunder is expressly limited to monies constituting
the guarantor's Guaranty Reserve Fund as established in accordance with the
regulations governing the Federal Family Education Loan Program as found in 34
CFR 682.410(a)(1) or as provided under Title IV, Part B, Section 432(o) of the
Higher Education Act of 1965, as amended.
Great Lakes Higher Education Guaranty Corporation
By: Xxxxxxx X. Xxxxxx 6-1-98
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Authorized Officer Date
The above Guaranty is hereby accepted this 1st day of June, 1998
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Exact Corporate Title Star Bank, N.A. as Trustee for Student Loan Funding
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By Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx Title of Officer Senior Trust Officer
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Employer Identification Number 00-0000000 Lender Number 829626
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AGREEMENT WITH RESPECT TO MAKING CONSOLIDATION LOANS
UNDER SECTION 428C OF THE HIGHER EDUCATION ACT OF 1965
STAR BANK, N.A. AS TRUSTEE FOR STUDENT LOAN FUNDING, (the "Lender"),
Lender Numbers 833361, 833081, 829626, 831008, 831692, 830631, 831785, 831640,
831299, 833207 and 831455, hereby enters into an agreement with GREAT LAKES
HIGHER EDUCATION GUARANTY CORPORATION ("Guarantor") for the purpose of making
consolidation loans as authorized under Section 428C of the Higher Education Act
of 1965, as amended (the "Act").
In the performance of their respective obligations under Section 428C
of the Act, the Guarantor and Xxxxxx agree as follows:
1. Lender shall exercise reasonable care and diligence in the making and
collection of consolidation loans, and shall comply with the
requirements of Section 428C of the Act, applicable regulations issued
by the U.S. Department of Education, and applicable regulations issued
by the Guarantor.
2. Xxxxxx will make a consolidation loan to an eligible borrower (on
request of the borrower) only if the borrower certifies that the
borrower has no other application pending for a loan under Section 428C
of the Act; and
(a) Xxxxxx holds an outstanding loan of that borrower which is
selected by the borrower for consolidation under Section 428C
of the Act, or
(b) the borrower certifies that the borrower has sought and has
been unable to obtain a consolidation loan with
income-sensitive repayment terms from the holders of the
outstanding loans of that borrower (which are so selected for
consolidation).
3. Each consolidation loan made by Lender will bear interest, and be
subject to repayment, in accordance with the provisions of Section
428C, subsection (c) of the Act.
4. Each consolidation loan will be made by Xxxxxx, notwithstanding any
other provision of Part B of Title IV of the Act limiting the annual or
aggregate principal amount for all insured loans made to a borrower, in
an amount
(a) which is not less than the minimum amount required for
eligibility of the borrower under Section 428C, subsection
(a)(3) of the Act, and
(b) which is equal to the sum of unpaid principal and accrued
unpaid interest and late charges of all eligible student loans
received by the eligible borrower which are selected by the
borrower for consolidation.
5. The proceeds of each consolidation loan will be paid by Lender to the
holder or holders of the loans selected for consolidation to discharge
the liability on such loans.
6. The Lender shall offer an income-sensitive repayment schedule,
established by the Lender in accordance with the regulations
promulgated by the Secretary, to the borrower of any consolidation loan
made by the Lender on or after July 1, 1994.
7. Guarantor shall, following execution of this Agreement, issue to Lender
in accordance with paragraph (b)(2) of Section 428C of the Act a
Certificate of Comprehensive Insurance for Consolidation Loans
("Certificate"). The Certificate shall be effective for the period and
limited to the amount stated therein, each as determined in the sole
discretion of the Guarantor.
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8. Lender will reach agreement with the Guarantor for the periodic
transmittal to the Guarantor of appropriate master file data with
respect to consolidation loans in addition to the normal reporting
requirements for loans insured under the Federal Family Education Loan
Program have been established by the Guarantor. Xxxxxx will have and
report master file data with respect to the separate balances of the
particular loans consolidated at the time of consolidation.
9. Section 423(c)(2) of the Act contains references to "other student
loans". For purposes hereof, "other student loans" shall mean loans
made under a public or private student loan program by an institutional
lender to the borrower that (a) are granted exclusively for the purpose
of financing the borrower's post-secondary education, (b) are set forth
in the application/promissory note signed by the borrower when applying
to Lender for a consolidation loan, and (c) may be verified as having
been granted for the stated purpose.
10. The Guarantor acknowledges that if a borrower selects for consolidation
one or more loans made under Section 428B as in effect prior to the
enactment of the Higher Education Amendments of 1986, whether or not
owned by Xxxxxx, Lender will first refinance such loans at the rate
authorized under Section 427(c)(4) of the Act and will use such rate
for purposes of determining the interest rate on such borrower's
consolidation loan.
11. Lender hereby certifies (a) that loans selected for consolidation are
legal, valid, and binding obligations that were made in compliance with
all applicable laws and regulations and that the insurance on such
loans is in full force and effect, and (b) that the consolidation loans
made by Lender are legal, valid, and binding obligations that were made
in compliance with all applicable laws and regulations. Xxxxxx agrees
to repurchase from the Guarantor any consolidation loan insured
hereunder (a) for which the Guarantor is denied federal reinsurance or
is required at any time to reimburse the federal government for federal
reinsurance previously paid on a consolidation loan in either case,
solely as a result of any failure of Lender or its servicer to comply
with the requirements of paragraph 1 hereof, or (b) in the event that a
consolidation loan is determined to be unenforceable by a court of
competent jurisdiction solely as a result of any action or inaction of
Lender or its servicer; provided, however, that the Guarantor has
notified Lender of such denial of federal reinsurance, claim for
reimbursement, or court action and has given Lender an opportunity to
assist in its resolution. The repurchase price shall be the amount of
the Guarantor's claim payment to Lender on any such loan.
12. The terms of the Certificate of Comprehensive Insurance for
Consolidation Loans are incorporated herein and made a part hereof as
if set forth in their entirety.
STAR BANK, N.A. AS TRUSTEE FOR GREAT LAKES HIGHER EDUCATION GUARANTY
STUDENT LOAN FUNDING CORPORATION
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxxx Name: Xxxxx X. Xxxxxx
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Title: Senior Trust Officer Title: Executive Vice President
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Effective Date: June 1, 1998
Certificate Amount: $15,000,000
Lender ID Numbers: 833361, 833081, 829626, 831008, 831692, 830631, 831785, 831640, 831299, 833207 and 831455
CERTIFICATE OF COMPREHENSIVE INSURANCE FOR CONSOLIDATION LOANS
WHEREAS, STAR BANK, N.A. AS TRUSTEE FOR STUDENT LOAN FUNDING (the
"Lender"), wishes to secure insurance on consolidation loans made pursuant to
Section 428C of Title IV, Part B of the Higher Education Act of 1965, as
amended, (the "Act"), and
WHEREAS, the Great Lakes Higher Education Guaranty Corporation (the
"Guarantor") is authorized by the Act to provide such loan insurance through
the issuance of a certificate of comprehensive insurance coverage under the
provisions of Section 428(b)(2) of the Act,
NOW THEREFORE, to evidence its intent to guarantee, Guarantor does
issue, as of the Effective Date shown above, this Certificate of Comprehensive
Insurance ("Certificate"), upon the following terms and conditions:
1. Within the limits established by the provisions of this certificate and
without further action by the Guarantor, all consolidation loans which
are eligible for insurance under the Act and are made in conformity
with Section 428C of the Act and the agreement entered into by the
Guarantor and Lender pursuant to such section of the Act shall, if
designated by Lender to be subject to this certificate, be insured from
the time of disbursement against the loss of interest and principal by
the Guarantor.
Notwithstanding the foregoing, default claims with respect to loans
first disbursed on or after October 1, 1993, shall be paid at
ninety-eight percent (98%) of the outstanding principal and interest
due to the lender, or such other rate, if any, as may be provided in
Section 428(b)(1)(G) of the Higher Education Act of 1965, as amended.
Specifically, and without limitation, this guaranty shall not apply to
any consolidation loan or any consolidation loan which consolidates a
loan which is not eligible for reinsurance as a result of school based
defenses or other defenses to enforceability under state or federal
law. Payment hereunder is expressly limited to monies constituting the
guarantor's Guaranty Reserve Fund as established in accordance with the
regulations governing the Federal Family Education Loan Program as
found in 34 CFR 628.410(a)(1) or as provided under Title IV, Part B,
Section 432(o) of the Higher Education Act of 1965, as amended.
2. A consolidation loan will not be insured under this certificate unless
Lender has determined, to its satisfaction, in accordance with
reasonable and prudent business practices, for each loan being
consolidated (a) that the loan is a legal, valid and binding obligation
of the borrower; (b) that each such loan was made and serviced in
compliance with applicable laws and regulations; and (c) in the case of
loans made under Part B of the Act, that the insurance on such loan is
in full force and effect.
3. This Certificate shall have effect with respect to Federal
Consolidation Loans made by Lender for the period from the Effective
Date shown above until March 1, 2000, provided that the aggregate
Initial Principal Amount of such Federal Consolidation Loans does not
exceed the Certificate Amount shown above and, provided further, that
this Certificate shall not have effect with respect to any Federal
Consolidation Loan which has not been made by Lender in accordance with
all of the terms of the Agreement and on a promissory note form
provided or approved by Guarantor.
4. With respect to loans insured under this certificate, Lender shall
submit such reports (a) to the Guarantor as it may reasonably require
to carry out its responsibilities under the Act and (b) to the U. S.
Secretary of Education as it may require.
5. All claims submitted by Xxxxxx under this certificate will be directed
to:
Great Lakes Higher Education Guaranty Corporation
0000 Xxxxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
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6. All administrative and procedural matters related to loans issued under
certificate will be directed to:
Great Lakes Higher Education Guaranty Corporation
0000 Xxxxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
7. Repayment terms offered to borrowers will include both level and
graduated payment schedules. For consolidation loans made after July 1,
1994, income-sensitive repayment schedules shall be offered in
accordance with regulations promulgated by the Secretary. Graduated
payment schedules may provide for an initial period of interest only
payments. Loans will be made for up to the maximum period provided by
law and the interest rate will be equal to or less than the applicable
rate.
8. If at any time prior to the expiration of this certificate, Xxxxxx no
longer proposes to make consolidation loans insured hereunder, it shall
notify the Guarantor and this certificate may be terminated on a
mutually agreed upon date.
No loans made under this certificate prior to its expiration, or the
termination thereof under this provision, shall be affected by such
expiration or termination.
9. The Guarantor may, for any reason, terminate Xxxxxx's authority to make
insured loans hereunder upon 90 days written notice prior to the
effective date of the termination.
This guaranty may also be terminated by Great Lakes Higher Education
Guaranty Corporation in the manner provided for by the Corporation
Rules and Regulations.
Loans made prior to the date of any such termination will not be
affected by the action of the Guarantor provided they are otherwise
insurable.
10. The terms of the Agreement between Lender and Great Lakes Higher
Education Guaranty Corporation With Respect to Making Consolidation
Loans under Section 428C of the Higher Education Act of 1965 are
incorporated herein and made a part hereof as if set forth herein in
their entirety.
GREAT LAKES HIGHER EDUCATION GUARANTY CORPORATION
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Executive Vice President
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