IV. Report of Independent Accountants
USA Group Loan Services, Inc.
30 South Meridian Street
Indianapolis, Indiana 46204
We have examined management's assertions of USA Group Loan Services, Inc.
(Loan Services) that Loan Services complied with the compliance
requirements described in management's assertions in their representation
letter dated December 9, 1997 and included in Section III of this Lender
Audit Guide report, relative to Loan Services' preparation of quarterly
Lender's Interest and Special Allowance Request and Reports (ED Form
799s) prepared and either submitted to its customers for their submission
to the U.S. Department of Education (ED) or submitted directly to ED on
behalf of certain customers (see Exhibit A) during the year ended
September 30, 1997, and about the effectiveness of Loan Services'
internal control over compliance with the aforementioned compliance
requirements as of September 30, 1997. Management is responsible for Loan
Services' compliance with, and the effectiveness of the Loan Services
internal control over compliance with, those requirements. Our
responsibility is to express an opinion on management's assertions about
Loan Services' compliance with, and the effectiveness of Loan Services'
internal control over compliance with, the specified compliance
requirements based on our examination.
Our examination was made in accordance with Government Auditing
Standards, issued by the Comptroller General of the United States;
standards established by the American Institute of Certified Public
Accountants; and the Audit Guide, Compliance Audits (Attestation
Engagements) for Lenders and Lender Servicers Participating in the
Federal Family Education Loan Program (the "Audit Guide"), issued by the
U.S. Department of Education, Office of Inspector General, and,
accordingly, included obtaining an understanding of the internal control
over compliance with the specified compliance requirements; testing and
evaluating the design and operating effectiveness of internal control
over compliance; examining, on a test basis, evidence about Loan
Services' compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances. We believe
that our examination provides a reasonable basis for our opinion. Our
examination does not provide a legal determination on Loan Services'
compliance with specified requirements.
Because of inherent limitations in any internal control structure, errors
or irregularities may occur and not be detected. Also, projections of any
evaluation of the internal control over compliance with the specified
requirements to future periods are subject to the risk that internal
control over compliance may become inadequate because of changes in
conditions, or that the degree of compliance with control policies or
procedures may deteriorate.
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In our opinion, management's assertions that Loan Services complied with
the aforementioned requirements relative to the quarterly ED Form 799s
prepared by Loan Services during the year ended September 30, 1997 and
Loan Services maintained an effective internal control over compliance
with the aforementioned compliance requirements as of September 30, 1997
are fairly stated, in all material respects.
The report is intended solely for the use of Loan Services' management,
Loan Services' customers and their independent accountants. However, this
report is a matter of public record and its distribution is not limited.
/s/ Coopers & Lybrand L.L.P.
Indianapolis, Indiana
December 9, 1997
