LISTING SUPPLEMENT $189000000 Class A-1 Notes $342100000 ...

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The Education Resources Institute, Inc. and Subsidiary Supplemental Consolidating Statement of Activities and Changes in Net Assets Year Ended June 30, 2003 The estimates of the prepayment speed and default rates affect the weighted average life of the securitized loans and therefore affect the valuation estimate of the residual interest. Prepayments and defaults shorten the average life of the loans, and if all other factors remain equal, will reduce the value of the residual interest asset. TERI uses historical statistics on prepayments and borrower defaults to estimate these amounts. The following table provides a summary of the changes in the fair value of the residual interest in securitized portfolios for the years ending June 30, 2003 and 2002. 2003 2002 Beginning balance $ 3,680,696 $ 73,258 New securitizations and adjustments 10,175,301 3,607,438 Payments received (186,627) - Ending balance $ 13,669,370 $ 3,680,696 5. Notes Receivable In fiscal year 2001, FMC purchased certain assets of TERI (Note 1). FMC's payment of the purchase price to TERI included two promissory notes with a combined value of $7.9 million. The two promissory notes are for ten years and bear interest at 6 percent per annum. Principal amounts due from notes receivable for the fiscal years ended June 30 are as follows: 2004 $ 670,267 2005 711,608 2006 755,508 2007 802,095 2008 851,566 Thereafter 2,882,975 Total $ 6,674,019 6. Deferred Guarantee Fees Deferred guarantee fees to cover ongoing costs will be recognized as income for the fiscal years ended June 30 as follows: 2004 $ 2,136,866 2005 1,795,732 2006 1,484,730 2007 1,204,936 2008 953,906 Thereafter 2,002,071 Total $ 9,578,241 TF-14 11
The Education Resources Institute, Inc. and Subsidiary Supplemental Consolidating Statement of Activities and Changes in Net Assets Year Ended June 30, 2003 7. Reserve Agreement with Lending Institutions As part of the guarantee agreements with lending institutions, TERI has agreed to maintain a reserve, calculated as a percentage of the amount of unpaid principal on outstanding loans which is either at least 2 percent in cash and equivalents and marketable securities, or 3.0 percent in total TERI funds. At June 30, 2003 and 2002, the balance of loans outstanding guaranteed directly by TERI (excluding the loans guaranteed indirectly by TERI of approximately $76 million and $107 million at June 30, 2003 and 2002, respectively, see Note 9) amounted to approximately $3.4 billion and $2.7 billion, respectively. At June 30, 2003, TERI was required to have no less than approximately $69 million in cash and equivalents and marketable securities and $103 million in total TERI funds available (consisting of loan loss reserves, deferred guarantee fees and unrestricted and/or board-designated unrestricted net assets) as security for TERI's performance as guarantor (Note 10). At June 30, 2002, $54 million in cash and equivalents and marketable securities and $81 million in total TERI funds were required. TERI was in compliance with each of these requirements as of June 30, 2003 and 2002, respectively. 8. Agreement with Nellie Mae, Inc. In December 1991 and July 1992, TERI entered into guarantee agreements with Nellie Mae, Inc. ("Nellie Mae") in connection with TERI guaranteed student loans. As part of these agreements, TERI transferred funds to Nellie Mae to be held in separate reserve accounts. The funds held in the reserves are to be used to reimburse Nellie Mae for principal and accrued interest of defaulted loans. Any balance remaining in the reserves after all of the student loans have been repaid, and after repayment of the indebtedness incurred by Nellie Mae, will be distributed in equal shares to TERI and Nellie Mae. TERI has guaranteed to Nellie Mae the payment of principal and accrued interest applicable to those loans that default, to the extent such amounts exceed the reserves, and a Nellie Mae contribution of 1 percent of the original principal amount of loans guaranteed under these agreements. Custodial reserve balances representing amounts remaining from Nellie Mae's 1 percent contribution were $342,370 and $295,349 at June 30, 2003 and 2002, respectively. TERI is to maintain reserves similar to that described in Notes 7 and 9 of at least 1/2 to 1 percent of the aggregate outstanding and unpaid principal balance of the specified loans (approximately $66 million and $94.6 million of loans were outstanding at June 30, 2003 and 2002, respectively). TERI was in compliance with this requirement as of June 30, 2003 and 2002, respectively. 9. Loan Loss Receivable At June 30, 2003 and 2002, TERI in its capacity as a guarantor has guaranteed, either directly or indirectly (Notes 7 and 8), the payment to its contracting lenders of approximately $3.5 billion and $2.8 billion, respectively, in outstanding principal value of student loans. In the event of default by the borrower, TERI is generally required to reimburse the lender for the outstanding principal and interest on the related loan. 12 TF-15
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LISTING SUPPLEMENT $189,000,000 Cla
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The Indenture Trustee will represen
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DIRECTORY UNDERWRITERS UBS Securiti
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PROSPECTUS SUPPLEMENT (To Prospectu
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THE INFORMATION IN THIS PROSPECTUS
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the transfer documents with respect
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calculations for the class A-IO-1 n
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• First, from amounts on deposit
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Final Maturity Dates The unpaid pri
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Amounts in the reserve account in e
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Poor’s Ratings Services, a divisi
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loans after each transfer of additi
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Sequential payment of the class A n
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If the loans were marketed or servi
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Failures by borrowers to pay timely
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FORMATION OF THE TRUST The National
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THE SELLERS Set forth below is a ch
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It is a student loan guarantor, not
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Loan Loss Reserve. TERI’s loan lo
Page 40 and 41: Guaranty Volume. TERI is one of the
Page 42 and 43: egarding the distribution of the tr
Page 44 and 45: Outstanding Principal Balance Perce
Page 46 and 47: Distribution of the Trust Student L
Page 48 and 49: Cosigned Loans Percentage of Trust
Page 50 and 51: Distribution of the Trust Student L
Page 52 and 53: TERI GUARANTY AGREEMENTS AND TERI S
Page 54 and 55: However, for the initial interest p
Page 56 and 57: Unless an event of default occurs,
Page 58 and 59: $114,130,609. The amount on deposit
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Page 62 and 63: (13) Pro rata: any unreimbursed adv
Page 64 and 65: On each quarterly distribution date
Page 66 and 67: ERISA CONSIDERATIONS The Employee R
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Page 70 and 71: otherwise in circumstances which ha
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Page 74 and 75: “Collection Period” means, with
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Page 80 and 81: PricewaterhouseCoopers LLP One Inte
Page 82 and 83: The Education Resources Institute,
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Page 104 and 105: IMPORTANT NOTICE ABOUT INFORMATION
Page 106 and 107: Interest distributions with disprop
Page 108 and 109: the student loan purchase agreement
Page 110 and 111: FORMATION OF THE TRUSTS The Trusts
Page 112 and 113: There can be no assurance that the
Page 114 and 115: Graduate credit-ready; Continuing e
Page 116 and 117: For credit-worthy programs only, to
Page 118 and 119: The composition of the pool; The di
Page 120 and 121: demands of any person, and the sell
Page 122 and 123: liquidator for itself or all or a s
Page 124 and 125: Fixed Rate Notes Each class of fixe
Page 126 and 127: Overcollateralization; Letters of c
Page 128 and 129: (a) Assumptions: (i) Denominations
Page 130 and 131: All necessary trust action for the
Page 132 and 133: However, the amount of principal re
Page 134 and 135: With respect to the trust, none of
Page 136 and 137: (j) For the first quarterly distrib
Page 138 and 139: changes in prevailing interest rate
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trust, or the indenture trustee. Di
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Luxembourg participants or Euroclea
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and clear of the lien of any third
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Tax Characterization of the Notes U
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of the stated redemption price of t
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the gain, or increase the loss, oth
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disposition of a note by a Non-U.S.
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Prohibited Transaction Class Exempt
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The underwriters will agree, subjec
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Secondary Market Trading Since the
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Borrowing through Clearstream, Luxe
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LISTING SUPPLEMENT $189000000 Class A-1 Notes $342100000 ...

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