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As filed with the Securities and Exchange Commission on October 30, 2001

Registration No. 333-63164

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

USA Education, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 52-2013874
(I.R.S. employer
identification no.)

11600 Sallie Mae Drive
Reston, VA 20193
(703) 810-3000
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Marianne M. Keler, Esq.
Executive Vice President and General Counsel
USA Education, Inc.
11600 Sallie Mae Drive
Reston, VA 20193
(703) 810-3000
(Address, including zip code, and telephone number, including area code, of agent for service)

Copies To:

Diana de Brito, Esq.
Cadwalader, Wickersham & Taft
1201 F Street, N.W.
Washington D.C. 20004
(202) 862-2200

Approximate date of commencement of proposed sale to the public: From time to time after this registration statement becomes effective.

   If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. / /

   If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. /x/

   If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: / /         

   If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: / /        

   If the delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. /x/ 

CALCULATION OF REGISTRATION FEE(1)

Title of Each Class of Securities Proposed to be Registered(2)	Proposed Maximum Offering Price	Amount of Registration Fee
Debt Securities (3), Common Stock, $0.20 par value per share (4), Preferred Stock, $0.20 par value per share and Warrants	$3,000,000,000(5)(6)(7)(8)	$750,000(1)

(1)

Pursuant to Rule 429 under the Securities Act of 1933, of the $64,000,000 of securities previously registered on Form S-3 (File No. 333-62564), $4,000,000 of such securities are being carried forward to this registration statement. The registrant previously paid the Commission a filing fee (at the rate of $250 per $1,000,000) in the amount of $16,000 in connection with the filing of that Form S-3 of which $1,000 is attributable to the $4,000,000 of securities being carried forward. The registrant also paid a filing fee in the amount of $250 in connection with the initial filing of this Registration Statement.

(2)

Any securities registered hereunder may be sold separately or as units with other securities registered hereunder.

(3)

The Debt Securities to be offered hereunder will consist of one or more series of senior debt securities or subordinated debt securities or any combination thereof, as more fully described herein.

(4)

Common Stock is registered primarily for the purpose of allowing flexibility to make sales of Common Stock in connection with the settlement of privately negotiated equity forward contracts. Common Stock may also be issued upon conversion, exercise or exchange of any Debt Securities, Preferred Stock or Warrants.

(5)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(o).

(6)

No separate consideration will be received for Debt Securities, Common Stock or Preferred Stock that are issued upon the conversion of Debt Securities or Preferred Stock.

(7)

In U.S. Dollars or the equivalent thereof in one or more foreign currencies or composite currencies.

(8)

Also includes such additional principal amount as may be necessary such that, if Debt Securities are issued with an original issue discount, the aggregate initial offering price of all Debt Securities will equal $3,000,000,000 less the dollar amount of other securities previously issued.

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

   Pursuant to Rule 429 under the Securities Act of 1933, the prospectus that is a part of this registration statement relates to the securities to be registered hereby as well as the securities that were originally registered but not issued under the registrant's Registration Statement on Form S-3 (File No. 333-62564) and that are being carried forward to this registration statement.

Subject to Completion

October   , 2001

Prospectus

USA EDUCATION, INC.
(formerly known as SLM Holding Corporation)

$3,000,000,000
Debt Securities
Preferred Stock
Warrants

•  This prospectus provides you with a general description of the securities we may offer. We will provide specific terms of these securities in supplements to this prospectus. You should read this prospectus and the applicable supplement carefully before you invest.

•  We are registering shares of our common stock primarily to preserve our flexibility to deliver or sell shares of our common stock in connection with the settlement of privately negotiated equity forward purchase contracts. We also may issue common stock upon conversion, exercise or exchange of any debt securities, preferred stock or warrants.

•  We are required to include the following legend:

Obligations of USA Education, Inc. and any subsidiary of USA Education, Inc. are not guaranteed by the full faith and credit of the United States of America, and neither USA Education, Inc. nor any subsidiary of USA Education, Inc. is a government-sponsored enterprise (other than Student Loan Marketing Association) or an instrumentality of the United States of America.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

This prospectus is dated October   , 2001

TABLE OF CONTENTS

	Page
About this Prospectus	2
Where You Can Find More Information	2
Forward-Looking Statements	3
USA Education, Inc.	4
Use of Proceeds	4
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends	4
Securities We May Offer	4
Additional Information	5
Description of Debt Securities	5
Description of Capital Stock	13
Description of Warrants	14
Plan of Distribution	15
Legal Matters	16
Experts	17

ABOUT THIS PROSPECTUS

    This prospectus is part of a registration statement we filed with the SEC using a "shelf" registration process. Under this shelf process, we may sell debt securities, preferred stock and warrants in one or more offerings up to a total dollar amount of $3,000,000,000. We may sell these securities either separately or in units. We may also issue common stock upon conversion, exchange or exercise of any of the securities mentioned above, and we may sell or deliver our common stock in connection with the settlement of privately negotiated equity forward or equity option transactions we have entered into or may enter into from time to time.

    This prospectus provides you with a general description of the securities we may offer. Each time we sell securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read this prospectus and the applicable prospectus supplement together with the additional information described under the heading "Where You Can Find More Information."

    The registration statement that contains this prospectus, including the exhibits to the registration statement, contains additional information about us and the securities we may offer under this prospectus. You can read that registration statement at the SEC's web site or at the SEC's offices mentioned under the heading "Where You Can Find More Information."

WHERE YOU CAN FIND MORE INFORMATION

    We file annual and quarterly reports, proxy statements and other information with the SEC. You may read and copy any of these documents at the SEC's public facilities in Washington, D.C. (located at 450 Fifth Street, N.W., Washington, D.C. 20549), Chicago (located at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661) and New York (located at Seven World Trade Center, 13th Floor, New York, New York 10048). Please call the SEC at 1-800-SEC-0330 for further information about the public reference rooms. The SEC also maintains a site on the World Wide Web at http://www.sec.gov. This site contains reports, proxy and information statements and other information about registrants that file electronically with the SEC. You can also inspect reports and other information we file at the office of the New York Stock Exchange, Inc. (located at 20 Broad Street, New York, New York 10005) or at our web site at http://www.salliemae.com.

    We have filed a registration statement and related exhibits with the SEC under the Securities Act of 1933. This registration statement contains additional information about us and our securities. You can inspect the registration statement and exhibits without charge at the SEC's office in Washington, D.C. (located at 450 Fifth Street, N.W.), and you may obtain copies from the SEC at prescribed rates.

    The SEC permits us to "incorporate by reference" the information and reports we file with it. This means that we can disclose important information to you by referring to another document. The information that we incorporate by reference is considered to be part of this prospectus, and later information that we file with the SEC automatically updates and supersedes this information. Specifically, we incorporate by reference:

•

our annual report on Form 10-K for the fiscal year ended December 31, 2000, which we filed on April 2, 2001;

•

our quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2001, which we filed on May 15, 2001;

•

our quarterly report on Form 10-Q for the fiscal quarter ended June 30, 2001, which we filed on August 14, 2001;

•

the description of our common stock in our Form 8-A, which we filed on August 7, 1997 and amended on July 27, 1999, and any amendments or reports filed for the purpose of updating this description;

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•

the description of our currently outstanding preferred stock in our form 8-A, which we filed on November 10, 1999;

•

our current report on Form 8-K, which we filed on February 22, 2001;

•

our current report on Form 8-K, which we filed on February 27, 2001;

•

our current report on Form 8-K, which we filed on March 7, 2001;

•

our current report on Form 8-K, which we filed on April 17, 2001;

•

our current report on Form 8-K, which we filed on June 18, 2001; and

•

all documents we file with the SEC under Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and before we sell all of the securities offered by this prospectus.

    You may request a copy of these filings at no cost by writing or telephoning us at the following address:

Corporate Secretary
USA Education, Inc.
11600 Sallie Mae Drive
Reston, VA 20193
(703) 810-3000

    You should rely only on the information incorporated by reference or provided in this prospectus and any prospectus supplement. We have not authorized anyone else to provide you with different information. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of these documents.

FORWARD-LOOKING STATEMENTS

    This prospectus and the information incorporated by reference in this prospectus include forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements are based on our management's beliefs and assumptions and on information currently available to our management. Forward-looking statements include information concerning our possible or assumed future results of operations and statements preceded by, followed by or that include the words "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions.

    Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. You should not put undue reliance on any forward-looking statements. We do not have any intention or obligation to update forward-looking statements after we distribute this prospectus.

    You should understand that the following important factors could cause our results to differ materially from those expressed in forward-looking statements:

•

changes in the terms of student loans and the educational credit marketplace arising from the implementation of applicable laws and regulations and from changes in these laws and regulations that may reduce the volume, average term, costs and yields on education loans under the Federal Family Education Loan Program or for non-FFELP loans or result in loans being originated or refinanced under non-FFELP programs or affect the terms upon which banks and others agree to sell FFELP loans to us;

•

changes in the demand for educational financing or in financing preferences of educational institutions, students and their families, which could reduce demand for our products and services or increase our costs; and

•

changes in the general interest rate environment and in the securitization markets for education loans, which could increase the costs or limit the availability of financings necessary to originate, purchase or carry education loans.

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USA EDUCATION, INC.

    We were formed in 1997 in connection with the reorganization of the Student Loan Marketing Association under the Student Loan Marketing Association Reorganization Act of 1996. Our principal business is financing and servicing education loans. We presently conduct a majority of this business through two wholly owned entities: Student Loan Marketing Association, a government-sponsored enterprise chartered by an act of Congress, and Sallie Mae Servicing L.P., a Delaware limited partnership. We are the largest non-governmental source of financing and servicing for education loans in the United States.

    On July 31, 2000, under a purchase agreement with USA Group, Inc., USA Group Loan Services, Inc. and USA Group Guarantee Services, Inc., we purchased substantially all of the business of USA Group, including its guarantee servicing, student loan servicing and secondary market operations. As part of the transaction, we changed our name from SLM Holding Corporation to USA Education, Inc.

    Our principal executive offices are located at 11600 Sallie Mae Drive, Reston, VA 20193, and our telephone number is (703) 810-3000.

USE OF PROCEEDS

    Unless the applicable prospectus supplement states otherwise, we intend to use the net proceeds from the sale of the offered securities for general corporate purposes.

RATIO OF EARNINGS TO FIXED CHARGES AND
PREFERRED STOCK DIVIDENDS

    The following table sets forth our ratio of earnings to fixed charges and preferred stock dividends for the five years ended December 31, 2000 and the six month periods ended June 30, 2000 and June 30, 2001.

						Six Months ended
	Years ended December 31,					June 30,
	1996	1997	1998	1999	2000	2000	2001
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends (1)	1.22	1.29	1.37	1.34	1.23	1.30	1.37
Ratio of Earnings to Fixed Charges (1)	1.23	1.29	1.38	1.34	1.24	1.30	1.37

(1)

For purposes of computing these ratios, earnings represent income before income tax expense plus fixed charges less preferred stock dividends. Fixed charges represent interest expense plus the estimated interest component of net rental expense.

SECURITIES WE MAY OFFER

    This section describes the general terms and provisions of the securities to which this prospectus and any prospectus supplement relates.

Types of Securities

    The types of securities that we may offer and sell from time to time by this prospectus are:

•

debt securities, which we may issue in one or more series;



•

preferred stock, which we may issue in one or more series;



•

common stock;



•

warrants entitling the holders to purchase common stock, preferred stock or debt securities;

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•

warrants or other rights relating to foreign currency exchange rates; or



•

warrants for the purchase or sale of debt securities of, or guaranteed by, the United States government or its agencies, units of a stock index or a stock basket or a commodity or a unit of a commodity index.

    The aggregate initial offering price of all securities we sell will not exceed $3,000,000,000. We will determine when we sell securities, the amounts of securities we will sell and the prices and other terms on which we will sell them. We may sell securities to or through underwriters, through agents or directly to purchasers.

ADDITIONAL INFORMATION

    We will describe in a prospectus supplement, which we will deliver with this prospectus, the terms of particular securities that we may offer in the future. Each prospectus supplement will include the following information:

•

the type and amount of securities that we propose to sell;



•

the initial public offering price of the securities;



•

the names of the underwriters or agents, if any, through or to which we will sell the securities;



•

the compensation, if any, of those underwriters or agents;



•

information about securities exchanges or automated quotation systems on which the securities will be listed or traded;



•

any material United States federal income tax considerations that apply to the securities; and



•

any other material information about the offering and sale of the securities.

DESCRIPTION OF DEBT SECURITIES

    This section discusses debt securities we may offer under this prospectus.

    We will issue debt securities under an indenture, dated as of October 1, 2000, between us and The Chase Manhattan Bank, New York, New York, as trustee. The Chase Manhattan Bank is qualified to act as trustee under the Trust Indenture Act of 1939. The indenture is governed by the Trust Indenture Act and may be supplemented from time to time.

    The following is a summary of the indenture. It does not restate the indenture entirely. We urge you to read the indenture. The indenture and any applicable indenture supplement will be filed or incorporated by reference as exhibits to the registration statement of which this prospectus is a part, and you may inspect them at the office of the trustee, or as described under the heading "Where You Can Find More Information." References below to an "indenture" are references to the indenture and the applicable indenture supplement under which we issue a particular series of debt securities.

Terms of the Debt Securities

    Our debt securities will be unsecured obligations of USA Education, Inc. We may issue them in one or more series. Authorizing resolutions or a supplemental indenture will set forth the specific terms of each series of debt securities. We will provide a prospectus supplement with, for some offerings, a pricing supplement, for each series of debt securities that will describe:

•

the title of the debt securities and their CUSIP numbers;



•

any limit upon the aggregate principal amount of the series of debt securities;

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•

the date or dates on which principal and premium, if any, of the debt securities will be payable;

•

if the debt securities will bear interest:

•   the interest rate on the debt securities or the method by which the interest rate may be determined;

•   the date from which interest will accrue;

•   the record and interest payment dates for the debt securities; and

•   any circumstances under which we may defer interest payments;

•

the place or places where:

•   we can make payments on the debt securities;

•   the debt securities can be surrendered for registration of transfer or exchange; and

•   notices and demands can be given to us relating to the debt securities and under the applicable indenture, and
    where notices to holders pursuant to the applicable indenture will be published;

•

any optional redemption provisions that would permit us or the holders of debt securities to elect to redeem the debt securities before their final maturity;

•

any sinking fund provisions that would obligate us to redeem the debt securities;

•

whether any of the debt securities are to be issuable as registered securities, bearer securities or both, whether debt securities are to be issuable with or without coupons or both and, if issuable as bearer securities, the date as of which the bearer securities will be dated (if other than the date of original issuance of the first debt security of that series of like tenor and term to be issued);

•

whether all or part of the debt securities will be issued in whole or in part as temporary or permanent global securities and, if so, the depositary for those global securities and a description of any book-entry procedures relating to the global securities;

•

if we issue temporary global securities, any special provisions dealing with the payment of interest and any terms relating to the ability to exchange interests in a temporary global security for interests in a permanent global security or for definitive debt securities;

•

the denominations in which the debt securities will be issued, if other than $1,000 or an integral multiple of $1,000 in the case of registered securities or $5,000 in the case of bearer securities;

•

the portion of the principal amount of debt securities payable upon a declaration of acceleration of maturity, if other than the full principal amount;

•

the currency or currencies in which the debt securities will be denominated and payable and, if a composite currency, any related special provisions;

•

any circumstances under which the debt securities may be paid in a currency other than the currency in which the debt securities are denominated and any related provisions;

•

the manner in which principal, premium and interest on debt securities will be determined if they are determined with reference to an index based upon a currency or currencies other than that in which the debt securities are denominated or payable;

•

any events of default that will apply to the debt securities in addition to those contained in the applicable indenture;

•

whether the issue of debt securities may be "reopened" by offering additional securities with substantially the same terms;

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•

any additions or changes to the covenants contained in the applicable indenture and the ability, if any, of the holders to waive our compliance with those additional or changed covenants;

•

whether the provisions described below under the heading "Defeasance" apply to the debt securities;

•

the identity of the security registrar and paying agent for the debt securities if other than the applicable trustee; and

•

any other terms of the debt securities.

Covenants Contained in Indenture

    In the indenture, we promise not to create or guarantee any debt for borrowed money that is secured by a lien on the capital stock of our wholly owned subsidiary, Student Loan Marketing Association, unless we also secure the debt securities on an equal or priority basis with the other secured debt. Our promise, however, is subject to an important exception: we may secure debt for borrowed money with liens on that stock without securing the debt securities if our board of directors determines that the liens do not materially detract from or interfere with the then-present value or control of that stock.

    Except as noted above, the indenture does not restrict our ability to put liens on our interests in our subsidiaries other than Student Loan Marketing Association, and it does not restrict our ability to sell or otherwise dispose of our interests in any of our subsidiaries, including Student Loan Marketing Association.

    We are required to deliver to the trustee an annual statement as to our fulfillment of all of our obligations under the indenture.

Consolidation, Merger or Sale

    The indenture generally permits a consolidation or merger between us and another entity. It also permits the sale or transfer by us of all or substantially all of our property and assets. These transactions are permitted if:

•

the resulting or acquiring entity, if other than us, is organized and existing under the laws of a domestic jurisdiction and assumes all of our responsibilities and liabilities under the applicable indenture, including the payment of all amounts due on the debt securities and performance of the covenants in the indenture; and

•

immediately after the transaction, and giving effect to the transaction, no event of default under the indenture exists; and

•

we deliver to the trustee an officers' certificate and an opinion of counsel stating that the transactions comply with these conditions.

    If we consolidate or merge with or into any other entity or sell or lease all or substantially all of our assets according to the terms and conditions of the indenture, the resulting or acquiring entity will be substituted for us in the indenture with the same effect as if it had been an original party to the indenture. As a result, the successor entity may exercise our rights and powers under the indenture, in our name and, except in the case of a lease of all or substantially all of our properties, we will be released from all our liabilities and obligations under the indenture and under the debt securities.

Events of Default and Remedies

    An event of default with respect to any series of debt securities is defined in the indenture or applicable supplemental indenture as being:

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•

default for 30 days in payment of any installment of interest on any debt security of that series beyond any applicable grace period;

•

default in payment of the principal of or premium, if any, on any of the debt securities of that series when due;

•

default for 60 days after notice in the observance or performance of any other covenants in the indenture or applicable supplemental indenture relating to that series;

•

our bankruptcy, insolvency or reorganization; and

•

any other event of default provided with respect to debt securities of any series.

    The indenture provides that the trustee may withhold notice to the holders of any series of debt securities of any default, except a default in payment of principal, premium, if any, or interest, if any, with respect to a series of debt securities, if the trustee considers it in the interest of the holders of that series of debt securities to do so.

    The indenture provides that if any event of default (other than our bankruptcy, insolvency or reorganization) has occurred and is continuing with respect to any series of debt securities, the trustee or the holders of not less than 25% in principal amount of all series of debt securities then outstanding affected by any such event of default, acting together as a single class, may declare the principal amount of and all accrued but unpaid interest on all the debt securities of those series to be due and payable immediately. If our bankruptcy, insolvency or reorganization causes an event of default, the principal amount of and all accrued but unpaid interest on all series of debt securities that are affected by the event of default will be immediately due and payable without any declaration or action by the trustee or the holders. The holders of a majority in principal amount of the debt securities of all series then outstanding that are affected by an event of default, acting as a single class, by written notice to the trustee and to us, may waive any past default, other than any event of default in payment of principal or interest or in respect of an indenture provision that may be amended only with the consent of the holder of each affected debt security. Holders of a majority in principal amount of debt securities of any series affected by an event of default that were entitled to declare the event of default may rescind and annul the declaration and its consequences if the recission will not conflict with any judgment or decree for payment of money due that has been obtained by the trustee.

    The holders of a majority of the outstanding principal amount of the debt securities of any series will have the right to direct the time, method and place of conducting any proceedings for any remedy available to the trustee with respect to that series, subject to limitations specified in the indenture.

Defeasance

    Defeasance and Discharge.  At the time that we establish a series of debt securities under the indenture, we can provide that the debt securities of that series are subject to the defeasance and discharge provisions of that indenture. If we so provide, we will be discharged from our obligations on the debt securities of that series if:

•

we deposit with the trustee, in trust, sufficient money or, if the debt securities of that series are denominated and payable in U.S. dollars only, eligible instruments, to pay the principal, any interest, any premium and any other sums due on the debt securities of that series, such as sinking fund payments, on the dates the payments are due under the indenture and the terms of the debt securities;

•

we deliver to the trustee an opinion of counsel that states that the holders of the debt securities of that series will not recognize income, gain or loss for federal income tax purposes as a result of the deposit and will be subject to federal income tax on the same amounts and in the same manner and at the same times as would have been the case if no deposit had been made; and

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•

if the debt securities of that series are listed on any domestic or foreign securities exchange, the debt securities will not be delisted as a result of the deposit.

    When we use the term "eligible instruments" in this section, we mean monetary assets, money market instruments and securities that are payable in dollars only and are essentially risk free as to collection of principal and interest, including:

•

direct obligations of the United States backed by the full faith and credit of the United States; or

•

any obligation of a person controlled or supervised by and acting as an agency or instrumentality of the United States if the timely payment of the obligation is unconditionally guaranteed as a full faith and credit obligation by the United States.

    In the event that we deposit money and/or eligible instruments in trust and discharge our obligations under a series of debt securities as described above, then:

•

the indenture will no longer apply to the debt securities of that series; but certain obligations to compensate, reimburse and indemnify the trustee, to register the transfer and exchange of debt securities, to replace lost, stolen or mutilated debt securities, to maintain paying agencies and the trust funds and to pay additional amounts, if any, required as a result of U.S. withholding taxes imposed on payments to non-U.S. persons will continue to apply; and

•

holders of debt securities of that series can only look to the trust fund for payment of principal, any premium and any interest on the debt securities of that series.

    Defeasance of Covenants and Events of Default.  At the time that we establish a series of debt securities under the applicable indenture, we can provide that the debt securities of that series are subject to the covenant defeasance provisions of that indenture. If we so provide and we make the deposit and deliver the opinion of counsel described above in this section under the heading "Defeasance and Discharge" we will not have to comply with any covenant we designate when we establish the series of debt securities.

    In the event of a covenant defeasance, our obligations under the applicable indenture and the debt securities, other than with respect to the covenants specifically referred to above, will remain in effect.

    If we exercise our option not to comply with any covenant and the debt securities of the series become immediately due and payable because an event of default has occurred, other than as a result of an event of default related to a covenant that is subject to defeasance, the amount of money and/or eligible instruments on deposit with the applicable trustee will be sufficient to pay the principal, any interest, any premium and any other sums, due on the debt securities of that series, such as sinking fund payments, on the date the payments are due under the applicable indenture and the terms of the debt securities, but may not be sufficient to pay amounts due at the time of acceleration. We would remain liable, however, for the balance of the payments.

Registration and Transfer

    Unless we indicate otherwise in the applicable prospectus supplement, we will issue debt securities only as registered securities without coupons. Debt securities that we issue as bearer securities will have interest coupons attached, unless we indicate otherwise in the applicable prospectus supplement.

    With respect to registered securities, we will keep or cause to be kept a register in which we will provide for the registration of registered securities and the registration of transfers of registered securities. We will appoint a "security registrar," and we may appoint any "co-security registrar," to keep the security register.

    Upon surrender for registration of transfer of any registered security of any series at our office or agency maintained for that purpose in a place of payment for that series, we will execute one or more

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new registered securities of that series in any authorized denominations, with the same aggregate principal amount and terms. At the option of the holder, a holder may exchange registered securities of any series for other registered securities of that series, or bearer securities (along with all necessary related coupons) of any series for registered securities of the same series. Registered securities will not be exchangeable for bearer securities in any event.

    We will agree in the indenture that we will maintain in each place of payment for any series of debt securities an office or agency where:

•

any debt securities of each series may be presented or surrendered for payment;

•

any registered securities of that series may be surrendered for registration of transfer;

•

debt securities of that series may be surrendered for exchange or conversion; and

•

notices and demands to or upon us in respect of the debt securities of that series and the indenture may be served.

    We will not charge holders for any registration of transfer or exchange of debt securities. We may require holders to pay for any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange, other than exchanges expressly provided in the indenture to be made at our own expense or without expense or without charge to the holders.

Global Securities

    We may issue debt securities of a series, in whole or in part, in the form of one or more global securities, registered in the name of Cede & Co., the nominee of The Depository Trust Company, New York, New York, unless the prospectus supplement describes another depositary or states that no global securities will be issued. Unless and until it is exchanged in whole or in part for the individual debt securities it represents, a global security may not be transferred except as a whole by:

•

DTC to its nominee;

•

DTC's nominee to the depositary or another nominee of the depositary; or

•

DTC or any nominee to a successor depositary or any nominee of that successor.

    Upon the issuance of a global security, DTC will credit, on its book-entry registration and transfer system, the principal amount of the securities represented by the global security to accounts of institutions that have accounts with DTC. Institutions that have accounts with DTC are referred to as "participants." The accounts to be credited will be designated by the agents, or by us if we sell the securities directly. Owners of beneficial interests in a global security that are not participants or persons that may hold through participants but desire to purchase, sell or otherwise transfer ownership of the securities by book-entry on the records of DTC may do so only through participants and persons that may hold through participants. Because DTC can only act on behalf of participants and persons that may hold through participants, the ability of an owner of a beneficial interest in a global security to pledge securities to persons or entities that do not participate in the book-entry and transfer system of DTC, or otherwise take actions in respect of the securities, may be limited. In addition, the laws of some states require that some purchasers of securities take physical delivery of such securities in definitive form. These limits and laws may impair a purchaser's ability to transfer beneficial interests in a global security.

    So long as DTC, or its nominee, is the registered owner of a global security, DTC or its nominee will be considered the sole owner or holder of the securities represented by the global security for all purposes under the indenture. Generally, owners of beneficial interest in a global security will not be entitled to have securities represented by the global security registered in their names, will not receive or be entitled to receive physical delivery of securities in definitive form and will not be considered the owners or holders of the securities under the indenture.

10

    Principal and interest payments on securities registered in the name of DTC or its nominee will be made to DTC or its nominee as the registered owner of a global security. Neither we, the trustee, any paying agent nor the security registrar will have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in a global security or for maintaining, supervising or reviewing any records relating to the beneficial ownership interests.

    We expect that DTC, upon receipt of any payment of principal or interest, will credit immediately participants' accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of a global security as shown on the records of DTC. We also expect that payments by participants to owners of beneficial interests in a global security held through the participants will be governed by standing instructions and customary practices, as is now the case with securities held for the accounts of customers and registered in "street name," and will be the responsibility of such participants. Owners of beneficial interests in a global security that hold through DTC under a book-entry format (as opposed to holding certificates directly) may experience some delay in the receipt of interest payments since DTC will forward payments to its participants, which in turn will forward them to persons that hold through participants.

    If DTC is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by us or DTC within ninety days, we will issue securities in definitive registered form in exchange for a global security. In addition, either we or DTC may at any time, in our sole discretion, determine not to have the securities represented by a global security and, in that event, we will issue securities in definitive registered form in exchange for the global security. In either instance, an owner of a beneficial interest in a global security will be entitled to have securities equal in principal amount to the beneficial interest registered in its name and will be entitled to physical delivery of the securities in definitive form.

    DTC has advised us as follows: DTC is a limited-purpose trust company organized under the laws of the State of New York, 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 Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions among its participants in those securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations, some of whom own DTC. Access to DTC's book-entry system is also available to others, including banks, brokers, dealers and trust companies, that clear through or maintain a custodian relationship with a participant, whether directly or indirectly.

Payment and Paying Agents

    Unless we indicate otherwise in a prospectus supplement:

•

we will maintain an office or agency in each place of payment for any series of debt securities where debt securities of that series may be presented or surrendered for payment; we may also from time to time designate one or more other offices or agencies where debt securities of one or more series may be presented or surrendered for payment and may appoint one or more paying agents for the payment of debt securities, in one or more other cities, and may from time to time rescind these designations and appointments;

•

at our option, we may pay any interest by check mailed to the address of the person entitled to payment as that address appears in the applicable security register kept by us or by wire transfer; and

11

•

we will pay any installment of interest on registered securities to the person in whose name the debt security is registered at the close of business on the regular record date for that payment.

    The holder of any coupon relating to a bearer security will be entitled to receive the interest payable on that coupon upon presentation and surrender of the coupon on or after the interest payment date of the coupon. We will not make payment with respect to any bearer security at any of our offices or agencies in the United States, by check mailed to any address in the United States or by transfer to an account maintained with a bank located in the United States.

Modification and Amendment

    Some of our rights and obligations and some of the rights of holders of the debt securities may be modified or amended with the consent of the holders of at least a majority of the aggregate principal amount of the outstanding debt securities of all series of debt securities affected by the modification or amendment, acting as one class. The following modifications and amendments, however, will not be effective against any holder without its consent:

•

a change in the stated maturity date of any payment of principal or interest;



•

a reduction in payments due on the debt securities;



•

a change in the place of payment or currency in which any payment on the debt securities is payable;



•

a limitation of a holder's right to sue us for the enforcement of payments due on the debt securities;



•

a change in the ranking or priority of any debt securities;



•

a reduction in the percentage of outstanding debt securities required to consent to a modification or amendment of the applicable indenture or required to consent to a waiver of compliance with certain provisions of the applicable indenture or past defaults under the applicable indenture;



•

a reduction in the requirements contained in the applicable indenture for quorum or voting;



•

a limitation of a holder's right, if any, to repayment of debt securities at the holder's option; and



•

a modification of any of the foregoing requirements contained in the applicable indenture supplement.

Concerning the Trustee

    The Chase Manhattan Bank, the trustee, provides and may continue to provide various services to us in the ordinary course of its business. The indenture contains limitations on the rights of the trustee, should it become our creditor, to obtain payment of claims in specified cases or to realize on property received in respect of any claim as security or otherwise. The indenture will permit the trustee to engage in other transactions; but if it acquires any conflicting interest, it must eliminate the conflict or resign.

    The indenture provides that in case an event of default occurs and is not cured, the trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in similar circumstances in the conduct of its own affairs. The trustee may refuse to perform any duty or exercise any right or power under the indenture, unless it receives indemnity satisfactory to it against any loss, liability or expense.

Governing Law

    The laws of the State of New York will govern the indenture and the debt securities.

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DESCRIPTION OF CAPITAL STOCK

    Our authorized capital stock is 375,000,000 shares of common stock, $.20 par value, and 20,000,000 shares of preferred stock, $.20 par value. (As of May 10, 2001, our shareholders voted to increase our authorized shares of common stock from 250,000,000 shares to 375,000,000 shares.) As of September 30, 2001, 156,770,155 shares of our common stock and 3,300,000 shares of our preferred stock were outstanding.

Common Stock

    We are registering shares of our common stock primarily to preserve our flexibility to deliver or sell shares of our common stock in connection with the settlement of privately negotiated equity forward purchase contracts. We may also issue common stock upon conversion, exercise or exchange of any debt securities, preferred stock or warrants or in connection with acquisitions.

    Our common stock is described in our registration statement on Form 8-A, which we filed with the SEC on August 7, 1997, as amended by our Form 8-A/A, which we filed with the SEC on July 27, 1999. These documents are incorporated by reference into this prospectus.

    We will distribute a prospectus supplement with regard to each issue of common stock. Each prospectus supplement will describe the specific terms of the common stock offered through that prospectus supplement and any general terms outlined in our Form 8-A, as amended, that will not apply to that common stock.

Preferred Stock

    We may issue preferred stock in one or more series with any rights and preferences that may be authorized by our board of directors. Our currently outstanding preferred stock is described in our registration statement on Form 8-A, which we filed with the SEC on November 10, 1999 and which is incorporated by reference into this prospectus.

    We will distribute a prospectus supplement with regard to each particular series of preferred stock. Each prospectus supplement will describe, as to the series of preferred stock to which it relates:

•

the title of the series of preferred stock;



•

any limit upon the number of shares of the series of preferred stock that may be issued;



•

the preference, if any, to which holders of the series of preferred stock will be entitled upon our liquidation;



•

the date or dates, if any, on which we will be required or permitted to redeem the preferred stock;



•

the terms, if any, on which we or holders of the preferred stock will have the option to cause the preferred stock to be redeemed or purchased;



•

the voting rights, if any, of the holders of the preferred stock;



•

the dividends, if any, that will be payable with regard to the series of preferred stock, which may be fixed dividends or participating dividends, and may be cumulative or non-cumulative;



•

the right, if any, of holders of the preferred stock to convert it into another class of our stock or securities, including provisions intended to prevent dilution of those conversion rights;



•

any provisions by which we will be required or permitted to make payments to a sinking fund to be used to redeem preferred stock, or a purchase fund to be used to purchase preferred stock; and



•

any other material terms of the preferred stock.

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    Any or all of these rights may be greater than the rights of the holders of common stock.

    Our board of directors, without shareholder approval, may issue preferred stock with voting, conversion or other rights that could adversely affect the voting power and other rights of the holders of our common stock. The terms of the preferred stock that might be issued could conceivably prohibit us from:

•

consummating a merger;



•

reorganizing;



•

selling substantially all of our assets;



•

liquidating; or



•

engaging in other extraordinary corporate transactions without shareholder approval.

    Preferred stock could therefore be issued with terms calculated to delay, defer or prevent a change in our control or to make it more difficult to remove our management. Our issuance of preferred stock may have the effect of decreasing the market price of the common stock.

DESCRIPTION OF WARRANTS

    We may issue:

•

warrants for the purchase of debt securities, preferred stock, common stock or units of two or more of these types of securities;



•

currency warrants, which are warrants or other rights relating to foreign currency exchange rates; or



•

index warrants, which are warrants for the purchase or sale of debt securities of, or guaranteed by, the United States government or its agencies, units of a stock index or a stock basket or a commodity or a unit of a commodity index.

    Warrants may be issued independently or together with debt securities, preferred stock or common stock, and may be attached to or separate from any offered securities. Each series of warrants will be issued under a separate warrant agreement to be entered into between us and a bank or trust company, as warrant agent. The warrant agent will act solely as our agent in connection with the warrants and will not assume any obligation or relationship of agency or trust for or with any registered holders of warrants or beneficial owners of warrants.

    We will distribute a prospectus supplement with regard to each issue of warrants. Each prospectus supplement will describe:

•

in the case of warrants to purchase debt securities, the designation, aggregate principal amount, currencies, denominations and terms of the series of debt securities purchasable upon exercise of the warrants, and the price at which you may purchase the debt securities upon exercise;



•

in the case of warrants to purchase preferred stock, the designation, number of shares, stated value and terms, such as liquidation, dividend, conversion and voting rights, of the series of preferred stock purchasable upon exercise of the warrants, and the price at which you may purchase shares of preferred stock of that series upon exercise;



•

in the case of warrants to purchase common stock, the number of shares of common stock purchasable upon the exercise of the warrants and the price at which you may purchase shares of common stock upon exercise;

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•

in the case of currency warrants, the designation, aggregate principal amount, whether the currency warrants are put or call currency warrants or both, the formula for determining any cash settlement value, exercise procedures and conditions, the date on which your right to exercise the currency warrants commences and the date on which your right expires, and any other terms of the currency warrants;



•

in the case of index warrants, the designation, aggregate principal amount, the procedures and conditions relating to the exercise of the index warrants, the date on which your right to exercise the index warrants commences and the date on which your right expires, the national securities exchange on which the index warrants will be listed, if any, and any other material terms of the index warrants;



•

in the case of warrants to purchase units of two or more securities, the type, number and terms of the units purchasable upon exercise of the warrants and the price at which you may purchase units upon exercise;



•

the period during which you may exercise the warrants;



•

any provision adjusting the securities that may be purchased on exercise of the warrants, and the exercise price of the warrants, to prevent dilution or otherwise;



•

the place or places where warrants can be presented for exercise or for registration of transfer or exchange; and



•

any other material terms of the warrants.

    Unless we provide otherwise in a prospectus supplement, warrants for the purchase of preferred stock and common stock will be offered and exercisable for U.S. dollars only, and will be issued in registered form only. The exercise price for warrants will be subject to adjustment as described in the prospectus supplement for those warrants.

    Prior to the exercise of any warrants to purchase debt securities, preferred stock or common stock, holders of the warrants will not have any of the rights of holders of the securities purchasable upon exercise, including:

•

in the case of warrants for the purchase of debt securities, the right to receive payments of principal of or any premium or interest on the debt securities purchasable upon exercise, or to enforce covenants in the applicable indenture; or



•

in the case of warrants for the purchase of preferred stock or common stock, the right to vote or to receive any payments of dividends on the preferred stock or common stock purchasable upon exercise.

PLAN OF DISTRIBUTION

    We may sell any of the securities being offered by this prospectus separately or together:

•

through agents;



•

to or through underwriters who may act directly or through a syndicate represented by one or more managing underwriters;



•

through dealers;



•

through a block trade in which the broker or dealer engaged to handle the block trade will attempt to sell the securities as agent, but may position and resell a portion of the block as principal to facilitate the transaction;



•

in exchange for our outstanding indebtedness;

15

•

directly to purchasers, through a specific bidding, auction or other process; or



•

through a combination of any of these methods of sale.

    If the securities offered under this prospectus are issued in exchange for our outstanding securities, the applicable prospectus supplement will describe the terms of the exchange, and the identity and the terms of sale of the securities offered under this prospectus by the selling security holders.

    The distribution of securities may be effected from time to time in one or more transactions at a fixed price or prices that may be changed, at market prices prevailing at the time of sale or prices related to prevailing market prices or at negotiated prices.

    Agents designated by us from time to time may solicit offers to purchase the securities. We will name any agent involved in the offer or sale of the securities and set forth any commissions payable by us to an agent in the prospectus supplement. Unless otherwise indicated in the prospectus supplement, any agent will be acting on a best efforts basis for the period of its appointment. Any agent may be deemed to be an "underwriter" of the securities as that term is defined in the Securities Act.

    If we utilize an underwriter or underwriters in the sale of securities, we will execute an underwriting agreement with the underwriter or underwriters at the time we reach an agreement for sale. We will set forth in the prospectus supplement the names of the specific managing underwriter or underwriters, as well as any other underwriters, and the terms of the transactions, including compensation of the underwriters and dealers. This compensation may be in the form of discounts, concessions or commissions. Underwriters and others participating in any offering of securities may engage in transactions that stabilize, maintain or otherwise affect the price of securities. We will describe any of these activities in the prospectus supplement.

    If a dealer is utilized in the sale of the securities, we or an underwriter will sell securities to the dealer, as principal. The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale. The prospectus supplement will set forth the name of the dealer and the terms of the transactions.

    We may directly solicit offers to purchase the securities, and we may sell directly to institutional investors or others. These persons may be deemed to be underwriters within the meaning of the Securities Act with respect to any resale of the securities. The prospectus supplement will describe the terms of any direct sales, including the terms of any bidding or auction process, if utilized.

    Agreements we enter into with agents, underwriters and dealers may entitle them to indemnification by us against specified liabilities, including liabilities under the Securities Act, or to contribution by us to payments they may be required to make in respect of these liabilities. The prospectus supplement will describe the terms and conditions of indemnification or contribution. Some of the agents, underwriters or dealers, or their affiliates, may be our customers, or engage in transactions with or perform services for us and our subsidiaries in the ordinary course of business.

    No securities may be sold under this prospectus without delivery (in paper format, in electronic format, in electronic format on the Internet, or by other means) of the applicable prospectus supplement describing the method and terms of the offering.

LEGAL MATTERS

    Marianne M. Keler, Esq., who is our Executive Vice President and General Counsel, or another of our lawyers, will issue an opinion about the legality of the securities offered by this prospectus. Ms. Keler owns shares of our common stock and holds stock options and stock-based awards under our compensation and management incentive plans. She may receive additional awards under these plans in the future. Certain legal matters will be passed upon for any underwriters or agents by Cadwalader,

16

Wickersham & Taft, Washington, DC. Cadwalader, Wickersham & Taft represents us in other legal matters.

EXPERTS

    The financial statements (other than the interim financial information contained in any Form 10-Q Report Incorporated by reference in this prospectus) and schedules included in this prospectus and registration statement (incorporated by reference) have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their reports with respect thereto, and are included herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said reports.

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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

    The following table sets forth all expenses payable by us in connection with the offering of the securities being registered, other than discounts and commissions.

Registration Fee	$	750,000
Printing Expenses	$	75,000	*
Legal Fees and Expenses	$	150,000	*
Accounting Fees and Expenses	$	175,200	*
Blue Sky Fees and Expenses	$	10,000	*
Trustee, Transfer Agent and Registrar Fees and Expenses	$	75,000	*
Rating Agency Fees and Expenses	$	600,000	*
Miscellaneous	$	5,000
Total	$	1,840,200

*

estimated

Item 15. Indemnification of Officers and Directors

    Article VIII of USA Education, Inc.'s By-Laws provides for indemnification of the officers and directors of USA Education, Inc. to the fullest extent permitted by applicable law. Section 145 of the Delaware General Corporation Law provides, in relevant part, that a corporation organized under the laws of Delaware shall have the power, and in certain cases the obligation, to indemnify any person who was or is a party or is threatened to be made a party to any suit or proceeding because such person is or was a director, officer, employee or agent of the corporation or is or was serving, at the request of the corporation, as a director, officer, employee or agent of another corporation, against all costs actually and reasonably incurred by him in connection with such suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal proceeding, he had no reason to believe his conduct was unlawful. Similar indemnity is permitted to be provided to such persons in connection with an action or suit by or in right of the corporation, provided such person acted in good faith and in a manner he believed to be in or not opposed to the best interests of the corporation, and provided further (unless a court of competent jurisdiction otherwise determines) that such person shall not have been adjudged liable to the corporation.

    The directors and officers of USA Education, Inc. and its subsidiaries are covered by a policy of insurance under which they are insured, within limits and subject to certain limitations, against certain expenses in connection with the defense of actions, suits or proceedings, and certain liabilities that might be imposed as a result of such actions, suits or proceedings in which they are parties by reason of being or having been directors or officers.

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Item 16. Exhibits

    The following exhibits are filed herewith or incorporated by reference:

Exhibit No.	Description of Document
**1.1	Form of Underwriting Agreement (Debt Securities) (incorporated by reference to the similarly numbered exhibit to the registrant's registration statement on Form S-3 (File No. 333-46056))
*1.2	Form of Distribution Agreement for Medium Term Notes
**1.3	Standard Underwriting Provisions (Preferred Stock) (incorporated by reference to the registrant's current report on Form 8-K filed November 12, 1999 (File No. 1-13251))
***1.4	Standard Underwriting Provisions (Warrants)
**4.1	Indenture, dated as of October 1, 2000, between the registrant and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K, dated October 5, 2000)
***4.2	Form of Warrant Agreement
**4.3	Amended and Restated Certificate of Incorporation of USA Education, Inc. (incorporated by reference to the registrant's registration statement on Form S-1 (File No. 333-21217))
**4.4	Bylaws of USA Education, Inc. (incorporated by reference to the registrant's annual report on Form 10-K for the period ended December 31, 2000) (File No. 1-13251))
*5.1	Opinion of Marianne M. Keler, Esq.
*12.1	Statement of Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
*23.1	Consent of Marianne M. Keler, Esq. (included in Exhibit 5.1 to this registration statement)
**23.2	Consent of Arthur Andersen LLP (incorporated by reference to the registrant's registration statement on Form S-3 (File No. 333-63164))
**24.1	Power of Attorney (incorporated by reference to the registrant's registration statement on Form S-3 (File No. 333-63164))
**25.1	Statement of Eligibility of Trustee on Form T-1 (incorporated by reference to the registrant's registration statement on Form S-3 (File No. 333-63164))

*

Filed herewith.

**

Previously filed.

***

To be filed pursuant to an amendment or incorporated by reference.

Item 17. Undertakings

    The undersigned registrant hereby undertakes:

    (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

    (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

    (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in

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the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement;

    (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in the post-effective amendment by those paragraphs is contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

    (2) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

    (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

    (4) For purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

    (5) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act of 1933 and will be governed by the final adjudication of such issue.

    (6) That, for purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act of 1933 shall be deemed to be part of this Registration Statement as of the time it was declared effective.

    (7) That, for the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

    (8) The undersigned registrant hereby undertakes to file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.

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SIGNATURES

    Pursuant to the requirements of the Securities Act of 1933, USA Education, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Reston, Virginia on October 29, 2001.

USA EDUCATION, INC.
	/S/ ALBERT L. LORD* By: Albert L. Lord Its: Chief Executive Officer

    Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.

Signature	Title	Date
/s/ EDWARD A. FOX* Edward A. Fox	Chairman of the Board of Directors	October 29, 2001
/s/ ALBERT L. LORD* Albert L. Lord	Chief Executive Officer (principal executive officer and director)	October 29, 2001
/s/ JOHN F. REMONDI* John F. Remondi	Executive Vice President and Chief Financial Officer (principal financial and accounting officer)	October 29, 2001
/s/ CHARLES L. DALEY* Charles L. Daley	Director	October 29, 2001
/s/ WILLIAM M. DIEFENDERFER III* William M. Diefenderfer III	Director	October 29, 2001
/s/ THOMAS J. FITZPATRICK* Thomas J. Fitzpatrick	Director	October 29, 2001
/s/ DIANE S. GILLELAND* Diane S. Gilleland	Director	October 29, 2001
/s/ EARL A. GOODE* Earl A. Goode	Director	October 29, 2001
/s/ ANN TORRE GRANT* Ann Torre Grant	Director	October 29, 2001
/s/ RONALD F. HUNT* Ronald F. Hunt	Director	October 29, 2001
/s/ BENJAMIN J. LAMBERT, III* Benjamin J. Lambert, III	Director	October 29, 2001

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/s/ JAMES C. LINTZENICH* James C. Lintzenich	Director	October 29, 2001
/s/ BARRY A. MUNITZ* Barry A. Munitz	Director	October 29, 2001
/s/ A. ALEXANDER PORTER* A. Alexander Porter	Director	October 29, 2001
/s/ WOLFGANG SCHOELLKOPF* Wolfgang Schoellkopf	Director	October 29, 2001
/s/ STEVEN L. SHAPIRO* Steven L. Shapiro	Director	October 29, 2001
Barry L. Williams	Director

*By:	/s/ MARY F. EURE
	Mary F. Eure Attorney-in-fact

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EXHIBIT INDEX

Exhibit No.	Description of Document
**1.1	Form of Underwriting Agreement (Debt Securities) (incorporated by reference to the similarly numbered exhibit to the registrant's registration statement on Form S-3 (File No. 333-46056))
*1.2	Form of Distribution Agreement for Medium Term Notes
**1.3	Standard Underwriting Provisions (Preferred Stock) (incorporated by reference to the registrant's current report on Form 8-K filed November 12, 1999 (File No. 1-13251))
***1.4	Standard Underwriting Provisions (Warrants)
**4.1	Indenture, dated as of October 1, 2000, between the registrant and The Chase Manhattan Bank (incorporated by reference to Exhibit 4.1 to the registrant's Current Report on Form 8-K, dated October 5, 2000)
***4.2	Form of Warrant Agreement
**4.3	Amended and Restated Certificate of Incorporation of USA Education, Inc. (incorporated by reference to the registrant's registration statement on Form S-1 (File No. 333-21217))
**4.4	Bylaws of USA Education, Inc. (incorporated by reference to the registrant's annual report on Form 10-K for the period ended December 31, 2000 (File No. 1-13251))
*5.1	Opinion of Marianne M. Keler, Esq.
*12.1	Statement of Computation of Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
*23.1	Consent of Marianne M. Keler, Esq. (included in Exhibit 5.1 to this registration statement)
**23.2	Consent of Arthur Andersen LLP (incorporated by reference to the registrant's registration statement on Form S-3 (File No. 333-63164))
**24.1	Power of Attorney (incorporated by reference to the registrant's registration statement on Form S-3 (File No. 333-63164))
**25.1	Statement of Eligibility of Trustee on Form T-1 (incorporated by reference to the registrant's registration statement on Form S-3 (File No. 333-63164))

*

Filed herewith.

**

Previously filed.

***

To be filed pursuant to an amendment or incorporated by reference.

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TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
WHERE YOU CAN FIND MORE INFORMATION
FORWARD-LOOKING STATEMENTS
USA EDUCATION, INC.
USE OF PROCEEDS
RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
SECURITIES WE MAY OFFER
ADDITIONAL INFORMATION
DESCRIPTION OF DEBT SECURITIES
DESCRIPTION OF CAPITAL STOCK
DESCRIPTION OF WARRANTS
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
SIGNATURES
EXHIBIT INDEX

EX-1.2

                               USA EDUCATION, INC.

                   $3,000,000,000 MEDIUM-TERM NOTES, SERIES A

                             DISTRIBUTION AGREEMENT

                                OCTOBER   , 2001

      USA Education, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell, from time to time, its medium-term debt securities (the
"Notes") in an aggregate amount up to U.S. $3,000,000,000, and agrees with each
person serving as an agent under this Agreement (individually, an "Agent",
and collectively, the "Agents") all as set forth herein. Subject to the terms
and conditions stated herein and the reservation by the Company of the right
to sell the Notes directly on its own behalf, the Company hereby (i) appoints
each Agent as an agent of the Company for the purpose of soliciting and
receiving offers to purchase Notes from the Company pursuant to Section 2(a)
hereof and (ii) agrees that whenever it determines to sell Notes directly to
any Agent as principal, it will enter into a separate agreement (each a
"Terms Agreement"), substantially in the form of Annex I hereto, relating to
such sale in accordance with Section 2(b) hereof (unless the Company and such
Agent shall otherwise agree). This Distribution Agreement shall not be
construed to create either an obligation on the part of the Company to sell
any Notes or an obligation of any of the Agents to purchase Notes as
principal.

      The Notes will be issued under an indenture, dated as of October 1,
2000, as amended or supplemented from time to time (the "Indenture"), between
the Company and The Chase Manhattan Bank, as Trustee (the "Trustee"). The
Notes shall have the currency, denomination, maturities, interest rates, if
any, redemption provisions and other terms set forth in the Prospectus
referred to below, as it may be amended or supplemented from time to time.
The Notes will be issued, and the terms and rights thereof established, from
time to time, by the Company in accordance with the Indenture and the
Administrative Procedures attached hereto as Annex II, as the procedures may
be amended from time to time by written agreement between the Agents and the
Company (the "Procedures") and, if applicable, will be specified in a Terms
Agreement.

      1.   The Company hereby represents and warrants to, and agrees with,
each Agent that:

                (a) A registration statement on Form S-3 (Registration No.
      333-63164) in respect of U.S. $3,000,000,000 aggregate principal
      amount (or the equivalent in foreign currency or currency units) of
      debt securities, common stock, preferred stock and warrants of the
      Company, including the Notes, has been filed with the Securities and
      Exchange Commission (the "Commission"). Such registration statement and
      any post-effective amendment relating to the Notes, each in the form
      heretofore delivered or to be delivered to the Agents, have been
      declared effective by the Commission. No other document with respect to
      such registration statement has heretofore been filed or transmitted
      for filing with the Commission (other than the prospectuses filed
      pursuant to Rule 424(b) of the rules and regulations of the Commission,
      each in the form heretofore delivered to the Agents and such other
      documents as may be related to securities other than the Notes). No
      stop order suspending the effectiveness of such registration statement
      has been issued and no proceeding for that purpose has been initiated
      or threatened by the Commission. For purposes hereof, any preliminary
      prospectus included in such registration statement or filed with the
      Commission pursuant to Rule 424(a) of the rules and regulations of the
      Commission, is hereinafter called a "Preliminary Prospectus", the
      various parts of such registration statement, including all exhibits
      thereto and all documents incorporated by reference at the time such
      part of the registration statement became effective but excluding Form
      T-1, each as amended at the time such part became effective, is
      hereinafter collectively called the "Registration Statement;" the
      prospectus (including, if applicable, any prospectus supplement)
      relating to the Notes, in the form

                                       1



      in which it has most recently been filed with the Commission on or
      prior to the date of this Agreement, is hereinafter called the
      "Prospectus;" any reference to any amendment or supplement to any
      Preliminary Prospectus or the Prospectus, including any supplement to
      the Prospectus that sets forth only the terms of a particular issue of
      Notes hereinafter called a "Pricing Supplement", shall be deemed to
      refer to and include any documents filed after the date of such
      Preliminary Prospectus or Prospectus, as the case may be, under the
      Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
      incorporated therein by reference; any reference to any amendment to
      the Registration Statement shall be deemed to refer to and include any
      annual report of the Company filed pursuant to Section 13(a) or 15(d)
      of the Exchange Act after the effective date of the Registration
      Statement that is incorporated by reference in the Registration
      Statement and any reference to the Prospectus, as amended or
      supplemented, shall be deemed to refer to the Prospectus as amended or
      supplemented (including by the applicable Pricing Supplement filed in
      accordance with Section 4(a) hereof), in relation to the Notes sold
      pursuant to this Agreement, in the form in which it is filed or
      transmitted for filing with the Commission pursuant to Rule 424(b) of
      Regulation C under the Securities Act, including any documents
      incorporated by reference therein as of the date of such filing);

                (b) (i) The documents incorporated by reference in the
      Prospectus, as amended or supplemented, when they became effective or
      were filed with the Commission, as the case may be, complied as to form
      in all material respects with the requirements of the Securities Act of
      1933, as amended (the "Securities Act") or the Exchange Act, as
      applicable, and the rules and regulations of the Commission thereunder,
      and none of such documents, when they became effective or were so
      filed, as the case may be, contained, in the case of documents which
      became effective under the Securities Act, an untrue statement of a
      material fact or omitted to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading,
      and, in the case of documents which were filed under the Exchange Act
      with the Commission, an untrue statement of a material fact or omitted
      to state a material fact necessary in order to make the statements
      therein, in the light of the circumstances under which they were made,
      not misleading, and (ii) any further documents so filed and
      incorporated by reference in the Prospectus, when such documents become
      effective or are filed with the Commission, as the case may be, will
      comply as to form in all material respects with the requirements of the
      Securities Act or the Exchange Act, as applicable, and the rules and
      regulations of the Commission thereunder and will not contain, in the
      case of documents which become effective under the Securities Act, an
      untrue statement of a material fact or omit to state a material fact
      required to be stated therein or necessary to make the statements
      therein not misleading, and in the case of documents which are filed
      under the Exchange Act with the Commission, an untrue statement of
      material fact or omit to state a material fact necessary in order to
      make the statements therein, in the light of the circumstances under
      which they were made, not misleading; provided, however, that this
      representation and warranty shall not apply to any statements or
      omissions made in reliance upon and in conformity with information
      furnished in writing to the Company by any Agent expressly for use in
      the Prospectus, as amended or supplemented, to relate to a particular
      issuance of Notes or other securities registered under the Registration
      Statement;

            (c) The Registration Statement and the Prospectus conformed, and
      any further amendments or supplements thereto will, when they become
      effective or are filed with the Commission, as the case may be,
      conform, in all material respects to the requirements of the Securities
      Act and the Trust Indenture Act of 1939, as amended (the "Trust
      Indenture Act"), and the rules and regulations of the Commission
      thereunder and do not and will not, as of the applicable effective date
      in the case of the Registration Statement and any amendment thereto and
      as of the applicable filing date in the case of the Prospectus and any
      amendment or supplement thereto, contain an untrue statement of a
      material fact or omit to state a material fact required to be stated
      therein or necessary to make the statements therein not misleading;
      provided, however, that this representation and warranty shall not
      apply to any statements or omissions made in

                                       2



      reliance upon and in conformity with information furnished in writing to
      the Company by any Agent expressly for use in the Prospectus, as amended
      or supplemented, to relate to a particular issuance of Notes or other
      securities registered under the Registration Statement;

           (d) (i) The Company has not sustained, since the date of the
      latest audited financial statements included or incorporated by
      reference in the Prospectus, any material loss or interference with its
      business from fire, explosion, flood or other calamity, whether or not
      covered by insurance, or from any labor dispute or court or
      governmental action, order or decree, otherwise than as set forth or
      contemplated in the Prospectus and (ii) since the respective dates as
      of which information is given in the Registration Statement and the
      Prospectus, there has not been any change in the capital stock or
      long-term debt of the Company or any material adverse change in or
      affecting the general affairs, financial position or results of
      operations of the Company and its subsidiaries, taken as a whole,
      otherwise than as set forth or contemplated in the Prospectus.

           (e) The Company has been duly incorporated and is validly existing
      as a corporation in good standing under the laws of the State of
      Delaware, with power and authority (corporate and other) to own its
      properties and conduct its business as described in the Prospectus.

            (f) The Company has an authorized capitalization as set forth in
      the Prospectus, and all of the issued shares or capital stock of the
      Company have been duly and validly authorized and issued and are fully
      paid and non-assessable.

            (g) The Notes have been duly authorized, and, when issued and
      delivered pursuant to this Agreement and any Terms Agreement or other
      agreement by an Agent to purchase Notes as principal, will have been
      duly executed, authenticated, issued and delivered and will constitute
      valid and legally binding obligations of the Company entitled to the
      benefits provided by the Indenture, which will be substantially in the
      form filed as an exhibit to the Registration Statement; the Indenture
      has been duly authorized and duly qualified under the Trust Indenture
      Act and constitutes a valid and legally binding instrument, enforceable
      in accordance with its terms, subject, as to enforcement, to
      bankruptcy, insolvency, reorganization and other laws of general
      applicability relating to or affecting creditors' rights and to general
      equity principles; and the Indenture conforms and the Notes will
      conform to the descriptions thereof contained in the Prospectus as
      amended or supplemented to relate to such issuance of Notes.

           (h) The issue and sale of the Notes and the compliance by the
      Company with all of the provisions of the Notes, the Indenture, this
      Agreement and any Terms Agreement or other agreement by an Agent to
      purchase Notes as principal, and the consummation of the transactions
      herein and therein contemplated, will not conflict with or result in a
      breach which would constitute a default under, or result in the
      creation or imposition of any lien, charge or encumbrance upon any
      property or assets of the Company, under the terms of any indenture,
      mortgage, deed of trust, loan agreement or other material agreement or
      instrument to which the Company is a party or by which the Company may
      be bound or to which any property or assets of the Company, is subject,
      nor will such action result in any violation of the provisions of the
      Certificate of Incorporation, as amended, or the By-Laws of the Company
      or, to the best of its knowledge, any statute or any order, rule or
      regulation applicable to the Company or any court or any Federal, State
      or other regulatory authority or governmental agency or body having
      jurisdiction over the Company or any of its properties, and no consent,
      approval, authorization, order, registration or qualification of, or
      filing with, any such court or regulatory agency or body is required
      for the issuance and sale of the Notes or the consummation by the
      Company of the transactions contemplated by this Agreement, any Terms
      Agreement or other agreement by an Agent to purchase Notes as principal
      or the Indenture, except such as have been obtained, or will have been
      obtained prior to the Commencement Date, under the Securities Act and
      the Trust Indenture Act and such other consents, approvals,
      authorizations, registrations or qualifications as may be required
      under state securities or Blue Sky laws in connection with the
      solicitation by the Agents of offers to purchase Notes from the Company
      and

                                       3



      with purchases of Notes by the Agents as principal, as the case may be,
      in each case in the manner contemplated hereby.

            (i) The Company is not (i) in violation of its Certificate of
      Incorporation or By-laws or (ii) in default in, and no condition exists
      which with the giving of notice, the lapse of time or both would a
      constitute a default in, the performance or observance of any
      obligation, agreement, covenant or condition contained in any
      indenture, mortgage, deed of trust, loan agreement, or other agreement
      or instrument to which it is a party or by which it or any of its
      properties may be bound, except for violations or defaults which
      individually and in the aggregate are not material to the Company and
      its subsidiaries taken as a whole.

            (j) The statements set forth in the Prospectus under the caption
      "Description of Debt Securities" and "Description of Notes", insofar as
      they purport to constitute a summary of the terms of the Notes, under
      the caption "Taxation", and under the caption "Plan of Distribution",
      insofar as they purport to describe the provisions of the laws and
      documents referred to therein, are accurate and complete.

            (k) Immediately after the settlement of any sale of Notes by the
      Company resulting from solicitation by such Agent hereunder and
      immediately after any Time of Delivery (as defined below) relating to a
      sale to an Agent as principal, the aggregate principal amount of Notes
      issued and sold by the Company hereunder or under any Terms Agreement
      or other agreement by an Agent to purchase Notes as principal and of
      any securities of the Company (other than such Notes) issued and sold
      pursuant to the Registration Statement will not exceed the amount of
      securities registered under the Registration Statement.

            (l) Other than as set forth in or incorporated by reference into
      the Prospectus, there are no legal or governmental proceedings pending
      to which the Company or any of its subsidiaries is a party or to which
      any property of the Company or any of its subsidiaries is the subject
      which, if determined adversely to the Company or any of its
      subsidiaries, would individually or in the aggregate have a material
      adverse effect on the current or future consolidated financial
      position, stockholders' equity or results of operations of the Company
      and its subsidiaries; and, to the best of the Company's knowledge, no
      such proceedings are threatened or contemplated by governmental
      authorities or threatened by others.

            (m) Arthur Andersen LLP, who have certified certain financial
      statements of the Company and its subsidiaries, are independent public
      accountants as required by the Securities Act and the rules and
      regulations of the Commission thereunder.

            (n) The Company is not and, after giving effect to the offering
      and sale of the Notes, will not be an "investment company", as such
      term is defined in the Investment Company Act of 1940, as amended (the
      "Investment Company Act").

            (o) Neither the Company nor any of its affiliates does business
      with the government of Cuba or with any person or affiliate located in
      Cuba within the meaning of Section 517.075, Florida Statutes.

      2. (a) On the basis of the representations and warranties herein
contained, and subject to the terms and conditions herein set forth, each
Agent hereby, severally and not jointly, agrees to act as an agent of the
Company, to use its reasonable efforts to solicit offers to purchase the
Notes from the Company upon the terms and conditions set forth in the
Prospectus relating to the Notes, as amended or supplemented from time to
time, and in the Procedures. So long as this Agreement shall remain in effect
with respect to any Agent, the Company shall not, without the consent of such
Agent, solicit or accept offers to purchase, or sell, any debt securities
with a maturity at the time of original issuance of 9 months to 30 years
except pursuant to this Agreement, pursuant to any Terms Agreement or other
agreement by an Agent to purchase Notes as principal, pursuant to a private

                                       4



placement not constituting a public offering under the Act or in connection
with a firm commitment underwriting pursuant to an underwriting agreement
that does not provide for a continuous offering of medium-term debt
securities.

      Subject to the provisions of this Section 2 and to the Procedures,
offers for the purchase of Notes may be solicited by each Agent, as agent for
the Company, at such time and in such amounts as such Agent deems advisable;
provided, however, that the Company reserves the right to sell, and may
solicit and accept offers to purchase, Notes directly on its own behalf or
through other agents, dealers or underwriters, and to appoint additional
persons from time to time to serve as Agents under this Agreement.

      Each Agent agrees that it will not solicit an offer to purchase Notes
or deliver any of the Notes in any jurisdiction outside the United States of
America except under circumstances that will result in compliance with the
applicable laws thereof. Each Agent understands that no action has been taken
to permit a public offering in any jurisdiction outside the United States of
America where action would be required for such purpose. The Agents further
undertake that in connection with the distribution of Notes denominated in
any foreign currency or currency unit, they will as agents, directly or
indirectly, not solicit offers to purchase and as principals under any Terms
Agreement or otherwise, directly or indirectly, not offer, sell or deliver,
such Notes in or to residents of the country issuing such currency, except as
permitted by applicable law.

      The Company reserves the right, in its sole discretion, to instruct the
Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Notes. As soon as practicable, but in
any event not less than one business day after receipt of notice from the
Company, the Agents will suspend solicitation of offers to purchase Notes
from the Company until such time as the Company has advised them that such
solicitation may be resumed. During the period of time that such solicitation
is suspended, the Company shall not be required to deliver any opinions,
letters or certificates in accordance with Sections 4(e), (g) and (h) hereof.
Upon advising the Agents that such solicitation may be resumed, however, the
Company shall simultaneously provide the documents required to be delivered
by Sections 4(e), (g) and (h) hereof, and the Agents shall have no obligation
to solicit offers to purchase the Notes until such documents have been
received by the Agents. In addition, any failure by the Company to comply
with its obligation to deliver documents required by Sections 4(e), (g) and
(h) hereof shall give each Agent the right to terminate its obligations under
this Agreement to solicit offers to purchase Notes hereunder as agent.

      The Company agrees to pay each Agent, at the time of settlement of any
sale of a Note by the Company, the purchase of which is solicited by such
Agent, a commission in United States dollars (which, in the case of Notes
denominated in other than United States dollars, shall be based upon the
Market Exchange Rate (as defined below) for such currency or currency unit at
the time of any acceptance of an offer to purchase a Note) in such amount as
may from time to time be negotiated between such Agent and the Company).

      Notwithstanding anything herein to the contrary, if, at or prior to the
time of settlement, the Company and an Agent have entered into, or such Agent
has arranged for the Company to enter into, a contract with respect to the
sale of the currency (other than United States dollars) or currency unit in
which a Note has been denominated and the purchase of which was solicited by
such Agent, the commission in United States dollars payable by the Company to
such Agent shall be based upon the same exchange rate set forth in such
contract.

      The authorized denominations of Notes denominated in a currency or
currency unit other than United States dollars shall be the equivalent, as
determined by the Market Exchange Rate for such currency or currency unit on
the business day immediately preceding the date on which the offer for such

                                       5



Notes is accepted, of U.S. $1,000 (rounded down to an integral multiple of
10,000 units of such currency or currency unit), and any larger amount.

      The authorized denominations of Notes denominated in United States
dollars shall be U.S. $1,000 and any larger amount in integral multiples of
$1,000 or such other amount as may be set forth in a Pricing Supplement for
the Notes.

      The "Market Exchange Rate" on a given date for a given foreign currency
means the noon buying rate in New York City for cable transfers in such
currency as certified for customs purposes by the Federal Reserve Bank of New
York on such date; provided, however, that in the case of European Currency
Units, Market Exchange Rate means, unless otherwise agreed by the Company and
the Agents, the rate of exchange determined by the Council of European
Communities (or any successor thereto) as published on such date or the most
recently available date in the Official Journal of the European Communities
(or any successor publication).

      Unless otherwise agreed between the Company and each Agent, each Agent
shall communicate to the Company, orally or in writing, each offer to
purchase Notes received by it as Agent, other than those rejected by such
Agent. Each Agent may, in its discretion reasonably exercised, reject any
offer received by it in whole or in part. Any such rejection shall not be
deemed a breach of the Agent's agreements under this Agreement. The Company
shall have the sole right to accept offers to purchase Notes and may reject
any proposed purchase of Notes.

      (b) Each sale of Notes to any Agent as principal shall be made in
accordance with the terms of this Agreement and (unless the Company and such
Agent shall otherwise agree) a Terms Agreement, which shall be substantially
in the form of Annex 1 hereto, which will provide for the sale of such Notes
to, and the purchase thereof by, such Agent. A Terms Agreement may also
specify certain provisions relating to the re-offering of such Notes by such
Agent; the commitment of any Agent to purchase Notes as principal, whether
pursuant to any Terms Agreement or otherwise, shall be deemed to have been
made on the basis of the representations and warranties of the Company herein
contained and shall be subject to the terms and conditions herein set forth.
Each Terms Agreement shall specify the principal amount of Notes to be
purchased by any Agent pursuant thereto, the price to be paid to the Company
for such Notes, any provisions relating to rights of, and default by,
underwriters acting together with such Agent in the re-offering of the Notes
and the time and date and place of delivery of and payment for such Notes;
and such Terms Agreement shall also specify any requirements for opinions of
counsel, accountants' letters and officers' certificates pursuant to Section
6 hereof. Terms Agreements may take the form of an exchange of any standard
form of written telecommunication between any Agent and the Company,
including by telecopy or telex. The Company and any Agent who is a party to a
Terms Agreement agree to exchange copies of such Terms Agreement as promptly
as practicable after they have entered into such Terms Agreement pursuant to
the foregoing exchange of written telecommunication. Each Agent proposes to
offer Notes purchased by it as principal for sale at prevailing market prices
or prices related thereto at the time of sale, which may be equal to, greater
than or less than the price at which such Notes are purchased by such Agent
from the Company. The Agents may utilize a selling or dealer group in
connection with the re-offering of the Notes purchased as principal.

      Each time and date of delivery of and payment for Notes to be purchased
by an Agent as principal, whether set forth in a Terms Agreement or in
accordance with the Procedures, is referred to herein as a "Time of Delivery."

      (c) Procedural details relating to the issue and delivery of Notes, the
solicitation of offers to purchase Notes, and the payment in each case
therefor, shall be as set forth in the Procedures. The provisions of the
Procedures shall apply to all transactions contemplated hereunder other than
those made pursuant to a Terms Agreement. Each of the Agents and the Company
agrees to perform the respective

                                       6



duties and obligations specifically provided to be performed by each of them
in the Procedures. The Company will furnish to the Trustee a copy of the
Procedures as from time to time in effect.

      3. The documents required to be delivered pursuant to Section 6 hereof
shall be delivered at the offices of the Company, 11600 Sallie Mae Drive,
Reston, Virginia 20193, at 11:00 a.m., New York City time, on the date of
this Agreement, or at such other date and time as the Agents and the Company
agree (such time and date being referred to herein as the "Commencement
Date"). In no event shall the Commencement Date be later than the day prior
to the date (i) on which solicitation of offers to purchase Notes is
commenced or (ii) on which the initial Terms Agreement is executed.

      4.   The Company hereby covenants and agrees with each Agent:

            (a) Prior to the termination of the offering of the Notes,

                 (i) to make no amendment or supplement to the Registration
            Statement or the Prospectus (except for a Pricing Supplement or a
            prospectus supplement or other amendment or supplement relating
            to securities other than the Notes) without first having
            furnished the Agents with a copy of the proposed form thereof and
            given the Agents a reasonable opportunity to review and comment
            on the same and if the Prospectus is amended or supplemented as a
            result of the filing under the Exchange Act of any document
            incorporated by reference in the Prospectus, no Agent shall be
            obligated to solicit offers to purchase Notes so long as it is
            not reasonably satisfied with such document;

                 (ii) to prepare, with respect to any Notes to be sold
            through or to such Agent pursuant to this Agreement, a Pricing
            Supplement with respect to such Notes substantially in a form
            previously approved by the Agents and to file such Pricing
            Supplement pursuant to Rule 424(b) under the Securities Act not
            later than the close of business of the Commission on the fifth
            business day after the date on which such Pricing Supplement is
            first used or the date of determination of the offering price;

                 (iii) to file promptly all reports and any definitive proxy
            or information statements required to be filed by the Company
            with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d)
            of the Exchange Act for so long as the delivery of a prospectus
            is required in connection with the offering or sale of the Notes,

                 (iv) for so long as the delivery of a prospectus is required
            in connection with the offering or sale of the Notes, to advise
            the Agents promptly after the Company receives notice thereof,
            of: (A) the time when any amendment to the Registration Statement
            has been filed or has become effective or any supplement to the
            Prospectus or any amended Prospectus (other than any Pricing
            Supplement that relates to Notes not purchased through or by such
            Agent or a prospectus supplement or other amendment or supplement
            relating to securities other than the Notes) has been filed with
            the Commission, and to confirm such advice in writing, (B) the
            issuance by the Commission of any stop order or of any order
            preventing or suspending the use of any prospectus relating to
            the Notes; (C) the suspension of the qualification of the Notes
            for offering or sale in any jurisdiction; (D) the initiation or
            threatening of any proceeding for any such purpose; or (E) any
            request by the Commission for the amending or supplementing of
            the Registration Statement or Prospectus or for additional
            information (other than in relation to securities other than the
            Notes);

                                       7



                 (v) in the event of the issuance of any such stop order or
            of any such order preventing or suspending the use of any such
            prospectus or suspending any such qualification, to use promptly
            its best efforts to obtain its withdrawal;

                 (vi) notify the Agents promptly in writing of any
            downgrading, or on its receipt of any notice of (A) any intended
            or potential downgrading or (B) any review or possible change
            that does not indicate an improvement in the rating accorded any
            of the securities of, or guaranteed by, the Company by any
            "nationally recognized statistical rating organization", as such
            term is defined for purposes of Rule 436(g)(2) under the
            Securities Act; and

                 (vii) to make generally available to the holders of the
            Notes and to the Agents as soon as practicable, but in any event
            not later than eighteen months after the effective date of the
            Registration Statement (as defined in Rule 158(c) under the Act),
            an earnings statement of the Company and its subsidiaries (which
            need not be audited) complying with Section 11(a) of the Act and
            the rules and regulations of the Commission thereunder
            (including, at the option of the Company, Rule 158).

            (b) So long as any Notes are outstanding, to furnish to the
      Agents copies of all reports or other communications (financial or
      other) furnished to stockholders of the Company and, as soon as they
      are available, copies of any reports and financial statements furnished
      to or filed with the Commission or any national securities exchange on
      which any class of securities of the Company is listed.

            (c) Promptly from time to time to take such action as the Agents
      reasonably may request to qualify the Notes for offering and sale under
      the securities laws of such jurisdictions as the Agents may request and
      to comply with such laws so as to permit the continuance of sales and
      dealings therein for as long as may be necessary to complete the
      distribution or sale of the Notes provided that in connection therewith
      the Company shall not be required to qualify as a foreign corporation
      or to file a general consent to service of process in any jurisdiction;

            (d) To furnish the Agents with copies of the Registration
      Statement and each amendment thereto relating to any Notes to be sold
      pursuant to this Agreement, and with copies of the Prospectus, as
      amended or supplemented, other than any Pricing Supplement (except as
      provided in the Procedures), in the form in which it is filed with the
      Commission pursuant to Rule 424 under the Securities Act or in the form
      first used to confirm sales which was not required to be filed pursuant
      to Rule 424 under the Securities Act, and with copies of the documents
      incorporated by reference therein, all in such quantities as the Agents
      may from time to time reasonably request, and, if the delivery of a
      prospectus is required at any time in connection with the offering or
      sale of the Notes (including Notes purchased from the Company by such
      Agent as principal) and if at such time any event shall have occurred
      as a result of which the Prospectus as then amended or supplemented
      would include an untrue statement of a material fact or omit to state
      any material fact necessary in order to make the statements therein, in
      the light of the circumstances under which they were made when such
      Prospectus is delivered, not misleading, or, if for any other reason it
      shall be necessary during such same period to amend or supplement the
      Prospectus or to file under the Exchange Act any document incorporated
      by reference in the Prospectus in order to comply with the Securities
      Act, the Exchange Act or the Trust Indenture Act, to (i) promptly
      notify the Agents to suspend solicitation of offers to purchase Notes
      from the Company (and, if so notified, the Agents shall promptly cease
      such solicitations), (ii) prepare and cause to be filed with the
      Commission, an amendment or supplement to the Registration Statement or
      the Prospectus as then amended or supplemented that will correct such
      statement or omission or effect such compliance and (iii) supply such
      Prospectus as then amended or supplemented to the Agents in such
      quantities as the Agents may reasonably request; if such

                                       8



      amendment or supplement, and any documents, certificates and opinions
      furnished to the Agents pursuant to Section 6 in connection with the
      preparation or filing of such amendment or supplement are reasonably
      satisfactory in all respects to the Agents, the Agents will, upon the
      filing of such amendment or supplement with the Commission and upon the
      effectiveness of an amendment to the Registration Statement if such an
      amendment is required, resume the Agents obligation to solicit offers
      to purchase Notes hereunder; if such amendment or supplement, or any
      documents, certificates and opinions furnished to the Agents pursuant
      to Section 6 in connection with the preparation or filing of such
      amendment or supplement, are not satisfactory to the Agents, the Agents
      will as promptly as reasonably practicable notify the Company in
      writing;

            (e) Quarterly following the filing of the Company's Form 10-K or
      Form 10-Q, each time the Registration Statement or the Prospectus shall
      be amended or supplemented (other than by a Pricing Supplement or in
      relation to securities other than the Notes), each other time a
      document filed under the Securities Act or the Exchange Act is
      incorporated by reference into the Prospectus (other than by reference
      of the Company's proxy statement for its annual meeting of shareholders
      or of a filing by the Company of a Current Report on Form 8-K under the
      Exchange Act, unless in the Agents' reasonable judgment, the
      information contained in such documents are of such a character that
      certificates of officers referred to below should be furnished, as the
      case may be), and each time the Company sells Notes to an Agent as
      principal and the applicable Terms Agreement or other agreement by an
      Agent to purchase Notes as principal specifies the delivery of an
      opinion of Company's counsel under this Section 4(e) as a condition to
      the purchase of Notes pursuant to such Terms Agreement or other
      agreement, the Company shall furnish or cause to be furnished to the
      Agents the written opinion of the counsel to the Company, who may be an
      employee of the Company or of any affiliate, dated each such date, in
      form and substance satisfactory to the Agents in the Agents' reasonable
      judgment to the effect that such Agents may rely on the opinion of such
      counsel referred to in Section 6(c)(ii) hereof which was last furnished
      to such Agents to the same extent as though it were dated the date of
      such letter authorizing reliance (except that the statements in such
      last opinion shall be deemed to relate to the Registration Statement
      and the Prospectus as amended and supplemented to such date) or, in
      lieu of such opinion, an opinion of the same tenor as the opinion of
      such counsel referred to in Section 6(c)(ii) hereof, but modified to
      relate to the Registration Statement and the Prospectus as amended and
      supplemented to such date;

            (f) Quarterly following the filing of the Company's Form 10-K or
      Form 10-Q, each time the Registration Statement or the Prospectus shall
      be amended or supplemented (other than by a Pricing Supplement or in
      relation to securities other than the Notes), each other time a
      document filed under the Securities Act or the Exchange Act is
      incorporated by reference into the Prospectus (other than by reference
      of the Company's proxy statement for its annual meeting of shareholders
      or of a filing by the Company of a Current Report on Form 8-K under the
      Exchange Act, unless in the Agents' reasonable judgment, the
      information contained in such documents are of such a character that
      certificates of officers referred to below should be furnished, as the
      case may be), and each time the Company sells Notes to an Agent as
      principal pursuant to a Terms Agreement or other agreement by an Agent
      to purchase Notes as principal (if such Terms Agreement or other
      agreement specifies the delivery of an opinion or opinions by
      Cadwalader, Wickersham & Taft, counsel to the Agents, as a condition to
      the purchase of Notes pursuant to such Terms Agreement or other
      agreement), the Company shall furnish to such counsel such papers and
      information as they may reasonably request to enable them to furnish to
      such Agent the opinion or opinions referred to in Section 6(c)(iii)
      hereof;

            (g) Quarterly following the filing of the Company's Form 10-K or
      Form 10-Q, each time the Registration Statement or the Prospectus shall
      be amended or supplemented (other than by a Pricing Supplement or in
      relation to securities other than the Notes), each other time a
      document filed under the Securities Act or the Exchange Act is
      incorporated by reference into the Prospectus (other than by reference
      of the Company's proxy statement for its annual meeting of shareholders
      or of a filing by the Company of a Current Report on Form 8-K under the
      Exchange

                                       9




      Act, unless in the Agents' reasonable judgment, the information contained
      in such documents are of such a character that certificates of officers
      referred to below should be furnished, as the case may be), and each
      time the Company sells Notes to an Agent as principal and the
      applicable Terms Agreement or other agreement by an Agent to purchase
      Notes as principal specifies the delivery of an accountant's letter
      under this Section 4(g) as a condition to the purchase of Notes
      pursuant to such Terms Agreement or other agreement, the Company shall
      cause the independent certified public accountants who have certified
      the financial statements of the Company and its subsidiaries included
      or incorporated by reference in the Registration Statement to furnish
      the Agents a letter or letters, dated each such date, in form
      satisfactory to the Agents, of the same tenor as the letter referred to
      in Section 6(c)(iv) hereof (modified in the case of amended or
      supplemented financial information to reflect such amended and
      supplemental financial information included or incorporated by
      reference in the Registration Statement and the Prospectus, as amended
      or supplemented to the date of such letter, provided that if the
      Registration Statement or the Prospectus is amended or supplemented
      solely to include or incorporate by reference unaudited quarterly
      financial information, the scope of such letter, which shall be
      satisfactory in form and substance to the Agents, may be limited to
      relate to such unaudited financial information unless any other
      accounting, financial or statistical information included or
      incorporated by reference therein is of a character that, in the
      reasonable judgment of the Agents, such letter should address such
      other information); provided however, that, with respect to any
      financial information or other matter, such letter may reconfirm as
      true and correct as such date as though made at and as of such date,
      rather than repeat, statements with respect to such financial
      information or other matter made in the letter referred to in Section
      6(c)(iv) hereof which was last furnished to the Agents;

            (h) Quarterly following the filing of the Company's Form 10-K or
      Form 10-Q, each time the Registration Statement or the Prospectus shall
      be amended or supplemented (other than by a Pricing Supplement or in
      relation to securities other than the Notes), each other time a
      document filed under the Securities Act or the Exchange Act is
      incorporated by reference into the Prospectus (other than by reference
      of the Company's proxy statement for its annual meeting of shareholders
      or of a filing by the Company of a Current Report on Form 8-K under the
      Exchange Act, unless in the Agents' reasonable judgment, the
      information contained in such documents are of such a character that
      certificates of officers referred to below should be furnished, as the
      case may be), and each time the Company sells Notes to an Agent as
      principal and the applicable Terms Agreement or other agreement by an
      Agent to purchase Notes as principal specifies the delivery of a
      certificate under this Section 4(h) as a condition to the purchase of
      Notes pursuant to such Terms Agreement or other agreement, the Company
      shall furnish or cause to be furnished to the Agents a certificate,
      dated the date of each such supplement, amendment, incorporation or
      Time of Delivery relating to such sale, as the case may be, in such
      form and executed by such officers of the Company as shall be
      satisfactory to the Agents, to the effect that the statements contained
      in the certificates referred to in Section 6(c)(v) hereof which were
      last furnished to the Agents are true and correct at such date as
      though made at and as of such date (except that such statements shall
      be deemed to relate to the Registration Statement and the Prospectus as
      amended and supplemented to such date) or, in lieu of such certificate,
      certificates of the same tenor as the certificates referred to in
      Section 6(c)(v), but modified to relate to the Registration Statement
      and the Prospectus as amended and supplemented to such date.

            (i) That each acceptance by the Company of an offer to purchase
      Notes hereunder (including any purchase by an Agent as principal
      pursuant to an agreement other than a Terms Agreement, and each
      execution and delivery by the Company of a Terms Agreement with an
      Agent) shall be deemed to be an affirmation to such Agent that the
      representations and warranties of the Company contained in or made
      pursuant to this Agreement are true and correct as of the date of such
      acceptance hereunder or of such Terms Agreement, as the case may be, as
      though made at and as of such date, and an undertaking that such
      representations and warranties will be true and correct as of the Time
      of Delivery relating to the sale of such Notes and as of the settlement
      date for the Notes relating to such acceptance, as the case may be, as
      though made at

                                       10



      and as of such date (except that such representations and warranties
      shall be deemed to relate to the Registration Statement and the
      Prospectus, as amended and supplemented, relating to such Notes); and

            (j) If specified in any Terms Agreement or any other agreement
      under which an Agent agrees to purchase Notes as principal, the Company
      covenants and agrees with each Agent that, during the period beginning
      from the date of such Terms Agreement or other agreement and continuing
      to and including the later of (i) the termination of the trading
      restrictions for the Notes purchased thereunder, of which termination
      such Agent or Agents party to the Terms Agreement or other agreement,
      as the case may be, agree to give the Company prompt notice confirmed
      in writing and (ii) the Time of Delivery for such Notes, not to offer,
      sell, contract to sell or otherwise dispose of any debt securities of
      the Company which (A) mature nine months or more after such Time of
      Delivery, (B) mature within six months of the maturity of such Notes,
      (C) bear interest at the same interest rate or with reference to the
      same interest rate index and (D) are denominated in the same currency
      or currency unit specified in such Terms Agreement or other agreement,
      without the prior written consent of such Agent or Agents, which
      consent shall not be unreasonably withheld, except pursuant to
      arrangements of which such Agent or Agents have been advised by the
      Company prior to the time of execution of such Terms Agreement or other
      agreement, as the case may be, which advice is confirmed in writing
      (which may be by telecopy or telex, receipt acknowledged) to such Agent
      or Agents by the end of the business day following the date of such
      Terms Agreement or other agreement, as the case may be.

      5. The Company covenants and agrees with each Agent that the Company
will pay or cause to be paid, whether or not any sale of Notes is
consummated, the following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Notes under the Securities Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus, the Prospectus, any Pricing Supplements and any
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Agents; (ii) the cost of printing or reproducing this
Agreement, any Terms Agreement, any Indenture, any Blue Sky and legal
investment surveys and any other documents in connection with the offering,
purchase, sale and delivery of the Notes; (iii) all fees, disbursements and
expenses in connection with the qualification of the Notes for offering and
sale under state securities laws as provided in Section 4(c) hereof and in
connection with any Blue Sky and legal investment surveys; (iv) all fees
charged by security rating services for rating the Notes; (v) any filing fees
incident to any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of the Notes; (vi) the cost of
preparing, issuing, executing, authenticating and delivering the Notes; (vii)
the fees and expenses of any Trustee and any transfer or paying agent of the
Company and the fees and disbursements of counsel for any Trustee or such
agent in connection with the Indenture and the Notes; (viii) on a monthly
basis all out-of-pocket expenses (including advertising expenses) incurred by
such Agent connected with the solicitation of offers to purchase and the sale
of Notes so long as such Agent has received the prior written approval of the
Company for such expenses; and (ix) all other costs and expenses incident to
the performance of the Company's obligations hereunder (other than costs and
expenses incurred by any Agent) which are not otherwise specifically provided
for in this Section 5.

      6. The obligation of each Agent, as agent of the Company, at any time
("Solicitation Time") to solicit offers to purchase the Notes and the
obligation of each Agent to purchase Notes as principal pursuant to any Terms
Agreement or any other agreement by an Agent to purchase Notes as principal
shall in each case be subject, in such Agent's discretion, to the conditions
that:

            (a) All representations and warranties of the Company herein (or,
      in the case of an obligation of an Agent under a Terms Agreement or
      other agreement by an Agent to purchase Notes as principal, in or
      incorporated by reference in such Terms Agreement or other agreement)
      are true and correct at and as of the Commencement Date, and any
      applicable date

                                       11



      referred to in Section 4(h) hereof that is prior to the Solicitation
      Time or Time of Delivery for such Notes, and as of the Solicitation
      Time or Time of Delivery for such Notes;

            (b) Prior to the Solicitation Time or Time of Delivery for such
      Notes, as the case may be, the Company shall have performed all of its
      obligations hereunder theretofore to be performed; and

            (c)  The following additional conditions have been met:

                      (i) (A) With respect to any Notes sold at or prior to
            the Solicitation Time or Time of Delivery, as the case may be,
            the Prospectus as amended or supplemented (including the Pricing
            Supplement) with respect to such Notes shall have been filed with
            the Commission pursuant to Rule 424(b) under the Act within the
            applicable time period prescribed for such filing by the rules
            and regulations under the Act and in accordance with Section 4(a)
            hereof; (B) no stop order suspending the effectiveness of the
            Registration Statement shall have been issued and no proceeding
            for that purpose shall have been initiated or threatened by the
            Commission; and (C) all requests for additional information on
            the part of the Commission shall have been complied with to the
            Agent's reasonable satisfaction;

                      (ii) Counsel to the Company, who may be an employee of
            the Company or any affiliate, shall have furnished to the Agents
            such counsel's written opinion, dated the Commencement Date, each
            Time of Delivery to the extent the applicable Terms Agreement or
            other agreement by an Agent to purchase Notes as principal
            requires an opinion, and the date of effectiveness of each
            amendment or the filing of each supplement to the Registration
            Statement or the Prospectus (including the filing under the
            Securities Act or the Exchange Act of documents incorporated by
            reference in the Prospectus as amended or supplemented but
            excluding amendments or supplements (i) providing solely for a
            change in the interest rates, redemption provisions, amortization
            schedules or maturities offered on the Notes or for a change which
            the Agents deem to be immaterial, (ii) relating to an offering of
            securities other than the Notes, (iii) constituting a Pricing
            Supplement, (iv) setting forth or incorporating by reference
            financial statements or other information as of and for a fiscal
            quarter or (v) relating solely to the incorporation by reference
            of the Company's proxy statement for its annual meeting of
            shareholders or of a filing by the Company of a Current Report on
            Form 8-K under the Exchange Act, unless in the case of clauses
            (iv) or (v) above, in the Agents' reasonable judgment, such
            financial statements or other information contained in such
            documents are of such a character that an opinion of counsel
            should be furnished), as the case may be, in form and substance
            satisfactory to the Agents in the Agents' reasonable judgment to
            the effect that:

                  (A) The Company has been duly incorporated and is validly
                  existing as a corporation in good standing under the laws
                  of the jurisdiction of its incorporation, with power and
                  authority (corporate and other) to own its properties and
                  conduct its business as described in the Prospectus as
                  amended or supplemented;

                  (B) The Company has an authorized capitalization as set
                  forth in the Prospectus as amended or supplemented and all
                  of the issued and outstanding shares of capital stock of
                  the Company have been duly and validly authorized and
                  issued and are fully paid and non-assessable;

                  (C) Each of this Agreement and any applicable Terms
                  Agreement or other agreement by an Agent to purchase Notes
                  as principal has been duly authorized, executed and delivered
                  on the part of the Company;


                                       12




                  (D) The Notes have been duly authorized and, when duly
                  executed, authenticated, issued and delivered by the
                  Company, will constitute valid and legally binding
                  obligations of the Company, subject, as to enforcement, to
                  bankruptcy, insolvency, reorganization and other laws of
                  general applicability relating to or affecting creditors'
                  rights and to general equity principles, and the Notes will
                  conform to the descriptions thereof in the Prospectus as
                  amended or supplemented;

                  (E) The Indenture has been duly authorized, executed and
                  delivered on the part of the Company and constitutes a
                  valid and binding instrument in accordance with its terms
                  subject, as to enforcement, to bankruptcy, insolvency,
                  reorganization and other laws of general applicability
                  relating to or affecting creditors' rights and to general
                  equity principles, and has been qualified under the Trust
                  Indenture Act, and the Indenture conforms to the
                  description thereof in the Prospectus as amended or
                  supplemented;

                  (F) The issue and sale of the Notes , the compliance by the
                  Company with all of the provisions of the Notes, the
                  Indenture, this Agreement and any applicable Terms
                  Agreement or other agreement by an Agent to purchase Notes
                  as principal, and the consummation of the transactions
                  herein and therein contemplated will not (a) conflict with
                  or result in any breach which would constitute a default
                  under, or result in the creation or imposition of any lien,
                  charge  or encumbrance  upon any property or assets of the
                  Company pursuant to the terms of, any indenture, loan
                  agreement or other material agreement or instrument known
                  to such counsel to which the Company is a party or by which
                  the Company may be bound or to which any property or assets
                  of the Company, is subject, (b) result in any violation of
                  the provisions of the Certificate of Incorporation, as
                  amended, or the By-Laws of the Company or  (c) to the best
                  of the knowledge of such counsel, result in  any violation
                  of any statute or any order, rule or regulation  applicable
                  to the Company of any court or any Federal, State  or other
                  regulatory authority or other governmental body  having
                  jurisdiction over the Company and any of its  properties;

                  (G) To the best knowledge of such counsel, no consent,
                  approval, authorization, order, registration or
                  qualification of or filing with, any court or any
                  governmental agency or body is required for solicitation of
                  offers to purchase Notes, the issue and sale of the Notes
                  except as have been obtained or made under the Securities
                  Act, the Exchange Act, the Trust Indenture Act and
                  securities laws of the various states or other
                  jurisdictions which are applicable to the issue and sale of
                  the Notes, as the case may be, in each case in the manner
                  contemplated by this Agreement;

                  (H) To the best of such counsel's knowledge and other than
                  as set forth in the Prospectus, there are no legal or
                  governmental proceedings pending to which the Company or
                  any of its subsidiaries is a party or to which any property
                  of the Company or any of its subsidiaries is subject,
                  which, if determined adversely to the Company or any of its
                  subsidiaries, would individually or in the aggregate have a
                  material adverse effect on the current or future
                  consolidated financial position, stockholders' equity or
                  results of operations of the Company and its subsidiaries,
                  taken as a whole; and to the best of such counsel's
                  knowledge, no such proceedings are threatened or
                  contemplated by governmental authorities or threatened by
                  others;

                                       13



                  (I) The Company is not in violation of its Certificate of
                  Incorporation or By-laws or in default in the performance
                  or observance of any material obligation, covenant or
                  condition contained in any indenture, mortgage, deed of
                  trust, loan agreement, lease or other agreement or
                  instrument to which it is a party or by which it or any of
                  its properties may be bound;

                  (J) The statements set forth in the Prospectus or the
                  Prospectus Supplement under the caption "Description of Debt
                  Securities" and "Description of the Notes We May Offer",
                  insofar as they purport to constitute a summary of the terms
                  of the Notes, under the caption "United States Federal
                  Taxation", and under the captions "Plan of Distribution" and
                  "Supplemental Plan of Distribution" as they relate to the
                  Notes and insofar as they purport to describe the provisions
                  of the laws and documents referred to therein, are accurate,
                  complete and fair;

                  (K) The Company is not and, after giving effect to the
                  offering and sale of the Notes, will not be, an "investment
                  company" within the meaning of the Investment Company Act
                  of 1940, as amended;

                  (L) The documents incorporated by reference in the
                  Prospectus inasmuch as those documents relate to the Notes
                  (other than the financial statements and related schedules
                  therein, as to which such counsel need express no opinion),
                  when they became effective or were filed with the
                  Commission, as the case may be, complied as to form in all
                  material respects with the requirements of the Act or the
                  Exchange Act, as applicable, and the rules and regulations
                  of the Commission thereunder; and they have no reason to
                  believe that any of such documents, when they became
                  effective or were so filed, as the case may be, contained
                  an untrue statement of a material fact or omitted to state
                  a material fact required to be stated therein or necessary
                  to make the statements therein not misleading, and, in the
                  case of other documents which were filed under the Act or
                  the Exchange Act with the Commission, an untrue statement
                  of a material fact or omitted to state a material fact
                  necessary in order to make the statements therein, in the
                  light of the circumstances under which they were made when
                  such documents were so filed, not misleading;

                  (M) The Registration Statement and the Prospectus as
                  amended or supplemented and any further amendments or
                  supplements thereto made by the Company prior to the date
                  of such opinion in as much as those documents relate to the
                  Notes (other than the financial statements and related
                  schedules therein, as to which such counsel need express no
                  opinion) comply as to form in all material respects with
                  the requirements of the Act and the Trust Indenture Act and
                  the rules and regulations thereunder; although they do not
                  assume any responsibility for the accuracy, completeness or
                  fairness of the statements contained in the Registration
                  Statement or the Prospectus, except for those referred to
                  in the opinion in subsection (j) of this Section 6(ii),
                  they have no reason to believe that, as of its effective
                  date, the Registration Statement or any further amendment
                  or supplement thereto made by the Company prior to the date
                  of such opinion (other than the financial statements and
                  related schedules therein, as to which such counsel need
                  express no opinion) contained an untrue statement of a
                  material fact or omitted to state a material fact required
                  to be stated therein or necessary to make the statements
                  therein not misleading or that, as of the date of such
                  opinion, the Prospectus as amended or supplemented or any
                  further amendment or supplement thereto made by the Company
                  prior to the date of such opinion (other than the financial
                  statements and related schedules therein, as to which such

                                                        14



                  counsel need express no opinion) contained an untrue
                  statement of a material fact or omitted to state a material
                  fact necessary to make the statements therein, in light of
                  the circumstances in which they were made, not misleading;
                  and they do not know of any amendment to the Registration
                  Statement required to be filed or any contracts or other
                  documents of a character required to be filed as an exhibit
                  to the Registration Statement or required to be
                  incorporated by reference into the Prospectus as amended or
                  supplemented or required to be described in the
                  Registration Statement or the Prospectus as amended or
                  supplemented which are not filed or incorporated by
                  reference or described as required; and

                  (N) Such counsel does not know of any contract or other
                  document to which the Company is a party required to be
                  filed as an exhibit to the Registration Statement or
                  required to be incorporated by reference into the
                  Prospectus, as amended or supplemented, or required to be
                  described in the Prospectus, as amended or supplemented,
                  which has not been so filed, incorporated by reference or
                  described.

            In rendering such opinion, such counsel may rely to the extent
            such counsel deems appropriate upon certificates of officers or
            other executives of the Company and its affiliates and of public
            officials as to factual matters and upon opinions of other
            counsel.

            In rendering the opinion referred to in item (D) above, such
            counsel need not express an opinion as to whether, with respect
            to any Notes denominated in a currency other than United States
            dollars, a court located in the United States of America would
            grant a judgment relating to the Notes in other than United
            States dollars, nor an opinion as to the date which any such
            court would utilize for determining the rate of conversion into
            United States dollars in granting such judgment.

                      (iii) Cadwalader, Wickersham & Taft, counsel to the
            Agents, shall have furnished to such Agent (A) such opinion or
            opinions, dated the Commencement Date, with respect to the
            matters covered in paragraphs (A), (B), (C), (D), (E), (J) and
            (M) of Subsection 6(c)(ii) above, as well as such other related
            matters as such Agent may reasonably request, and (B) if and to
            the extent requested by such Agent, with respect to each
            applicable date referred to in Section 4(h) hereof that is on or
            prior to such Solicitation Time or Time of Delivery, as the case
            may be, an opinion or opinions, dated such applicable date, to
            the effect that such Agent may rely on the opinion or opinions
            which were last furnished to such Agent pursuant to this Section
            6(c)(iii) to the same extent as though it or they were dated the
            date of such letter authorizing reliance (except that the
            statements in such last opinion or opinions shall be deemed to
            relate to the Registration Statement and the Prospectus as
            amended and supplemented to such date) or, in any case, in lieu
            of such an opinion or opinions, an opinion or opinions of the
            same tenor as the opinion or opinions referred to in clause (A)
            of this Section 6(c)(iii) but modified to relate to the
            Registration Statement and the Prospectus as amended and
            supplemented to such date; and in each case such counsel shall
            have received such papers and information as they may reasonably
            request to enable them to pass upon such matters;

                  (iv) On (A) the Commencement Date, (B) the date of
            effectiveness of each amendment or the filing of each supplement
            to the Registration Statement or the Prospectus setting forth or
            incorporating by reference amended or supplemental financial
            information, as the case may be (including the filing under the
            Securities Act or the Exchange Act of documents which are
            incorporated by reference in the Prospectus as amended or
            supplemented but excluding amendments or supplements (i) relating
            to an offering of securities other than the Notes, (ii)
            constituting a Pricing Supplement, or (iii)

                                       15



            relating solely to the incorporation by reference of the Company
            proxy statement for its annual meeting of shareholders or of a
            filing by the Company of a Current Report on Form 8-K under the
            Exchange Act, unless in the case of clause (iii) above, in such
            Agent's reasonable judgment, the information contained in such
            documents is of such a character that certificates of officers
            referred to below should be furnished, as the case may be), and
            (C) each Time of Delivery, the independent certified public
            accountants who have certified the financial statements of the
            Company and its subsidiaries included or incorporated by
            reference in the Registration Statement shall have furnished to
            the Agents a letter or letters, dated such date in form and
            substance satisfactory to the Agents, to the effect set forth in
            Annex III hereto (modified in the case of amended or supplemented
            financial information to reflect such amended and supplemental
            financial information included or incorporated by reference in
            the Registration Statement and the Prospectus, as amended or
            supplemented to the date of such letter, provided that if the
            Registration Statement or the Prospectus is amended or
            supplemented solely to include or incorporate by reference
            unaudited quarterly financial information, the scope of such
            letter, which shall be satisfactory in form and substance to the
            Agents, may be limited to relate to such unaudited financial
            information unless any other accounting, financial or statistical
            information included or incorporated by reference therein is of a
            character that, in the reasonable judgment of the Agents, such
            letter should address such other information);

                  (v) The Company shall have furnished or caused to be
            furnished to such Agent certificates of officers of the Company
            dated the Commencement Date and each applicable date referred to
            in Section 4(h) hereof that is on or prior to such Solicitation
            Time or Time of Delivery, as the case may be, in such form as
            shall be satisfactory to such Agent, as to the accuracy of the
            representations and warranties of the Company herein at and as of
            the Commencement Date or such applicable date, as the case may
            be, as to the performance by the Company of all of its
            obligations hereunder to be performed at or prior to the
            Commencement Date or such applicable date, as the case may be,
            and as to the matters set forth in subsections (c)(i) and (c)(vi)
            of this Section 6;

                  (vi) The Company shall not have sustained since the date of
            the latest audited financial statements included or incorporated
            by reference in the Prospectus as amended or supplemented prior
            to the date of the Pricing Supplement relating to the Notes to be
            delivered at the relevant Time of Delivery any change in the
            capital stock or long-term debt of the Company or any change, or
            any development involving a prospective change, in or affecting
            the business, financial position, stockholders' equity or results
            of operations of the Company, otherwise than as set forth or
            contemplated in the Prospectus as amended or supplemented prior
            to the date of the Pricing Supplement relating to the Notes to be
            delivered at the relevant Time of Delivery, the effect of which
            is in the judgment of such Agent so material and adverse as to
            make it impracticable or inadvisable to proceed with the
            solicitation by such Agent of offers to purchase Notes from the
            Company or the purchase by such Agent of Notes from the Company
            as principal, as the case may be, on the terms and in the manner
            contemplated in the Prospectus as amended or supplemented prior
            to the date of the Pricing Supplement relating to the Notes to be
            delivered at the relevant Time of Delivery;

                  (vii) On or after the date of this Agreement or on the date
            of any applicable Terms Agreement or other agreement by an Agent
            to purchase Notes as principal, (A) no downgrading shall have
            occurred in the rating accorded the Company's debt securities by
            any "nationally recognized statistical rating organization", as
            that term is defined by the Commission for purposes of Rule
            436(g)(2) under the Act, and (B) no such organization shall have
            publicly announced that it has under surveillance or review, with
            possible negative implications, its rating of any of the
            Company's debt securities

                                       16



            provided, however, that this Section 6(c)(vii) shall not apply to
            any such rating agencies which shall have notified the Company of
            the downgrading in the rating of its debt securities and of which
            the Company shall have given the Agents written notice prior to
            the execution of the Terms Agreement;

                  (viii) During the period in which the Agents are soliciting
            offers to purchase Notes, including the period between the date
            that any Agent agreed to purchase such Notes as principal and the
            related Time of Delivery, there shall not have occurred: (A) a
            suspension or material limitation in trading in securities
            generally on the New York Stock Exchange (the "Exchange"); (B) a
            suspension or material limitation in trading in the Company's
            securities on the Exchange; (C) a general moratorium on
            commercial banking activities declared in the United States by
            Federal authorities, a general moratorium on commercial banking
            activities declared in New York declared by either Federal
            authorities or New York State authorities, or a general
            moratorium on commercial banking activities in the District of
            Columbia declared by either Federal or District of Columbia
            authorities; or (D) the outbreak or escalation of hostilities
            involving the United States or the declaration by the United
            States of a national emergency or war, if the effect of any such
            event specified in the clause (D) in the judgment of such Agent
            makes it impracticable or inadvisable to proceed with the
            solicitation of offers to purchase Notes or the purchase of the
            Notes from the Company as principal pursuant to the applicable
            Terms Agreement or otherwise, as the case may be, on the terms
            and in the manner contemplated in the Prospectus; and

                  (ix) With respect to any Note denominated in a currency
            other than the U.S. dollar, more than one currency or a composite
            currency or any Note the principal or interest of which is
            indexed to such currency, currencies or composite currency, there
            shall not have occurred a suspension or material limitation in
            foreign exchange trading in such currency, currencies or
            composite currency by a major international bank, a general
            moratorium on commercial banking activities in the country or
            countries issuing such currency, currencies or composite
            currency, the outbreak or escalation of hostilities involving,
            the occurrence of any material adverse change in the existing
            financial, political or economic conditions of, or the
            declaration of war or a national emergency by, the country or
            countries issuing such currency, currencies or composite currency
            or the imposition or proposal of exchange controls by any
            governmental authority in the country or countries issuing such
            currency, currencies or composite currency.

      7. (a) The Company will indemnify and hold harmless each Agent against
any losses, claims, damages or liabilities, joint or several, to which such
Agent may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement, the Prospectus, the Prospectus as amended or
supplemented, any other prospectus relating to the Notes, or any amendment or
supplement thereto furnished by the Company, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading; and will reimburse each Agent for any legal or other expenses
reasonably incurred by such Agent in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement, the
Prospectus, the Prospectus as amended or supplemented or any other prospectus
relating to the Notes or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by the
Agents expressly for use therein; and provided, further, that the Company
shall not be liable to any Agent under the indemnity agreement in this
subdivision (a) with

                                        17



respect to the Preliminary Prospectus, the Prospectus, the Prospectus as
amended or supplemented, any other prospectus relating to the Notes or any
amendment or supplement thereto, as the case may be, to the extent that any
such loss, claim, damage or liability of such Agent results solely from the
fact that such Agent sold Notes to a person to whom there was not sent or
given, at or prior to the written confirmation of such sale, a copy of the
Prospectus (excluding documents incorporated by reference) or of the
Prospectus as then amended or supplemented (excluding documents incorporated
by reference), whichever is most recent, if the Company has previously
furnished copies thereof to such Agent.

      (b) Each Agent, on a several and not joint basis, will indemnify and
hold harmless the Company against any losses, claims, damages or liabilities
to which the Company may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any Preliminary
Prospectus, the Registration Statement, the Prospectus, or the Prospectus as
amended or supplemented, any other prospectus relating to the Notes or any
amendment or supplement thereto, or arise out of or are based upon the
omission or the alleged omission to state therein a material fact required to
be stated therein necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement
or alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement, the Prospectus, the
Prospectus as amended or supplemented, any other prospectus relating to the
Notes or such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Agent expressly for use
therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.

           (c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party
in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have
to any indemnified party otherwise than under such subsection. In case any
such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party (which consent shall not be unreasonably withheld, conditioned or
delayed), be counsel to the indemnifying party), and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such
indemnified party under such subsection for any legal expenses of other
counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than
reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim and
(ii) does not include any statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
The consent in this last sentence shall not be unreasonably withheld,
conditioned or delayed and the indemnifying party agrees that the indemnified
party shall in all cases be justified in withholding consent unless such
settlement, compromise or judgment (i) includes an unconditional release of
the indemnified party from all liability arising out of such action or claim
and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.

                                        18



      (d) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
subdivision (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and
each Agent, on the other, from the offering of the Notes to which such loss,
claim, damage or liability (or action in respect thereof) relates. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company, on the one hand, and each Agent,
on the other, in connection with the statements or omissions which resulted
in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and each Agent on
the other shall be deemed to be in the same proportion as the total net
proceeds from the sale of Notes (before deducting expenses) received by the
Company bear to the total commissions or discounts received by such Agent
with respect thereof. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, on the one hand or by any
Agent, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
With respect to any Agent, such relative fault shall also be determined by
reference to the extent (if any) to which such losses, claims, damages or
liabilities (or actions in respect thereof) with respect to any Preliminary
Prospectus result solely from the fact that such Agent sold Notes to a person
to whom there was not sent or given, at or prior to the written confirmation
of such sale, a copy of the Prospectus (excluding documents incorporated by
reference) or of the Prospectus as then amended or supplemented (excluding
documents incorporated by reference) if the Company has previously furnished
copies thereof to such Agent. The Company and each Agent agree that it would
not be just and equitable if contribution pursuant to this subdivision (d)
were determined by per capita allocation (even if all Agents were treated as
one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to above in this
subdivision (d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this subdivision (d) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subdivision (d), no Agent shall be
required to contribute any amount in excess of the amount by which the total
price at which the Notes purchased by or through such Agent were sold exceeds
the amount of any damages which such Agent has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of each of the Agents under this
subdivision (d) to contribute are several in proportion to the respective
purchases made by or through it to which such loss, claim, damage or
liability (or action in respect thereof) relates and are not joint.

      (e) The obligations of the Company under this Section 7 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Agent within the meaning of the Securities Act; and each Agent's
obligations under this Section 7 shall be in addition to any liability which
such Agent may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person,
if any, who controls the Company within the meaning of the Securities Act.

      8. In soliciting offers to purchase Notes from the Company and in
performing the other obligations of such Agent hereunder (other than in
respect of any purchase by an Agent as principal,

                                         19



pursuant to a Terms Agreement or otherwise), each Agent is acting solely as
agent for the Company and not as principal. Each Agent will make reasonable
efforts to assist the Company in obtaining performance by each purchaser
whose offer to purchase Notes from the Company was solicited by such Agent
and has been accepted by the Company, but such Agent shall not have any
liability to the Company in the event such purchase is not consummated for
any reason. If the Company shall default on its obligation to deliver Notes
to a purchaser whose offer it has accepted, the Company shall (i) hold each
Agent harmless against any loss, claim or damage arising from or as a result
of such default by the Company and (ii) notwithstanding such default, pay to
the Agent that solicited the offer any commission to which it would otherwise
be entitled in connection with such sale.

      9. The respective indemnities, agreements, representations, warranties
and other statements by any Agent and the Company set forth in or made
pursuant to this Agreement shall remain in full force and effect regardless
of any investigation (or any statement as to the results thereof) made by or
on behalf of any Agent, the Company, or any officer or director or any
controlling person of the Company or any Agent, and shall survive each
delivery of and payment for any of the Notes.

      10. The provisions of this Agreement relating to the solicitation of
offers to purchase Notes from the Company may be suspended or may be
terminated at any time by the Company as to any or all Agents or by any
Agent, insofar as this Agreement relates to such Agent, upon the giving of
written notice of such suspension or termination to such Agent or the
Company, as the case may be. Unless otherwise agreed by the respective
parties, any such suspension or termination shall be effective immediately
with respect to the party giving such notice and, in the case of the party
receiving such notice, at the close of business on the first business day
following the receipt of such notice. In the event of such suspension or
termination with respect to any Agent:

            (x) this Agreement shall remain in full force and effect with
      respect to any Agent as to which such suspension or termination has not
      occurred;

            (y) this Agreement shall remain in full force and effect with
      respect to the rights and obligations of any party which had previously
      accrued or which relate to Notes which are already issued, agreed to be
      issued or the subject of a pending offer at the time of such suspension
      or termination; and

            (z) the Company shall not have any liability to such Agent and such
      Agent shall not have any liability to the Company, except as provided in
      any Terms Agreements, in the fifth paragraph of Section 2(a) and Sections
      4(a)(vii), 4(b), 5, 7, 8 and 9 of this Agreement.

      11. This Agreement or any Terms Agreement or other agreement by an Agent
to purchase Notes as principal may be terminated by any Agent upon written
notice to the Company if the Company makes an amendment or supplement to the
Registration Statement or the Prospectus related to the Notes after the date of
any Terms Agreement or other agreement by such Agent to purchase Notes as
principal and prior to the related Time of Delivery which shall be disapproved
by such Agent. In the event of such termination with respect to any Agent:

            (x) this Agreement and any Terms Agreement or other agreement by
      an Agent to purchase Notes as principal shall remain in full force and
      effect with respect to any Agent as to which such termination has not
      occurred;

            (y) this Agreement and any Terms Agreement or other agreement by
      an Agent to purchase Notes as principal shall remain in full force and
      effect with respect to the rights and obligations of any party which had
      previously accrued or which relate to Notes which are already issued,
      agreed to be issued or the subject of a pending offer at the time of
      such termination; and

            (z) the Company shall not have any liability to such Agent and
      such Agent shall not have any liability to the Company, except as
      provided in the fifth paragraph of Section 2(a) and Sections 4(a)(vii),
      4(b), 5, 7, 8 and 9 of this Agreement.

                                       20



      12. This Agreement may be amended or supplemented if, but only if, such
amendment or supplement is in writing and is signed by the Company and each
Agent. The foregoing notwithstanding, the Company may from time to time, on
two (2) business days prior written notice to the Agents but without the
consent of any Agent, add as a party hereto one or more additional firms
registered under the Exchange Act, pursuant to the execution of a counterpart
original of this Agreement by the Company and the additional firm, which when
taken together with all other counterpart originals executed by the Company
and the Agents shall constitute one document. Upon the execution of the
counterpart original of this Agreement by the additional firm, such firm
shall be a party to this Agreement and shall have all of the rights and
obligations of an Agent under this Agreement.

      13. Except as otherwise specifically provided herein or in the
Procedures, all statements, requests, notices and advices hereunder shall be
in writing, or by telephone if promptly confirmed in writing, and if to an
Agent shall be sufficient in all respects when delivered or sent by facsimile
transmission or mail to such Agent at the address or facsimile transmission
number set forth in the Appointment and Acceptance of Agent relating to the
appointment of such Agent, and if to the Company shall be sufficient in all
respects when delivered or sent by facsimile transmission or mail to the
Company at 11600 Sallie Mae Drive, Reston, Virginia 20193, Attention: Vice
President, Finance , Facsimile Transmission No. (703) 810-7655 with a copy to
the Marianne M. Keler, General Counsel, Facsimile Transmission No. (703)
810-7695. Upon request of any party hereto, any statements, requests, notices
and advices transmitted by facsimile shall be promptly followed by delivery
of executed documents by mail.

      14. This Agreement and any Terms Agreement shall be binding upon, and
inure solely to the benefit of, each Agent and the Company, and to the extent
provided in Section 7, Section 8 and Section 9 hereof, the officers and
directors of the Company and any person who controls any Agent or the
Company, and their respective heirs, executors, administrators, successors
and assigns, and no other person shall acquire or have any right under or by
virtue of this Agreement or any Terms Agreement. No purchaser of a Note
through or from any Agent hereunder shall be deemed a successor or assign by
reason merely of such purchase.

      15. Time shall be of the essence in this Agreement and any Terms
Agreement. As used herein, the term "business day" means a a Monday, Tuesday,
Wednesday, Thursday or Friday on which commercial banks in any of New York,
New York or Wilmington, Delaware and, (i) if the Notes are denominated in a
currency other than U.S. dollars, in the capital of the country of the
currency specified in the pricing supplement for those Notes, or (ii) if the
Notes are denominated in European Currency Units, in Brussels, are not
required or authorized to be closed.

      16. This Agreement and each Terms Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York.

      17. This Agreement (including such Appointments and Acceptances of
Agent as may be executed and delivered by the Company and accepted by one or
more Agents from time to time) and any Terms Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be an original, but all of such respective counterparts
shall together constitute one and the same instrument.


                                       21







      18. Each agent designated below is hereby appointed as an Agent on the
terms and conditions set forth in the Distribution Agreement. Upon acceptance
of such appointment by signing and returning to us three counterparts hereof,
the Distribution Agreement shall constitute a binding agreement between the
Company and each such Agent in accordance with its terms.

Very truly yours,

USA EDUCATION, INC.



By:  _____________________________
Name:_____________________________
Title: ___________________________


                                       22






                       APPOINTMENT AND ACCEPTANCE OF AGENT

Accepted in New York, New York, as of the date set forth on the first page of
the Distribution Agreement:

--------------------------------



By:  _____________________________
Name:_____________________________
Title: ___________________________


Address:__________________________
        __________________________
        __________________________
Facsimile Transmission No.:


[Other terms of Agent's appointment, if any, including the duration of
appointment if limited other than pursuant to Section 12]



                                       23





                       APPOINTMENT AND ACCEPTANCE OF AGENT

Accepted in New York, New York, as of the date set forth on the first page of
the Distribution Agreement:

--------------------------------



By:  _____________________________
Name:_____________________________
Title: ___________________________


Address:__________________________
        __________________________
        __________________________
Facsimile Transmission No.:


[Other terms of Agent's appointment, if any, including the duration of
appointment if limited other than pursuant to Section 12]

                                       24



                                     ANNEX I

                               USA EDUCATION, INC.

                       $3,000,000,000 MEDIUM TERM NOTES, SERIES A

                                 TERMS AGREEMENT

-----------------------
-----------------------
-----------------------

                                     , 200__

Ladies and Gentlemen:


      USA Education, Inc. (the "Company") proposes, subject to the terms and
conditions stated herein and in the Distribution Agreement, dated October __,
2001 (the "Distribution Agreement"), between the Company, on the one hand and
the Agents named therein, on the other, to issue and sell to you the
securities specified in the Schedule hereto (the "Purchased Notes"). Each of
the provisions of the Distribution Agreement not specifically related to the
solicitation by such firms, as agents of the Company, of offers to purchase
Notes is incorporated herein by reference in its entirety, and shall be
deemed to be part of this Agreement to the same extent as if such provisions
had been set forth in full herein, provided that for purposes of this
Agreement all references in the Distribution Agreement to the "Agents" shall
be deemed to refer to you alone. Nothing contained herein or in the
Distribution Agreement shall make any party hereto an agent of the Company or
make such party subject to the provisions in the Distribution Agreement
relating to the solicitation of offers to purchase securities from the
Company, solely by virtue of its execution of this Terms Agreement. Each of
the representations and warranties set forth therein shall be deemed to have
been made at and as of the date of this Terms Agreement, except that each
representation and warranty in Section 1 of the Distribution Agreement which
makes reference to the Prospectus shall be deemed to be a representation and
warranty as of the date of the Distribution Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Terms Agreement in relation to the Prospectus as amended and
supplemented to relate to the Purchased Notes. Unless otherwise defined
herein, terms defined in the Distribution Agreement are used herein as
therein defined.

      An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Purchased Notes, in the form
heretofore delivered to you is now proposed to be filed with the Commission.

      Subject to the terms and conditions set forth herein and in the
Distribution Agreement incorporated herein by reference, the Company agrees
to issue and sell to you and you agree to purchase from the Company the
Purchased Notes, at the time and place, in the principal amount and at the
purchase price set forth in the Schedule hereto.





      If the foregoing is in accordance with your understanding, please sign
and return to us three counterparts hereof, and upon acceptance hereof by
you, this letter and such acceptance hereof, including those provisions of
the Distribution Agreement incorporated herein by reference, shall constitute
a binding agreement between you and the Company.

USA EDUCATION, INC.



By:  ____________________________
Name:___________________________
Title: ___________________________




Accepted:

[___________________________________]



By:  ____________________________
Name:___________________________
Title: ___________________________

                                       ii



                                  FORM OF PRICING SUPPLEMENT

                             SUBJECT TO COMPLETION DATED OCTOBER __, 2001

Pricing Supplement No. ___ dated: ____________ ____, 200__
to Prospectus dated August __, 2001
and Prospectus Supplement dated August __, 2001

                                                $---------------------



                                                  USA EDUCATION, INC.
                                              MEDIUM-TERM NOTES, SERIES A


Principal Amount:                         Floating Rate Note:         / /         Fixed Rate Note:        / /

Original Issue Date:                      Certificated Notes:         / /         Book Entry Notes:       / /

Closing Date:                             Specified Currency:                     CUSIP Number:

Maturity Date:                            Option to Extend Maturity:  No  / /     If Yes, Final Maturity Date:

                                                                      Yes / /

Redeemable:                    No  / /                        Redemption Price:
                               Yes / /
Optional Repayment Date(s):                                   Optional Repayment Price(s):

Applicable to Fixed Rate Notes Only:

         Interest Rate:                                       Interest Payment Date(s):

         Interest Accrual Method:

Applicable to Floating Rate Notes Only:

Floating Rate Index:
                  / / CD Rate                                 Index Maturity:
                  / / Commercial Paper Rate
                  / / CMT Rate                                Spread (plus or minus):
                  / / Federal Funds Rate
                  / / LIBOR Telerate                          Interest Rate Reset Date:
                  / / LIBOR Reuters
                  / / Prime Rate                              Interest Rate Reset Period:
                  / / 91-Day Treasury Bill Rate

Initial Interest Rate:                                        Interest Payment Date(s):

Interest Determination Date:                                  Interest Payment Period:

Lock-in Period Start Date:                                    Interest Accrual Method:

Maximum Interest Rate:                                        Minimum Interest Rate:


                                       ii


Denominations:

Listing:

Clearance and Settlement:

                                          UNDERWRITING AND OTHER INFORMATION:

Concession:  ___ %

Reallowance:  ___%



                                       iii



                                    ANNEX II

                               USA EDUCATION, INC.

                            ADMINISTRATIVE PROCEDURES

      Medium-term notes (the "Notes") in the aggregate initial offering price
of up to $ are to offered from time to time by USA Education, Inc. (the
"Company") through agents of the Company (each an "Agent" and together, in
such capacity, the "Agents"). Each Agent has agreed to use its reasonable
efforts to solicit offers to purchase Notes directly from the Company (an
Agent, in relation to a purchase of a particular Note by a purchaser
solicited by such Agent, being herein referred to as the "Selling Agent") and
may also purchase Notes from the Company as principal (an Agent, in relation
to a purchase of a Note by such Agent as principal, being herein referred to
as the "Purchasing Agent"). The Notes are being sold pursuant to a
Distribution Agreement, dated October ___, 2001 (the "Distribution
Agreement"), between the Company and the Agents, to which these
Administrative Procedures are attached as Annex II.

      The Notes will be issued pursuant to an Indenture, dated as of October
1, 2000, as amended or supplemented from time to time (the "Indenture"),
between the Company and The Chase Manhattan Bank, as Trustee (the "Trustee").
Unless otherwise defined herein, terms defined in the Indenture or the Notes
shall be used herein as therein defined.

      In the case of purchases of Notes by any Agent as principal, the
relevant terms and settlement details related thereto, including the Time of
Delivery referred to in the first paragraph of Section 8, will (unless the
Company and such Agent otherwise agree) be set forth in a Terms Agreement
entered into between such Agent and the Company pursuant to the Distribution
Agreement.

      The procedures to be followed during, and the specific terms of, the
solicitation of offers by the Agents and the sale as a result thereof by the
Company are explained below. The procedures are subject, and are qualified in
their entirety by reference, to all of the respective provisions of the
Distribution Agreement and the Indenture.

      The Company will advise each Agent in writing of those persons handling
administrative responsibilities ("Designated Persons") with whom such Agent
is to communicate regarding offers to purchase Notes and the details of their
delivery.

I. General Procedures

                             
Registration:                   Notes will be issued only in fully registered form and will
                                be either (a) Book-Entry Notes represented by one or more
                                global notes (each a "Global Note") held by the Trustee, as
                                agent for The Depository Trust Company ("DTC") and recorded
                                in the book-entry system maintained by DTC or (b)
                                Certificated Notes delivered in certificated form to the
                                Selling Agent or Purchasing Agent.  All Notes will be issued
                                as Book-Entry Notes except as otherwise approved in advance
                                by the Company and except that non-U.S. dollar denominated
                                Notes will be issued as Certificated Notes only unless
                                otherwise specified in a Prospectus Supplement or Pricing
                                Supplement.

                                       iv



Maturities:                     Each Note will mature on a date, selected by the Agents
                                and/or the purchaser, as the case may be,  and agreed to by
                                the Company, which will be at least nine months, but not
                                more than thirty years, from the date of original issuance
                                by the Company of such Note (the "Settlement Date").

Price to Public:                Each Note will be issued at the percentage of principal
                                amount specified in the Prospectus (as defined in Section
                                1(a) of the Distribution Agreement) relating to the Notes.

Currencies:                     Notes will be denominated in U.S. dollars or in such other
                                currency or currency unit as is specified in the Prospectus
                                (the "Specified Currency").

Denominations:                  The denomination of any Book-Entry, Global or Certificated
                                Note will be a minimum of U.S. $1,000 or any amount in
                                excess thereof in integral multiples of $1,000 or the
                                equivalent, as determined pursuant to the provisions of the
                                Indenture, of U.S. $1,000 (rounded down to an integral
                                multiple of 1,000 units of such Specified Currency) and any
                                amounts in excess thereof.

Interest Payments:              As specified in the Indenture and the Form of Note.

Acceptance of  Offers:          Each Agent will promptly advise the Company by telephone or
                                other appropriate means of offers to purchase Notes received
                                by it other than those rejected by such Agent.  Each Agent
                                may, in its discretion reasonably exercised, reject any
                                offer received by it in whole or in part.  Each Agent also
                                may make offers to the Company to purchase Notes as a
                                Purchasing Agent in accordance with Section 3(b) of the
                                Distribution Agreement.  The Company will have the sole
                                right to accept offers to purchase Notes and may reject any
                                such offer.

                                If the Company accepts an offer to purchase Notes, it will
                                confirm such acceptance in writing to the Selling Agent or
                                Purchasing Agent, as the case may be.  If the Company
                                rejects an offer, it will promptly notify the Agent involved.

Filing and Delivery of          If the Company accepts an offer to purchase a Note, the
Prospectus:                     Company will prepare a Pricing Supplement reflecting the
                                terms of such Note and will arrange to have a Pricing
                                Supplement filed with the Securities and Exchange Commission
                                (the "Commission") as soon as practicable after the
                                preparation thereof and will supply at least one such
                                Pricing Supplement to the Selling Agent or the Purchasing
                                Agent, as the case may be, not later than 5:00 p.m., New
                                York City time, on the Business Day following the date of
                                acceptance of such offer.

                                With respect to each Note sold pursuant to the Distribution
                                Agreement, the Selling Agent shall send a copy of the
                                Prospectus as most recently amended or supplemented
                                (together with the Pricing Supplement relating to such Note)
                                to the purchaser or its agent prior to or together with the
                                delivery of (a) the written confirmation of sale

                                       v



                                (including, in the case of a book-entry security, the
                                confirmation through DTC's Institutional Delivery System)
                                or (b) the delivery of such Note, whichever is earlier.

Confirmation:                   For each offer accepted by the Company, the Selling Agent
                                will issue a written confirmation to each purchaser
                                containing the Sale Information (as defined below), plus
                                delivery and payment instructions.

Currency Swaps:                 Unless otherwise requested by the Company, each time an
                                Agent advises the Company of an offer to purchase Notes
                                denominated in a currency or currency unit other than U.S.
                                dollars, such Agent will provide the Company information
                                with respect to currency swap or forward arrangements that,
                                as of the time the offer is communicated to the Company,
                                such Agent is prepared to enter into or arrange with a third
                                party to enter into in order to exchange amounts to be
                                received from the purchaser of such Note at the Settlement
                                Date and to exchange amounts to be paid by the Company on
                                the interest payment dates and at maturity.

Settlement --Sales as           In the event of a purchase of Notes by an Agent or Agents,
Principal:                      as principal or underwriter (other than as Purchasing
                                Agent), appropriate settlement details will be set forth in
                                the applicable Terms Agreement to be entered into between
                                such Agent or Agents and the Company pursuant to the
                                Distribution Agreement.

Settlement --                   All offers solicited by the Agents and accepted by the
Sales as Agent:                 Company will be settled on the third Business Day after the
                                date of acceptance unless otherwise agreed by the purchaser
                                and the Company and the Settlement Date shall be specified
                                upon acceptance of such offer.


Communication of Sale           For each offer accepted by the Company, the Selling Agent or
Information to the Company by   Purchasing Agent, as the case may be, will provide (unless
Selling Agent:                  provided by the purchaser directly to the Company) to a
                                Designated Person by facsimile transmission or other
                                acceptable means the following information (the "Sale
                                Information"):

                                (1)  If a Certificated Note, exact name of the registered
                                owner,

                                (2)  If a Certificated Note, exact address of the registered
                                owner,

                                (3)  If a Certificated Note, taxpayer identification number
                                of the registered owner (if available),

                                (4)  If a Book-Entry Note, the DTC Participant Number of the
                                institution through which the customer will hold the
                                beneficial interest in the Global Note,

                                (5)  Principal amount of the Note,

                                (6)  Date of Note,

                                       vi



                                (7)  If a Fixed Rate Note, the interest rate,

                                (8)  Settlement Date,

                                (9)  Maturity date,

                                (10) Currency or currency unit in which the Note is to be
                                denominated and, if other than U.S. dollars, the applicable
                                Exchange Rate for such currency or currency unit,

                                (11) Indexed Currency, the Base Rate and the Exchange Rate
                                Determination Date, if applicable,

                                (12) Issue Price,

                                (13) Selling Agent's commission or Purchasing Agent's
                                discount, as the case may be (to be paid upon settlement as
                                a discount from gross proceeds of sale except as provided
                                below under "Delivery of Notes and Cash Payment"),

                                (14) Net proceeds to the Company,

                                (15) If a redeemable or repayable Note with a Redemption
                                Date or Redemption Dates, such of the following as are
                                applicable:
                                        (i)   the Redemption Date or Redemption Dates,
                                        (ii)  whether the Note is redeemable or repayable at
                                              the option of the Company or the Holder or both,
                                        (iii) the Redemption Price (% of par) on each
                                              Redemption Date,
                                        (iv)  the notice period during which the option to
                                              redeem may be exercised, and
                                        (v)   the method by which notice of redemption is to
                                              be given,

                                (16) If a Floating Rate Note, such of the following as are
                                applicable:
                                        (i)    Interest Rate Basis,
                                        (ii)   Index Maturity,
                                        (iii)  Spread,
                                        (iv)   Spread Multiplier,
                                        (v)    Maximum Rate,
                                        (vi)   Minimum Rate,
                                        (vii)  Initial Interest Determination Date,
                                        (viii) Interest Reset Dates,
                                        (ix)   Calculation Dates,
                                        (x)    Interest Determination Dates, and
                                        (xi)   Calculation Agent,

                                (17) Interest Payment Dates,

                                (18) Regular Record Dates,

                                (19) Denomination of certificates to be delivered at
                                settlement,

                                (20) That the Note is a Certificated Note (if applicable),

                                       vii



                                (21) To the extent known to the Agent, any information not
                                otherwise expressly set forth in the Prospectus Supplement
                                which is required pursuant to Item 501(c)(7)or 508 of
                                Regulation S-K promulgated by the Commission, including, but
                                not limited to, the initial public offering price of the
                                Notes, if other than 100% of the principal amount, and

                                (22) If an Agent purchases Notes as a principal, the extent,
                                if any, to which the items specified in Sections 8(c), 8(d)
                                and 8(h) of the Distribution Agreement are required to be
                                furnished as of the Time of Delivery.

In addition, the Selling Agent will use its reasonable efforts to provide in
writing the following information to the Company and the Trustee:

                                One of the following:

                                        a.   In the case of a foreign registered owner
                                        (other than a Financial Institution (as defined
                                        below)), an IRS Form W-8 that has been duly and
                                        properly signed by the registered owner.

                                        b.   In the case of a registered owner which is a
                                        Financial Institution, a statement from the
                                        Financial Institution signed under penalties of
                                        perjury stating that the Financial Institution has
                                        received from the beneficial owner an IRS Form W-8
                                        that has been duly and properly signed by the
                                        registered owner together with a copy of such Form
                                        W-8.

                                        c.   In the case of a registered owner who is a
                                        United States person, an IRS Form W-9 that has been
                                        duly and properly signed by the registered owner.

                                A "Financial Institution" is a securities clearing organization,
                                a bank, or another financial institution that holds customers'
                                securities in the ordinary course of its trade or business which
                                holds a Note for a beneficial owner who is a foreign person.

After receiving the Sale Information, the Company will, after recording the Sale
Information and any necessary calculations, provide appropriate documentation to
the Trustee necessary for the preparation, authentication and delivery of such
Note.

Change in Interest Rate,        The Company and the Agents will discuss from time to time
Maturity or Currency            the rates of interest per annum to be borne by, and the
Denomination:                   maturity and currency denomination of, Notes that may be
                                sold as a result of the solicitation of offers by the Agents.

Suspension of Solicitation;     The Company may instruct the Agents to suspend solicitation
  Amendment or Supplement:      of offers to purchase Notes at any time, whereupon the
                                Agents will as promptly as possible (but in any event not later
                                than one business day after receipt of such instruction) suspend
                                solicitation until such time as the Company has advised the
                                Agents that solicitation of

                                       viii



                                offers to purchase Notes may be resumed.  If the Company proposes
                                to amend or supplement the Registration Statement or the
                                Prospectus relating to the Notes (except in the case of a Pricing
                                Supplement), it will promptly advise the Agents and will furnish to the
                                Agents such proposed amendment or supplement and, after the Agents
                                have been afforded a reasonable opportunity to review such
                                amendment or supplement, will cause such amendment or
                                supplement to be filed with the Commission.  The Company
                                will promptly provide the Agents with copies of any such
                                amendment or supplement and confirm to the Agents that such
                                amendment or supplement has been filed with the Commission.

                                In the event that at the time the Agents suspend
                                solicitation of offers to purchase Notes there shall be any
                                outstanding offers to purchase Notes that have been accepted
                                by the Company but for which settlement has not occurred,
                                the Company, consistent with its obligations under the
                                Distribution Agreement, promptly will advise the Agents
                                whether such sales may be settled and whether copies of the
                                Prospectus as supplemented at the time of the suspension may
                                be delivered in connection with the settlement of such
                                sales.  The Company will have the sole responsibility for
                                such decision and for any arrangements which may be made in
                                the event that the Company determines that such sales may
                                not be settled or that copies of such Prospectus may not be
                                so delivered

Authenticity of Signatures:     The Trustee will furnish the Agents from time to time with
                                the specimen signatures of each of the Trustee's officers,
                                employees or agents who have been authorized by the Trustee
                                to authenticate Notes, but the Agents will have no
                                obligation or liability to the Company or the Trustee in
                                respect of the authenticity of the signature of any officer,
                                employee or agent of the Company or the Trustee on any Note.

Advertising Cost:               The Company will determine with the Agents the amount of
                                advertising that may be appropriate in the solicitation of
                                offers to purchase the Notes.  Advertising expenses will be
                                paid by the Agents.


II.  Book-Entry Procedures

In connection with the qualification of Book-Entry Notes for eligibility in the
book-entry system maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in accordance
with its obligations under a Letter of Representations from the Company and the
Trustee to DTC, dated as of October ___, 2001, and a Medium-Term Note
Certificate Agreement, dated as of October ___, 2001 between the Trustee and DTC
(the "Certificate Agreement"), and the Trustee's obligations as a participant in
DTC including DTC's Same-Day Funds Settlement System ("SDFS").

Issuance:                       All Fixed Rate Notes which have the same original issue
                                date, redemption or repayment provisions, Interest Payment
                                Dates, Regular Record Dates, interest rate, Specified
                                Currency and maturity date (collectively, the "Fixed Rate
                                Terms") will be represented

                                       ix



                                initially by a single Global Note in fully registered form
                                without coupons.

                                All Floating Rate Notes which have the same original issue
                                date, redemption or repayment provisions, Interest Payment
                                Dates, Regular Record Dates, Interest Rate Basis, Interest
                                Determination Dates, Interest Reset Dates, Calculation
                                Dates, Index Maturity, Spread or Spread Multiplier, if any,
                                Minimum Rate, if any, Maximum Rate, if any, Specified
                                Currency and maturity date (collectively, the "Floating
                                Rate Terms") will be represented initially be a single Global
                                Note in fully registered form without coupons.

Identification:                 The Company has received from the CUSIP Service Bureau of
                                Standard & Poor's Corporation (the "CUSIP Service Bureau") a
                                series of approximately ____ CUSIP numbers for future
                                assignment to Global Notes, and the Company has delivered to
                                the Trustee and DTC such list of such CUSIP numbers.  The
                                Trustee will assign CUSIP numbers to Global Notes as
                                described below.  DTC will notify the CUSIP Service Bureau
                                periodically of the CUSIP numbers that have been assigned to
                                Global Notes.  The Trustee will notify the Company at any
                                time when fewer than 10 of the reserved CUSIP numbers remain
                                unassigned to Global Notes, and, if it deems necessary, the
                                Company will reserve additional CUSIP numbers for assignment
                                to Global Notes.  Upon obtaining such additional CUSIP
                                numbers, the Company will deliver a list of such additional
                                numbers to the Trustee and DTC.

Registration:                   Each Global Note will be registered in the name of Cede &
                                Co., as nominee for DTC, on the Security Register maintained
                                under the Indenture.  The beneficial owner of a Book-Entry
                                Note (or one or more indirect participants in DTC designated
                                by such owner) will designate one or more participants in DTC (the
                                "Participants") to act as agent or agents for such owner in
                                connection with the book-entry system maintained by DTC, and
                                DTC will record in book-entry form, in accordance with
                                instructions provided by such Participants, a credit balance
                                with respect to such Book-Entry Note in the account of such
                                Participants.  The ownership interest of such beneficial
                                owner in such Book-Entry Note will be recorded through the
                                records of such Participants or through the separate records
                                of such Participants and one or more indirect participants
                                in DTC.

Transfers:                      Transfers of a Book-Entry Note will be accomplished by book
                                entries made by DTC and, in turn, by Participants (and in
                                certain cases, one or more indirect participants in DTC) acting on
                                behalf of beneficial transferors and transferees of such Book-Entry
                                Note.

Exchanges:                      The Trustee, at the Company's request, may deliver to DTC
                                and the CUSIP Service Bureau at any time a written notice of
                                consolidation specifying (a) the CUSIP numbers of two or
                                more outstanding Global Notes having the same Fixed Rate
                                Terms or Floating Rate Terms, as the case may be (except
                                that original issue dates need not be the same), and for
                                which interest has been paid to the same date; (b) a date,
                                occurring at least 30 days after such written notice is

                                       x



                                delivered and at least 30 days before the next Interest
                                Payment Date for the related Book-Entry Notes, on which such
                                Global Notes shall be exchanged for a single replacement
                                Global Note; and (c) a new CUSIP number to be assigned to
                                such replacement Global Note.  Upon receipt of such a
                                notice, DTC will send to its participants (including the
                                Trustee) a written reorganization notice to the effect that
                                such exchange will occur on such date.

                                Prior to the specified exchange date, the Trustee will
                                deliver to the CUSIP Service Bureau written notice setting
                                forth such exchange date and the new CUSIP number and
                                stating that, as of such exchange date, the CUSIP numbers of
                                the Global Notes to be exchanged will no longer be valid.

                                On the specified exchange date, the Trustee will exchange
                                such Global Notes for a single Global Note bearing the new
                                CUSIP number.  The CUSIP numbers of the exchanged Global Notes
                                will, in accordance with CUSIP Service Bureau procedures, be
                                cancelled and not immediately reassigned.

                                Notwithstanding the foregoing, if the Global Notes to be
                                exchanged exceed $400,000,000 in aggregate principal amount,
                                one replacement Global Note will be authenticated and issued
                                to represent each $400,000,000 of principal amount of the
                                exchanged Global Notes and an additional Global Note will be
                                authenticated and issued to represent any remaining principal
                                amount of such Global Notes, subject to the minimum denomination
                                restrictions described in General Procedures - Denominations (see
                                "Denominations" below).

Denominations:                  Global Notes representing Book-Entry Notes will be denominated
                                in principal amounts not in excess of $400,000,000.  If one
                                or more Book-Entry Notes having an aggregate principal amount in
                                excess of $400,000,000 would, but for the preceding sentence, be
                                represented by a single Global Note, then one Global Note will be
                                issued to represent each $400,000,000 principal amount of such
                                Book-Entry Note or Book-Entry Notes and an additional Global Note will
                                be issued to represent any remaining principal amount of such
                                Book-Entry Note or Book-Entry Notes, subject to the minimum
                                denomination  restrictions described in General Procedures -
                                Denominations.  In such a case, each of the Global Notes
                                representing such Book-Entry Note or Notes shall be assigned
                                the same CUSIP number.

Interest:                       DTC will arrange for each pending deposit message described
                                under Settlement Procedure B below to be transmitted to
                                Standard & Poor's Corporation, which will use the message to
                                include certain terms of the related Global Note in the
                                appropriate daily bond report published by Standard & Poor's
                                Corporation.

Payments of Principal:
Premium, if any, and Interest   Promptly after each Regular Record Date (or as soon
Payments of Interest Only:      thereafter as such information is determined), the Trustee
                                will deliver to the

                                       xi



                                Company and DTC a written notice specifying by CUSIP
                                number the amount of interest to be paid on each
                                Global Note on the following Interest Payment Date
                                (other than an Interest Payment Date coinciding with the
                                Maturity) and the total of such amounts.  DTC will confirm
                                the amount payable on each Global Note on such Interest
                                Payment Date by reference to the daily bond reports
                                published by Standard & Poor's Corporation.  On such
                                Interest Payment Date, the Company will pay to the Trustee,
                                and the Trustee in turn will pay to DTC, such total amount
                                of interest due (other than at Maturity), at the times and
                                in the manner set forth below under "Manner of Payment."

Payments at Maturity:           On or about the first Business Day of each month (or as soon
                                thereafter as such information is determined), the Trustee
                                will deliver to the Company and DTC a written list of
                                principal, premium, if any, and interest to be paid on each
                                Global Note maturing or subject to redemption or repayment
                                in the following month.  The Trustee, the Company and DTC
                                will confirm the amounts of such principal, premium (if any)
                                and interest payments with respect to each such Global Note
                                on or about the fifth Business Day preceding the maturity
                                date of such Global Note.  At such maturity date, the
                                Company will pay to the Trustee, and the Trustee in turn
                                will pay to DTC, the principal of and premium, if any, on
                                such Global Note, together with interest due at such
                                maturity date, at the times and in the manner set forth
                                below under "Manner of Payment."  Promptly after payment to
                                DTC of the principal, premium, if any, and interest due at
                                maturity of all Book-Entry Notes represented by a particular
                                Global Note, the Trustee will cancel such Global Note, make
                                appropriate entries in its records and dispose of such
                                Global Note as provided in the Indenture.

Manner of Payment:              The total amount of any principal, premium and interest due
                                on Global Notes on any Interest Payment Date or at maturity
                                shall be paid by the Company to the Trustee in funds
                                immediately available for use by the Trustee as of noon, New
                                York City time, on such date.  The Company will make such
                                payment on such Global Notes by wire transfer to the Trustee
                                or by instructing the Trustee to withdraw funds from an
                                account maintained by the Company at the Trustee.  The
                                Company will confirm any such instructions in writing to the
                                Trustee.  For maturity, redemption and other principal
                                payments, prior to 1:00 p.m., New York City time, on each
                                such date or as soon as possible thereafter following
                                receipt of such funds from the Company, the Trustee will pay
                                by separate wire transfer (using Fedwire message entry
                                instructions in a form previously specified by DTC) to an
                                account at the Federal Reserve Bank of New York previously
                                specified by DTC, in funds available for immediate use by
                                DTC, each payment of interest, principal and premium, if
                                any, due on Global Notes on such date; and for interest
                                payments, the Trustee will pay DTC in same day funds on the
                                Interest Payment Date in accordance with existing
                                arrangements between the Trustee and DTC.  Thereafter on
                                each such date, DTC will pay, in accordance with its SDFS
                                operating procedures then in effect, such amounts in funds
                                available for immediate use to the respective

                                       xii



                                Participants with payments in amounts proportionate to
                                their respective holdings in principal amount of beneficial
                                interest in such Global Note as are recorded in the book-entry
                                system maintained by DTC.  Once payment has been made to DTC,
                                neither the Company nor the Trustee shall have any
                                responsibility or liability for the payment by DTC of the
                                principal of, or premium, if any, or interest on, the
                                Book-Entry Notes to such Participants.

Withholding Taxes:              The amount of any taxes required under applicable law to be
                                withheld from any interest payment on a Book-Entry Note will
                                be determined and withheld by the Participant, indirect
                                participant in DTC or other Person responsible for
                                forwarding payments and materials directly to the beneficial
                                owner of such Book-Entry Note, or as applicable law may
                                otherwise require.


                            SETTLEMENT PROCEDURES

Settlement Procedures with regard to each Book-Entry Note sold by each Agent
will be as follows:

A. Upon receiving the Sale Information, the Company will, as soon as
practicable, advise the Trustee by facsimile transmission of the Sale
Information and the name of such Agent.

B. The Trustee will assign a CUSIP number to the Global Note representing such
Book-Entry Note and will communicate to DTC and the Agent through DTC's
Participant Terminal System, a pending deposit message specifying such of the
following Settlement information as applicable:

                                1.   The following information:

                                        (a)  Principal amount of the purchase.
                                        (b)  In the case of a Fixed Rate Note, the interest
                                        rate, or, in the case of a Floating Rate Note, the
                                        initial interest rate, the Interest Reset Dates, the
                                        Interest Payment Dates, the Interest Rate Basis,
                                        Index Maturity, Spread or Spread Multiplier, if any,
                                        and the Minimum Rate and Maximum Rate, if any.
                                        (c)  Settlement date.
                                        (d)  Maturity date.
                                        (e)  Price.
                                        (f)  DTC Participant Number of the institution
                                        through which the customer will hold the beneficial
                                        interest in the Global Note.

                                2.   The numbers of the participant accounts maintained by
                                DTC on behalf of the Trustee and the Agent.

                                3.   Identification as a Fixed Rate Note or a Floating Rate
                                Note.

                                4.   The initial Interest Payment Date for such Note, number
                                of days by which such date succeeds the related DTC record
                                date (which term means the Regular Record Date, or in the
                                case of Floating Rate Notes which reset weekly, the date
                                five calendar days immediately preceding the applicable
                                Interest Payment Date) and, for Fixed Rate Notes, the amount
                                of interest payable on such Interest Payment Date

                                       xiii



                                per $1,000 principal amount of Note.

                                5.   The frequency of interest payments.

                                6.   The frequency of interest rate resets.

                                7.   The CUSIP number of the Global Note representing such
                                Book-Entry Notes.

                                8.   Whether such Global Note represents any other
                                Book-Entry Notes issued or to be issued.

                                The Trustee will also orally notify the Agent of the CUSIP
                                number assigned to the Global Note.





C. The Trustee will prepare a Global Note representing such Book-Entry Note
in a form that has been approved by the Company.

D. The Trustee will authenticate the Global Note representing such Book-Entry
Note and maintain possession of such Global Note.

E. DTC will credit such Book-Entry Note to the participant account of the
Trustee maintained by DTC.

F. The Trustee will enter an SDFS deliver order through DTC's Participant
Terminal System instructing DTC to (i) debit such Book-Entry Note to the
Trustee's participant account and credit such Book-Entry Note to the
participant account of the Agent maintained by DTC and (ii) debit the
settlement account of the Agent and credit the settlement account of the
Trustee maintained by DTC, in an amount equal to the price of such Book-Entry
Note less the Agent's commission. The entry of such a deliver order shall be
deemed to constitute a representation and warranty by the Trustee to DTC that
(a) the Global Note representing such Book-Entry Note has been issued and
authenticated and (b) the Trustee is holding such Global Note pursuant to the
Certificate Agreement.

G. The Agent will enter an SDFS deliver order through DTC's Participant
Terminal System instructing DTC to (i) debit such Book-Entry Note to the
Agent's participant account and credit such Book-Entry Note to the
participant accounts of the Participants to whom such Book-Entry Note is to
be credited maintained by DTC and (ii) debit the settlement accounts of such
Participants and credit the settlement account of the Agent maintained by
DTC, in an amount equal to the initial public offering price of the
Book-Entry Note so credited to their accounts.

H. Transfers of funds in accordance with SDFS deliver orders described in
Settlement Procedures F and G will be settled in accordance with SDFS
operating procedures in effect on the Settlement Date.

I. The Trustee will credit to an account of the Company maintained at funds
available for immediate use in an amount equal to the amount credited to the
Trustee's DTC settlement account in accordance with Settlement Procedure F.

J. The Agent will confirm the purchase of each Book-Entry Note to the
purchaser thereof either by transmitting to the Participant to whose account
such Note has been credited a confirmation order through DTC's Participant
Terminal System or by mailing a written confirmation to such purchaser. In
all cases the Prospectus as most recently amended or supplemented (including
the applicable Pricing Supplement) must accompany or precede such
confirmation.


                                       xiv




                              
  Timetable:                     For offers accepted by the Company, Settlement Procedures A
                                 through J shall occur no later than the respective times (New
                                 York City time) listed below:
  Settlement Procedure                                        Time

                A                11:00 a.m. on the Business Day following the date of
                                 acceptance.
                B                2:00 p.m. on the Business Day following the date of
                                 acceptance.
                C                5:00 p.m. on the Business Day before the Settlement Date.
                D                9:00 a.m. on the Settlement Date.
                E                10:00 a.m. on the Settlement Date.
                F                2:00 p.m. on the Settlement Date.
                G                4:45 p.m. on the Settlement Date.
                H                5:00 p.m. on the Settlement Date.

Settlement Procedure H is subject to extension in accordance with any extension
of Fedwire closing deadlines and in the other events specified in the SDFS
operating procedures in effect on the Settlement Date.

If Settlement of a Book-Entry Note is rescheduled or cancelled, the Trustee will
deliver to DTC, through DTC's Participant Terminal System, a cancellation
message to such effect by no later than 2:00 p.m., New York City time, on the
Business Day immediately preceding the scheduled Settlement Date.

Failures:                      If the Trustee has not entered an SDFS deliver order with
                               respect to a Book-Entry Note pursuant to Settlement Procedure
                               F (which may be evidenced by facsimile transmission), the
                               Trustee, at the Company's direction, shall deliver to DTC,
                               through DTC's Participant Terminal System, as soon as
                               practicable, but no later than 2:00 p.m. on any business day,
                               a withdrawal message instructing DTC to debit such Book-Entry
                               Note to the participant account of the Trustee maintained at
                               DTC.  DTC will process the withdrawal message, provided that
                               such participant account contains a principal amount of the
                               Global Note representing such Book-Entry Note that is at
                               least equal to the principal amount of such Book-Entry Note
                               to be debited.  If withdrawal messages are processed with
                               respect to all the Book-Entry Notes issued or to be issued
                               represented by a Global Note, the Trustee will void such
                               Global Note, make appropriate entries in its records and,
                               unless otherwise directed by the Company, destroy the
                               Certificate.  The CUSIP number assigned to such Global Note
                               shall, in accordance with CUSIP Service Bureau procedures, be
                               cancelled and not immediately reassigned.  If withdrawal
                               messages are processed with respect to a portion of the
                               Book-Entry Notes represented by a Global Note, the Trustee
                               will exchange such Global Note for two Global Notes, one of
                               which shall represent such Book-Entry Notes (which shall be
                               cancelled immediately after issuance), and the other of which
                               shall represent the remaining Book-Entry Notes previously
                               represented by the surrendered Global Note and shall bear the
                               CUSIP number of the surrendered Global Note.  If the purchase
                               price for any Book-Entry Note is not timely paid to the
                               Participants with respect to such Note by the beneficial
                               purchaser (other than a Purchasing Agent) thereof (or a
                               person, including an indirect participant in DTC, acting on
                               behalf of such purchaser), such Participants and, in turn,
                               the related Agent may enter SDFS deliver orders through DTC's
                               Participant Terminal System debiting such

                                       xv



                               Note free to such Agent's Participant Account and crediting
                               such Note free to the Participant Account of the Trustee and
                               shall notify the Trustee and the Company thereof.  Thereafter,
                               the Trustee, (i) will immediately notify the Company, once the
                               Trustee has confirmed that such Note has been credited to its
                               Participant Account, and the Company shall transfer by Fedwire
                               (immediately available funds) to such Agent an amount equal
                               to the price of such Note which was previously sent by wire
                               transfer to the account of the Company maintained at [The
                               Chase Manhattan Bank] in accordance with settlement procedure
                               I, and (ii) the Trustee will deliver the withdrawal message
                               and take the related actions described in the preceding
                               sentences of this paragraph.  Such debits and credits will be
                               made on the Settlement Date, if possible, and in any event
                               not later than 5:00 p.m. on the following Business Day.  If
                               such failure shall have occurred for any reason other than
                               default by the Agent in the performance of its obligations
                               hereunder or under the Distribution Agreement, the Company
                               will reimburse the Agent on an equitable basis for its loss
                               of the use of funds during the period when they were credited
                               to the account of the Company.  In addition, if such failure
                               shall have occurred by reason of a default by the Company in
                               the performance of its obligations under the Distribution
                               Agreement, the Company will pay the Selling Agent any commission to
                               which it would have been entitled in connection with such
                               sale.

                               Notwithstanding the foregoing, upon any failure to settle
                               with respect to a Book-Entry Note, DTC may take any actions
                               in accordance with its SDFS operating procedures then in
                               effect.  In the event of a failure to settle with respect to
                               a Book-Entry Note that was to have been represented by a
                               Global Note also representing other Book-Entry Notes, the
                               Trustee will provide, in accordance with Settlement
                               Procedures C and D, for the authentication and issuance of a
                               Global Note representing such other Book-Entry Notes and will
                               make appropriate entries in its records.

Trustee Not to Risk Funds:     Nothing herein shall be deemed to require the Trustee to risk
                               or expend its own funds in connection with any payment to the
                               Company, or the Agents or DTC, it being understood by all
                               parties that payments made by the Trustee to either the
                               Company, DTC or the Agents shall be made only to the extent
                               that funds are provided to the Trustee for such purpose.



Settlement Procedures with regard to each Certificated Note sold by each Agent
will be as follows:

Payment at Maturity:           As specified in the Indenture and the Form of Note.

Settlement:                    Prior to 3:00 p.m., New York City time, on the Business Day
                               prior to the Settlement Date, the Company will instruct the
                               Trustee or its agent by facsimile transmission or other
                               acceptable written means to authenticate and deliver the
                               Certificated Notes no later than 2:15 p.m., New York City
                               time, on the Settlement Date.

                                       xvi



                               If the Settlement Date is the same day as the date of
                               acceptance, then prior to 11:00 a.m., New York City time, on
                               the Settlement Date the Company will instruct the Trustee or
                               its agent by facsimile transmission or other acceptable
                               written means to authenticate and deliver the Certificated
                               Notes no later than 2:15 p.m., New York time, on the
                               Settlement Date. Certificated Notes denominated in a currency
                               or currency unit other than U.S. dollars shall have a
                               Settlement Date not less than two Business Days after the
                               acceptance of the offer by the Company.

Delivery of Notes and Cash     Upon receipt of appropriate documentation and instructions,
Payment:                       the Company will cause the Trustee to prepare and
                               authenticate each Note and appropriate receipts.

                               Each Certificated Note shall be authenticated and dated on
                               the Settlement Date therefor.  The Trustee will deliver each
                               authenticated Certificated Note to the Selling Agent for the
                               benefit of the purchaser in accordance with written
                               instructions (or oral instructions confirmed in writing
                               (which may be given by telex or telecopy) on the next
                               business day) from the Company.

Delivery by the Trustee of     Upon verification by the Selling Agent that a Certificated
each Certificated Note will    Note has been prepared and properly authenticated and
be made against a receipt      delivered by the Trustee and registered in the name of the
therefor:                      purchaser in the proper principal amount and other terms in
                               accordance with the Sale Information, payment will be made to
                               the Company's account at  [The Chase Manhattan Bank], on behalf
                               of the Company by the Selling Agent on behalf of the purchaser the
                               same day as the Selling Agent's receipt of such Certificated
                               Note in immediately available funds.

                               If either (i) the Certificated Note is denominated in U.S.
                               dollars or (ii) the Certificated Note is denominated in a
                               currency or currency unit other than U.S. dollars and, at or
                               prior to the Settlement Date, the Company and the Selling
                               Agent have entered into, or the Selling Agent has arranged
                               for the Company to enter into, a contract with respect to the
                               sale of the Specified Currency, the amount payable by the
                               Selling Agent pursuant to the preceding sentence shall be the
                               issue price of the Certificated Note (or the U.S. dollar
                               equivalent pursuant to such contract) less the Selling
                               Agent's commission determined in accordance with Section 3(a)
                               of the Distribution Agreement.  In all other cases, the
                               Selling Agent's commission shall not be discounted from the
                               gross proceeds but shall be paid separately by the Company in
                               U.S. dollars in immediately available funds on the Settlement
                               Date.  The payment by the Selling Agent shall be made only
                               upon prior receipt by such Agent of immediately available
                               funds from or on behalf of the purchaser in the Specified
                               Currency unless such Agent decides, at its option, to advance
                               its own funds for such payment against subsequent receipt of
                               funds from the purchaser.

                               Upon delivery of a Certificated Note to the Selling Agent and
                               the verification provided in the preceding paragraph, the
                               Selling Agent shall promptly deliver such Certificated Note
                               to the purchaser or its agent.

                                       xvii



Failures:                      In the event that a purchaser (other than a Purchasing Agent)
                               shall fail to accept delivery of and make payment for any
                               Certificated Note, the Selling Agent will forthwith notify
                               the Trustee and the Company's Executive Vice President and
                               Chief Financial Officer by telephone or by facsimile
                               transmission.  If the Certificated Note has been delivered to
                               the Selling Agent on behalf of the purchaser, the Selling
                               Agent will immediately return the Certificated Note to the
                               Trustee.  If funds have been advanced by the Selling Agent
                               for the purchase of such Note, the Trustee will, upon
                               instruction by the Company and upon receipt of the
                               Certificated Note, debit the account of the Company in an
                               amount equal to the amount previously credited thereto in
                               respect of the Note and will either credit the account of or
                               return such funds to the Selling Agent.  Such debits and
                               credits or returns will be made on the Settlement Date if
                               possible and, in any event, not later than the business day
                               following the Settlement Date.  If such failure shall  have
                               occurred for any reason other than default by the Selling
                               Agent in the performance of its obligations under the
                               Distribution Agreement, the Company will reimburse the
                               Selling Agent on an equitable basis for its loss of the use
                               of the funds during the period when they were credited to the
                               account of the Company.  In addition, if such failure shall
                               have occurred by reason of a default by the Company in the
                               performance of its obligations under the Distribution
                               Agreement, the Company will pay the Selling Agent any
                               commission to which it would have been entitled in connection
                               with such sale.

                               Immediately upon receipt of the certificate representing the
                               Note in respect of which the failure occurred, the Trustee
                               will void such Certificated Note, make appropriate entries in
                               its records and, unless otherwise instructed by the Company,
                               destroy the certificate.





                                       xviii




                                    ANNEX III

     Pursuant to Section 8(d) of the Distribution Agreement, the Company's
independent certified public accountants shall furnish letters to the effect
that:

                (i) They are independent certified public accountants with
      respect to the Company and its consolidated subsidiaries within the
      meaning of the Securities Act and the applicable published rules and
      regulations of the Commission thereunder and the answer to Item 10 of the
      Registration Statement is correct insofar as it relates to them;

                (ii) In their opinion, the financial statements and schedules
      and the additional financial information examined by them and included or
      incorporated by reference in the Registration Statement or the Prospectus
      comply as to form in all material respects with the applicable accounting
      requirements of the Securities Act or the Exchange Act, as applicable, and
      the published rules and regulations thereunder;

                (iii) On the basis of limited procedures, not constituting an
      examination in accordance with generally accepted auditing standards,
      including a reading of the unaudited financial statements and schedules
      and other information referred to below, a reading of the latest available
      interim financial statements of the Company and certain of its
      subsidiaries, inspection of the minute books of the Company and certain of
      its subsidiaries since the date of the latest audited financial statements
      included or incorporated by reference in the Prospectus, inquiries of
      officials of the Company and its subsidiaries responsible for financial
      and accounting matters and such other inquiries and procedures as may be
      specified in such letter, nothing came to their attention that caused them
      to believe that:

             (A) the unaudited consolidated statements of income, consolidated
            statements of financial position and consolidated statements of
            changes in financial position of the Company and its consolidated
            subsidiaries included or incorporated by reference in the Prospectus
            do not comply as to form in all material respects with the
            applicable accounting requirements of the Exchange Act and the
            published rules and regulations thereunder; or

             (B) as of a specified date not more than five business days prior
            to the date of delivery of such letter, there have been any changes
            in the capital stock accounts, long-term debt, short- term debt, or
            any decreases in net assets or other items specified by the Agents,
            in each case as compared with amounts shown or included in the
            latest statement of financial position of the Company included or
            incorporated by reference in the Prospectus, except in each case for
            changes, increases or decreases which the Prospectus discloses have
            occurred or may occur or which are described in such letter; and

                (iv) In addition to the examination referred to in their
      report(s) included or incorporated by reference in the Prospectus and the
      limited procedures, inspection of minute books, inquiries and other
      procedures referred to in clause (iii) above, they have carried out
      certain specified procedures, not constituting an audit, with respect to
      certain amounts, percentages and financial information specified by the
      Agents which are derived from the general accounting records of the
      Company and its subsidiaries, which appear in the Prospectus (excluding
      documents incorporated by reference), or in Part II of, or in exhibits and
      schedules to, the Registration Statement specified by the Agents or in
      documents incorporated by reference in the Prospectus specified by the
      Agents, and have compared certain of such amounts, percentages and
      financial information with the accounting records of the Company and its
      subsidiaries and have found them to be in agreement.

                                       xix



          All references in this Annex III to the Prospectus shall be deemed
to refer to the Prospectus as amended or supplemented (including the
documents incorporated by reference therein) as of the Commencement Date
referred to in Section 6(c) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein) as
of the date of the amendment, supplement, incorporation or the Time of
Delivery relating to the Terms Agreement or other agreement by an Agent to
purchase Notes as principal requiring the delivery of such letter under
Section 8(d) thereof.

                                       xx

EX-5.1

                                                                     EXHIBIT 5.1

                                October 29, 2001


USA Education, Inc.
11600 Sallie Mae Drive
Reston, Virginia 20193

Ladies and Gentlemen:

         I am Executive Vice President and General Counsel of USA Education,
Inc. (the "Corporation") and, as such, I have acted as counsel for the
Corporation in the preparation of a Registration Statement on Form S-3 (File No.
333-63164) (the "Registration Statement") filed with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act")
in connection with the proposed offer and sale of the following securities from
time to time (the "Securities") of the Corporation having an aggregate initial
offering price of up to $3,000,000,000: (i) debt securities (the "Debt
Securities"), (ii) preferred stock, par value .20 per share (the "Preferred
Stock"), (iii) common stock, par value .20 per share (the "Common Stock"), of
the Corporation issuable upon conversion of Debt Securities or Preferred Stock,
or upon exercise of warrants or in connection with the settlement of privately
negotiated equity forward purchase contracts, and (iv) warrants to purchase Debt
Securities, Preferred Stock, or Common Stock; warrants or other rights relating
to foreign currency exchange rates; or warrants for the purchase or sale of debt
securities of, or guaranteed by, the United States government or its agencies,
units of a stock index or stock basket or a commodity or a unit of a commodity
index (collectively, the "Warrants"). The Securities may be offered separately
or as part of units with other Securities, in separate series, in amounts, at
prices, and on terms to be set forth in the prospectus and one or more
supplements to the prospectus (collectively, the "Prospectus") constituting a
part of the Registration Statement, and in the Registration Statement.

         The Debt Securities are to be issued under one or more indentures in
the form to be filed with the Securities and Exchange Commission, with
appropriate insertions (the "Indenture"), to be entered into by the Corporation
and a trustee or trustees to be named by the Corporation. Each series of
Preferred Stock is to be issued under the Certificate of Incorporation, as
amended, (the "Certificate of Incorporation") of the Corporation and a
certificate of designations (a "Certificate of Designations") to be approved by
the board of directors of the Corporation or a committee thereof and filed with
the Secretary of State of the State of Delaware (the "Delaware Secretary of
State") in accordance with section 151 of the General Corporation Law of the
State of Delaware. The Common Stock is to be issued under the Certificate of
Incorporation. The Warrants are to be issued under a warrant agreement in the
form to be filed with the Securities and Exchange Commission, with appropriate
insertions (the "Warrant Agreement"), to be entered into by the Corporation and
a warrant agent to be named by the Corporation.





USA Education, Inc.
October 29, 2001
Page 2

         Certain terms of the Securities to be issued by the Corporation from
time to time will be approved by the Board of Directors of the Corporation or a
committee thereof or certain authorized officers of the Corporation as part of
the corporate action taken and to be taken (the "Corporate Proceedings") in
connection with issuance of the Securities. I have examined or am otherwise
familiar with the Certificate of Incorporation, the By-Laws of the Corporation,
as amended, the Registration Statement, such of the Corporate Proceedings as
have occurred as of the date hereof, and such other documents, records, and
instruments as I have deemed necessary or appropriate of the purposes of this
opinion.

         Based on the foregoing, I am of the opinion that (i) upon the execution
and delivery by the Corporation of the Indenture and the execution and delivery
of the Warrant Agreement, the completion of all required Corporate Proceedings,
and the execution, issuance, and delivery, and the authentication by a duly
appointed trustee, of the Debt Securities and the Warrants, respectively,
pursuant to such agreements, such Indenture, or Warrant Agreement, as the case
may be, any Debt Securities issuable thereunder will be legal, valid, and
binding obligations of the Corporation, and any Preferred Stock (assuming
completion of the actions referred to in clause (ii) below) or Common Stock
(assuming completion of the actions referred to in clause (iii) below) issuable
thereunder will be duly and validly authorized and issued, fully paid, and
nonassessable; (ii) upon the authorization, execution, acknowledgment, delivery,
and filing with, and recording by, the Delaware Secretary of State of the
applicable Certificate of Designations, the completion of all required Corporate
Proceedings and the execution, issuance and delivery of the Preferred Stock
pursuant to such Certificate of Designations, the Preferred Stock will be duly
and validly authorized and issued, fully paid, and nonassessable; and (iii) upon
the authorization of issuance of the Common Stock, the completion of all
required Corporate Proceedings, and the execution, issuance, and delivery of the
Common Stock, the Common Stock will be duly and validly authorized and issued,
fully paid, and nonassessable; except in each case as enforcement of provisions
of such instruments and agreements may be limited by bankruptcy or other laws of
general application affecting the enforcement of creditors' rights and by
general equity principles. The foregoing opinions assume that (a) the
consideration designated in the applicable Corporate Proceedings for any
Preferred Stock or Common Stock shall have been received by the Corporation in
accordance with applicable law; (b) the Indenture and Warrant Agreement shall
have been duly authorized, executed, and delivered by all parties thereto other
than the Corporation; (c) the Registration Statement shall have become effective
under the Securities Act and will continue to be effective; (d) the Indenture
shall have become duly qualified under the Trust Indenture Act of 1939, as
amended; and (e) that, at the time of the authentication and delivery of the
Securities, the Corporate Proceedings related thereto will not have been
modified or rescinded, there will not have occurred any change in the law
affecting the authorization, execution, delivery, validity or enforceability of
such Securities, none of the particular terms of such Securities will violate
any applicable law and neither the issuance and sale thereof nor the compliance
by the Corporation with the terms thereof





USA Education, Inc.
October 29, 2001
Page 3


will result in a violation of any agreement or instrument then binding upon the
Corporation or any order of any court or governmental body having jurisdiction
over the Corporation.

         I have also assumed (a) the accuracy and truthfulness of all public
records of the Corporation and of all certifications, documents and other
proceedings examined by me that have been produced by officials of the
Corporation acting within the scope of their official capacities, without
verifying the accuracy or truthfulness of such representations, and (b) the
genuineness of such signatures appearing upon such public records,
certifications, documents and proceedings. I express no opinion as to the laws
of any jurisdiction other than the laws of the District of Columbia, the General
Corporation Law of the State of Delaware, and the federal laws of the United
States of America. I express no opinion as to whether, or the extent to which,
the laws of any particular jurisdiction apply to the subject matter hereof,
including, without limitation, the enforceability of the governing law provision
contained in the Indenture or the Warrant Agreement. Because the governing law
provision of the Indenture or the Warrant Agreement may relate to the law of a
jurisdiction as to which I express no opinion, the opinion set forth in clause
(a) of the preceding paragraph are given as if the law of the District of
Columbia governs the Agreements.

         I hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to being named in the Prospectus included therein
under the caption "Legal Matters" with respect to the matters stated therein
without implying or admitting that I am an "expert" within the meaning of the
Securities Act, or other rules and regulations of the Securities and Exchange
Commission issued thereunder with respect to any part of the Registration
Statement, including this exhibit.

                                       Very truly yours,


                                       /s/ MARIANNE M. KELER
                                       Marianne M. Keler

EX-12.1

                                                                  Exhibit 12.1


                             SLM HOLDING CORPORATION
           RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DIVIDENDS
                             (DOLLARS IN THOUSANDS)





                                                                     -------------------------------------------------------
                                                                         1996          1997           1998           1999
                                                                     -----------    ----------     ----------     ----------
                                                                                                      

Pre-tax income from continuing operations before
adjustment for minority interests in consolidated
subsidiaries                                                         $  600,327     $  759,748     $  750,131     $  751,652
                        Add:  Fixed charges                           2,600,048      2,544,584      1,948,995      2,140,588

                        Less: Other adjustments                            (711)            --             --             --

                        Less: Preferred dividends                       (16,452)       (18,428)       (23,998)       (25,803)
                                                                     ----------     ----------     ----------     ----------
               TOTAL EARNINGS                                        $3,183,212     $3,285,904     $2,675,128     $2,866,437
                                                                     ==========     ==========     ==========     ==========

Fixed charges
                              Interest expense                       $2,582,885     $2,526,156     $1,924,997     $2,114,785
                              Preferred dividends                        16,452         18,428         23,998         25,803
                              Other adjustments                             711             --             --             --
                                                                     ----------     ----------     ----------     ----------
          TOTAL FIXED CHARGES                                        $2,600,048     $2,544,584     $1,948,995     $2,140,588
                                                                     ==========     ==========     ==========     ==========

         RATIO OF EARNINGS TO
            FIXED CHARGES AND
    PREFERRED STOCK DIVIDENDS                                              1.22           1.29           1.37           1.34
                                                                     ==========     ==========     ==========     ==========


            RATIO OF EARNINGS
             TO FIXED CHARGES                                              1.23           1.29           1.38           1.34
                                                                     ==========     ==========     ==========    ===========

                                                                                    SIX MONTHS ENDED JUNE 30,
                                                                                    -------------------------
                                                                         2000          2000            2001
                                                                     -----------    ----------     ----------

                                                                                          
Pre-tax income from continuing operations before
adjustment for minority interests in consolidated
subsidiaries                                                         $  711,591     $  415,795     $  493,399
                        Add:  Fixed charges                           2,879,548      1,324,488      1,283,090

                        Less: Other adjustments                             --             --             --

                        Less: Preferred dividends                       (42,677)       (21,234)       (20,780)
                                                                     ----------     ----------     ----------
               TOTAL EARNINGS                                        $3,548,462     $1,719,049     $1,755,709
                                                                     ==========     ==========     ==========

Fixed charges
                              Interest expense                       $2,836,871     $1,303,254     $1,262,310
                              Preferred dividends                        42,677         21,234         20,780
                              Other adjustments                              --             --             --
                                                                     ----------     ----------     ----------
          TOTAL FIXED CHARGES                                        $2,879,548     $1,324,488     $1,283,090
                                                                     ==========     ==========    ===========

         RATIO OF EARNINGS TO
            FIXED CHARGES AND
    PREFERRED STOCK DIVIDENDS                                              1.23           1.30           1.37
                                                                     ==========     ==========    ===========


            RATIO OF EARNINGS
             TO FIXED CHARGES                                              1.24           1.30           1.37
                                                                     ==========    ===========    ===========






        For purposes of the "earnings" computation, "other adjustments"
                    includes the capitalized interest cost.

       For purposes of the "fixed charges" computation, other adjustments
                     includes the capitalized interest cost.






                                                                                                         
Preference Security Dividend
                          Amount of Dividend                            $10,694        $11,978        $15,599        $15,334
                          Amount of Dividend                                                                         $ 1,438
                          1- Tax Rate                                      0.65           0.65           0.65           0.65
                                                                     ----------     ----------     ----------     ----------
                          Pre-tax earnings required to pay dividend      16,452         18,428         23,998         25,803





                                                                                    
Preference Security Dividend
                          Amount of Dividend                             $16,218   $ 8,009   $ 7,757
                          Amount of Dividend                             $11,522   $ 5,793   $ 5,750
                          1- Tax Rate                                       0.65      0.65      0.65
                                                                         -------   -------   -------
                          Pre-tax earnings required to pay dividend       42,677    21,234    20,780










REGULATION S-K
 (Section 229.601)
STATEMENTS RE COMPUTATION OF RATIOS
in reasonable detail, the computation of any ratio of earnings to fixed charges
or to combined fixed charges & preferred stock dividends or any other ratios
which appear in the registration statement.

 - must disclose for last 5 years

EARNINGS CALC: (PER REG S-K  Section 229.503 (d) (3))