EXHIBIT 2.1 AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,

CANNON ACQUISITION CORPORATION

and

COLLEGIATE FUNDING SERVICES, INC.

Dated as of December 14, 2005

TABLE OF CONTENTS

INDEX OF DEFINED TERMS

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER, dated as of December 14, 2005 (this “ Agreement ”), among JPMORGAN CHASE BANK, NATIONAL ASSOCIATION (“ Parent ”), CANNON ACQUISITION CORPORATION, a Delaware corporation and a direct wholly-owned subsidiary of Parent (“ Merger Sub ”), and COLLEGIATE FUNDING SERVICES, INC., a Delaware corporation (the “ Company ”).

     WHEREAS, the Board of Directors of the Company has (i) determined that it is in the best interests of the Company and the stockholders of the Company, and declared it advisable, to enter into this Agreement with Parent and Merger Sub providing for the merger (the “ Merger ”) of Merger Sub with and into the Company in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), upon the terms and subject to the conditions set forth herein, (ii) approved this Agreement in accordance with the DGCL, upon the terms and subject to the conditions set forth herein, and (iii) resolved to recommend adoption of this Agreement by the stockholders of the Company;

     WHEREAS, in connection with the execution and delivery of this Agreement by the parties hereto, The Lightyear Fund, L.P. and Lightyear Co-Invest Partnership, L.P. (together, the “ Lightyear Entities ”) are entering into a Stockholder Support Agreement (the “ Stockholder Agreement ”), dated as of the date hereof, with Parent, in the form attached hereto as Exhibit C , pursuant to which such entities agree, among other things, to vote all of the Shares (as defined herein) beneficially owned by them in favor of the Merger; and

     WHEREAS, the Boards of Directors of Parent and Merger Sub have each approved, and the Board of Directors of Merger Sub has declared it advisable for Merger Sub to enter into, this Agreement providing for the Merger in accordance with the DGCL, upon the terms and subject to the conditions set forth herein.

     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I

THE MERGER

     SECTION 1.1   The Merger . Upon the terms and subject to the conditions of this Agreement and in accordance with the DGCL, at the Effective Time (as defined below), Merger Sub shall be merged with and into the Company. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and the Company shall continue as the surviving corporation of the Merger (the “ Surviving Corporation ”).

     SECTION 1.2   Closing; Effective Time . Subject to the provisions of Article VII, the closing of the Merger (the “ Closing ”) shall take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York, as soon as practicable, but in no event later than the second business day after the satisfaction or waiver of the conditions set forth

in Article VII (excluding conditions that, by their terms, cannot be satisfied until the Closing, but subject to the satisfaction or waiver of such conditions at the Closing), or at such other place or on such other date as Parent and the Company may mutually agree. The date on which the Closing actually occurs is hereinafter referred to as the “ Closing Date .” At the Closing, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in such form as required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or such later date and/or time as is specified in the Certificate of Merger and as is agreed to by the parties hereto, being hereinafter referred to as the “ Effective Time ”).

     SECTION 1.3   Effects of the Merger . The Merger shall have the effects set forth herein and in the applicable provisions of the DGCL. Without limiting the generality of the foregoing and subject thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     SECTION 1.4   Certificate of Incorporation; By-Laws . (a) At the Effective Time, the certificate of incorporation of the Company shall be amended so as to read in its entirety as is set forth on Exhibit A annexed hereto, and, as so amended, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with its terms and as provided by law.

     (b) At the Effective Time, the by-laws of the Company shall be amended so as to read in their entirety as is set forth on Exhibit B annexed hereto, and, as so amended shall be the by-laws of the Surviving Corporation until thereafter amended in accordance with their terms, the certificate of incorporation of the Surviving Corporation and as provided by law.

     SECTION 1.5   Directors and Officers . The directors of the Company immediately prior to the Effective Time shall submit their resignations to be effective as of the Effective Time. Immediately after the Effective Time, Parent shall take the necessary action to cause the directors of Merger Sub immediately prior to the Effective Time to be the directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and by-laws of the Surviving Corporation. The officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, each to hold office until the earlier of their resignation or removal.

ARTICLE II

EFFECT OF THE MERGER ON THE CAPITAL STOCK

     SECTION 2.1   Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the holders of any of the following securities:

     (a) Each share of common stock, par value $0.001 per share, of the Company (the “ Common Stock ”) (all issued and outstanding shares of the Common Stock being hereinafter collectively referred to as the “ Shares ” ) issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 2.1(b), any Dissenting Shares (as defined in Section 2.3(a)) and any Shares beneficially owned by any direct or indirect wholly-owned subsidiary of Parent or the Company (which Shares shall remain outstanding, except that the number of such Shares owned by such subsidiaries may be adjusted following the Merger to maintain relative ownership percentages) shall be converted into the right to receive $20.00 in cash (the “ Merger Consideration ”), payable to the holder thereof, without interest, upon surrender of such Shares in the manner provided in Section 2.4, less any required withholding taxes;

     (b) Each Share held in the treasury of the Company and each Share owned by Parent immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto; and

     (c) Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into one share of common stock of the Surviving Corporation.

     SECTION 2.2   Treatment of Options and Restricted Shares . (a) The Company shall provide that, as of the Effective Time, each option to purchase shares of Common Stock (an “ Option ”) granted under any Company Stock Plan that is outstanding and unexercised as of the Effective Time (whether vested or unvested) shall be canceled and the holder thereof shall be entitled to receive, as soon as practicable after the Effective Time (but in no event later than 5 business days after the Effective Time) from the Surviving Corporation, in consideration for such cancellation, an amount in cash equal to the product of (A) the number of shares of Common Stock previously subject to such Option and (B) the excess, if any, of the Merger Consideration over the exercise price per share of Common Stock previously subject to such Option, less any required withholding taxes.

     (b) The Company shall provide that, as of the Effective Time, each Share granted subject to vesting or other restrictions pursuant to any Company Stock Plan (collectively, “ Restricted Shares ”) which is outstanding immediately prior to the Effective Time shall vest and become free of such restrictions and at the Effective Time the holder thereof shall, subject to and in accordance with this Article II, be entitled to receive the Merger Consideration with respect to each such Restricted Share, less any required withholding taxes.

     (c) Prior to the Effective Time, the Company shall, or shall cause its Board of Directors and/or the Compensation Committee thereof to, take all actions necessary, including any amendment to any Company Stock Plan, to permit the cancellation of the Options and the vesting of any Restricted Shares as provided in this Section 2.2.

     SECTION 2.3   Dissenting Shares . (a) Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by holders of Shares who have not voted in favor of or consented to the Merger and who have properly demanded and perfected their rights to be paid

the fair value of such Shares in accordance with Section 262 of the DGCL (the “ Dissenting Shares ”) shall not be converted into the right to receive the Merger Consideration, and the holders thereof shall be entitled to only such rights as are granted by Section 262 of the DGCL; provided , however , that if any such holder shall fail to perfect or shall effectively waive, withdraw or lose such holder’s rights under Section 262 of the DGCL, such holder’s shares of Company Common Stock shall thereupon be deemed to have been converted, at the Effective Time, into the right to receive the Merger Consideration, as set forth in Section 2.1 of this Agreement, without any interest thereon.

     (b) The Company shall give Parent (i) prompt notice of any appraisal demands received by the Company, withdrawals thereof and any other instruments served pursuant to Section 262 of the DGCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to the exercise of appraisal rights under Section 262 of the DGCL. The Company shall not, except with the prior written consent of Parent or as otherwise required by applicable law, make any payment with respect to any such exercise of appraisal rights or offer to settle or settle any such rights.

     SECTION 2.4   Surrender of Shares . (a) Prior to the Effective Time, Parent and Merger Sub shall enter into an agreement with the Company’s transfer agent, or such other bank, trust company or other entity qualified to serve as a paying agent as Parent may select that is reasonably acceptable to the Company, to act as agent for the stockholders of the Company in connection with the Merger (the “ Paying Agent ”) and to receive the Merger Consideration to which the stockholders of the Company shall become entitled pursuant to this Article II. At or prior to the Effective Time, Parent shall deposit (or cause to be deposited) with the Paying Agent sufficient funds to make all payments pursuant to Section 2.4(b). Such funds may be invested by the Paying Agent as directed by Merger Sub or, after the Effective Time, the Surviving Corporation; provided that (i) no such investment or losses thereon shall affect the Merger Consideration payable to the holders of Company Common Stock and following any losses Parent shall promptly provide additional funds to the Paying Agent for the benefit of the stockholders of the Company in the amount of any such losses and (ii) such investments shall be in short-term obligations of the United States of America with maturities of no more than 30 days or guaranteed by the United States of America and backed by the full faith and credit of the United States of America or in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively. Any interest or income produced by such investments will be payable to the Surviving Corporation or Parent, as Parent directs.

     (b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each record holder, as of the Effective Time, of (i) an outstanding certificate or certificates which immediately prior to the Effective Time represented Shares (the “ Certificates ”) or (ii) Shares represented by book-entry (“ Book-Entry Shares ”), a form of letter of transmittal (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Paying Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the letter of transmittal) and instructions for use in effecting the surrender of the Certificates or, in the case of Book-Entry Shares, the surrender of such Shares for payment of the Merger Consideration therefor. Upon surrender to the Paying Agent of a Certificate or of Book-Entry

Shares, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Shares shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate or Book-Entry Shares and such Certificate or book-entry shall then be canceled. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book-Entry Shares on the Merger Consideration payable in respect of the Certificates or Book-Entry Shares. If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable. Until surrendered as contemplated by this Section 2.4(b), each Certificate and each Book-Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration as contemplated by this Article II.

     (c) At any time following the date that is twelve months after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) which have been made available to the Paying Agent and which have not been disbursed to holders of Certificates or Book-Entry Shares and thereafter such holders shall be entitled to look only to Parent and the Surviving Corporation (subject to abandoned property, escheat or other similar laws) as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates or Book-Entry Shares. The Surviving Corporation shall pay all charges and expenses, including those of the Paying Agent, in connection with the exchange of Shares for the Merger Consideration.

     (d) After the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares that were outstanding prior to the Effective Time. After the Effective Time, Certificates or Book-Entry Shares presented to the Surviving Corporation for transfer shall be canceled and exchanged for the consideration provided for, and in accordance with the procedures set forth in, this Article II.

     (e) Notwithstanding anything in this Agreement to the contrary, Parent, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any former holder of Shares, Options and Restricted Shares pursuant to this Agreement any amount as may be required to be deducted and withheld with respect to the making of such payment under applicable Tax (as defined below) laws, and any such amount so deducted or withheld shall be treated for all purposes hereunder as having been paid to such holder. To the extent that amounts are so withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Shares, Options and Restricted Shares in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent.

     (f) In the event that any Certificate shall have been lost, stolen or destroyed, upon the holder’s compliance with the replacement requirements established by the Paying Agent, including, if necessary, the posting by the holder of a bond in customary amount as indemnity against any claim that may be made against it with respect to the Certificate, the Paying Agent will deliver in exchange for the lost, stolen or destroyed Certificate the applicable Merger Consideration payable in respect of the Shares represented by such Certificate pursuant to this Article II.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     The Company hereby represents and warrants to Parent and Merger Sub that, except as set forth on the Company Disclosure Schedule delivered by the Company to the Parent and Merger Sub prior to the execution of this Agreement (the “ Company Disclosure Schedule ”) and except as disclosed in the SEC Reports (as defined below) filed prior to the date of this Agreement:

     SECTION 3.1   Organization and Qualification; Subsidiaries . Each of the Company and its subsidiaries is duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction of its organization and has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted, except where any such failure to be so organized, existing or in good standing or to have such power or authority, would not, individually or in the aggregate reasonably be expected to result in a Material Adverse Effect (as defined below). Section 3.1 of the Company Disclosure Schedule sets forth a true and accurate list of the Company’s subsidiaries. Each of the Company and its subsidiaries is duly qualified or licensed to do business, and is in good standing (with respect to jurisdictions that recognize the concept of good standing), in each jurisdiction where the character of its properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except for any such failure to be so qualified or licensed or in good standing which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. All subsidiaries of the Company are directly or indirectly wholly owned by the Company. “ Material Adverse Effect ” means any change, effect, event or occurrence that would be materially adverse to the business, financial condition or results of operations of the Company and its subsidiaries taken as a whole, other than any change or effect to the extent resulting from (i) changes in general economic conditions, (ii) changes in laws, rules or regulations (in each case, including changes to tax laws, rules or regulation) or the interpretations thereof affecting the Company, (iii) general changes or developments in the industries in which the Company and its subsidiaries operate; (iv) the announcement of this Agreement and the transactions contemplated hereby, including any termination of, reduction in or similar negative impact on relationships, contractual or otherwise, with any customers, partners, financing sources or employees of the Company and its subsidiaries to the extent due to the announcement of this Agreement or the identity of the parties to this Agreement, or any actions or omissions required by the express terms of this Agreement, including compliance with the covenants set forth herein or (v) changes in any applicable accounting regulations or principles.

     SECTION 3.2   Certificate of Incorporation and By-Laws . The Company has heretofore furnished or otherwise made available to Parent a complete and correct copy of the second amended and restated certificate of incorporation (the “ Certificate of Incorporation ”) and the amended and restated by-laws (the “ By-Laws ”) of the Company as currently in effect. The Certificate of Incorporation and By-Laws are in full force and effect and no other organizational documents are applicable to or binding upon the Company. The Company is not in violation of any provisions of its Certificate of Incorporation or By-Laws in any material respect.

     SECTION 3.3   Capitalization . The authorized capital stock of the Company consists of (i) 120,000,000 shares of Common Stock and (ii) 20,000,000 shares of preferred stock, par value $0.001 per share (the “ Preferred Stock ”). As of December 13, 2005, (i) 32,357,385 shares of Common Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were issued free of preemptive rights, (ii) an aggregate of 2,469,364 shares of Common Stock were reserved for issuance upon or otherwise deliverable in connection with the grant of equity-based awards or the exercise of outstanding Options issued pursuant to the Company’s Stock Incentive Plan (the “ Company Stock Plan ”) and (iii) no shares of Preferred Stock were outstanding. From the close of business on December 13, 2005 until the date of this Agreement, no Options to purchase shares of Company Common Stock or Preferred Stock have been granted and no shares of Company Common Stock or Preferred Stock have been issued, except for Common Stock issued pursuant to the exercise of Options already outstanding as of such date in accordance with their terms. Except as otherwise set forth above, as of the date hereof: (A) there are not outstanding or authorized any (I) shares of capital stock or other voting securities of the Company, (II) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company or (III) options or other rights to acquire from the Company, and no obligation of the Company to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company (collectively, “ Company Securities ”), (B) there are no outstanding obligations of the Company to repurchase, redeem or otherwise acquire any Company Securities and (C) there are no other options, calls, warrants, registration obligations or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any of its subsidiaries to which the Company or any of its subsidiaries is a party. Other than its subsidiaries, the Company does not have any equity investment in any Person. Each of the outstanding shares of capital stock, voting securities or other equity interests of each of the Company’s subsidiaries is duly authorized, validly issued, fully paid and nonassessable and all such shares are owned by the Company or another wholly-owned subsidiary of the Company and are owned free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting rights, charges or other encumbrances of any nature whatsoever, except where any such failure to own any such shares free and clear would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Notwithstanding any other provision of this Agreement, in no event shall the number of Shares outstanding, or issuable pursuant to outstanding options, warrants, share equivalents or securities of any kind convertible or exchangeable into Shares or other rights with respect to Shares, exceed 34,839,609 in the aggregate as of immediately prior to the Effective Time. No subsidiary of the Company owns any capital stock of the Company. Section 3.3 of the Company Disclosure Schedule sets forth a true and correct list as of the date hereof of all holders of

Options, the number of Shares issuable pursuant to each Option held by each such holder and the exercise price per Share thereof.

     SECTION 3.4   Authority . The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions so contemplated (other than adoption of this Agreement at the Stockholders Meeting by (a) the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon and (b) the affirmative vote of the holders of a majority of shares of Common Stock present, in person or by proxy, at the Stockholders Meeting and voted “for” or “against” the adoption of this Agreement or with respect to which there is submitted an abstention in respect of the proposal to adopt the Agreement, other than shares owned by the Lightyear Entities or by the executive officers of the Company (both (a) and (b), the “ Company Requisite Vote ”), and the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and any implied covenant of good faith and fair dealing. The Board of Directors of the Company has approved and declared advisable, and has resolved to recommend that the Company’s stockholders adopt, this Agreement. The only vote of the stockholders of the Company required to adopt this Agreement and approve the transactions contemplated hereby is the Company Requisite Vote.

     SECTION 3.5   No Conflict; Required Filings and Consents . (a) The execution, delivery and performance of this Agreement by the Company do not and will not (i) conflict with or violate the Certificate of Incorporation or By-Laws of the Company or the comparable constituent or organizational documents of any of its subsidiaries, (ii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (v) of subsection (b) below have been obtained, and all filings described in such clauses have been made, conflict with or violate any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound or (iii) result in any breach or violation of or constitute a default (or an event which with notice or lapse of time or both would become a default) or result in the loss of a right or benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation (each, a “ Contract ”) to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries or its or any of their respective properties are bound, except, in the case of clauses (ii) and (iii), for any such conflict, violation, breach, default, loss, right or other

occurrence which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

     (b) The execution, delivery and performance of this Agreement by the Company and the consummation of the Merger by the Company do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any governmental or regulatory (including stock exchange) authority, agency, court commission, or other governmental body (each, a “ Governmental Entity ”), except for (i) applicable requirements of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”) and the rules and regulations promulgated thereunder (including the filing of the Proxy Statement (as defined below)), the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and state securities, takeover and “blue sky” laws, (ii) the applicable requirements of the Nasdaq National Market, (iii) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL, (iv) the applicable requirements of antitrust or other competition laws of jurisdictions other than the United States or investment laws relating to foreign ownership (“ Foreign Antitrust Laws ”) and (v) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not (A) prevent or materially delay the Company from performing its obligations under this Agreement in any material respect or (B) individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.6   Compliance . (a) Neither the Company nor any of its subsidiaries is in violation of, and since January 1, 2003, each of the Company and its subsidiaries has conducted its business only in compliance with, any law, rule, regulation, order, judgment or decree applicable to the Company or any of its subsidiaries or by which its or any of their respective properties are bound, except for any such violation or non-compliance which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, and (b) the Company and its subsidiaries have all permits, licenses, authorizations, exemptions, orders, consents, approvals and franchises (“ Licenses ”) from Governmental Entities required to conduct their respective businesses as now being conducted, except for any such Licenses the absence of which would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Without limiting the generality of the foregoing, except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, each of the Company and its subsidiaries is, and since January 1, 2003, has conducted its business, in compliance with the Higher Education Act of 1965, as amended and the published rules, regulations and interpretations of the DOE thereunder or thereof (collectively, the “ Higher Education Act ”) and the published rules and requirements of all guaranty agencies with which the Company or its subsidiaries has a guaranty agreement in effect as of the date hereof (each such guaranty agency, an “ Applicable Guaranty Agency ”) under the Higher Education Act and, since January 1, 2003, none of the Company or any of its subsidiaries has been notified in writing by any Governmental Authority or Applicable Guaranty Agency of any potential failure or alleged failure to so comply.

     SECTION 3.7   SEC Filings; Financial Statements . (a) The Company has filed or otherwise transmitted all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed by it with the Securities and Exchange Commission (the “ SEC ”) since July 15, 2004, including the Company’s

final prospectus dated July 15, 2004, in connection with its initial public offering (all such forms, reports, statements, certificates and other documents filed since July 15, 2004, collectively, the “ SEC Reports ”). Each of the SEC Reports, as amended, complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended (the “ Securities Act ”) and the rules and regulations promulgated thereunder and the Exchange Act and the rules and regulations promulgated thereunder, each as in effect on the date so filed. None of the SEC Reports contained, when filed, any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

     (b) The audited consolidated financial statements of the Company (including any related notes thereto) included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004 filed with the SEC have been prepared, and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, if and when filed, will be prepared, in accordance with generally accepted accounting principles in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present, or will fairly present, in all material respects the consolidated financial position of the Company and its subsidiaries at the respective dates thereof and the consolidated statements of operations, cash flows and changes in stockholders’ equity for the periods indicated. The unaudited consolidated financial statements of the Company (including any related notes thereto) for all interim periods included in the Company’s quarterly reports on Form 10-Q filed with the SEC since January 1, 2005 have been, or if not filed prior to the date hereof, will be, prepared in accordance with generally accepted accounting principles in all material respects applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto) and fairly present, or will fairly present, in all material respects the consolidated financial position of the Company and its subsidiaries as of the respective dates thereof and the consolidated statements of operations and cash flows for the periods indicated (subject to normal period-end adjustments).

     (c) Since the enactment of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”), the Company has been and is in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and corporate governance rules and regulations of the Nasdaq National Market.

     (d) The Company has designed disclosure controls and procedures to ensure that material information relating to the Company, including its subsidiaries, is made known to the Chief Executive Officer and the Chief Financial Officer of the Company by others within those entities.

     (e) The Company has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s auditors and the audit committee of the Company’s Board of Directors (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other

employees who have a significant role in the Company’s internal controls over financial reporting.

     (f) To the knowledge of the Company, the Company has not identified any material weaknesses in the design or operation of internal controls over financial reporting. To the knowledge of the Company, there is no reason to believe that its auditors and its Chief Executive Officer and Chief Financial Officer will not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Sections 302 and 404 of the Sarbanes-Oxley Act, when due.

     SECTION 3.8   Absence of Certain Changes or Events; Absence of Undisclosed Liabilities . Since September 30, 2005, the Company and its subsidiaries have conducted their business in the ordinary course consistent with past practice and, since such date, there has not been: (a) any change, event or occurrence which has had, individually or in the aggregate, a Material Adverse Effect; (b) prior to the date of this Agreement, any declaration, setting aside or payment of any dividend or other distribution in cash, stock, property or otherwise in respect of the Company’s or any of its subsidiaries’ capital stock, except for any dividend or distribution by a direct or indirect wholly-owned subsidiary of the Company to the Company or to another direct or indirect wholly-owned subsidiary of the Company; (c) prior to the date of this Agreement, any redemption, repurchase or other acquisition of any shares of capital stock of the Company or any of its subsidiaries; (d) prior to the date of this Agreement, (i) any granting by the Company or any of its subsidiaries to any of their directors, officers or employees of any increase in compensation, except for increases in the ordinary course of business or increases required under any Company Plan, (ii) any granting to any director, officer or employee of the Company or its subsidiaries of the right to receive any severance or termination pay not provided for under any Company Plan, or (iii) any entry by the Company or any of its subsidiaries into any employment, consulting, severance, change in control or compensation agreement or arrangement with any director, officer or employee of the Company or its subsidiaries, or any material amendment of any Company Plan; (e) prior to the date of this Agreement, any material change by the Company in its accounting principles, except as may be appropriate to conform to changes in statutory or regulatory accounting rules or generally accepted accounting principles or regulatory requirements with respect thereto; (f) prior to the date of this Agreement, any material Tax election made, changed or revoked by the Company or any of its subsidiaries, any surrender of a right to claim a material Tax refund or any settlement or compromise of any material Tax liability by the Company or any of its subsidiaries; or (g) prior to the date of this Agreement, any material change in tax accounting principles by the Company or any of its subsidiaries, except insofar as may have been required by applicable law. Neither the Company nor any of its subsidiaries has any liabilities or obligations of any nature whatsoever (whether accrued, absolute, contingent or otherwise) (“ Liabilities ”), except for those Liabilities that (i) are accrued or reserved against in the most recent consolidated balance sheet included in the SEC Reports filed prior to the date hereof or are reflected in the notes thereto, (ii) were incurred in the ordinary course of business consistent with past practice of the Company since the date of such financial statements, or (iii) as, would not individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.9   Absence of Litigation . There are no suits, claims, actions, proceedings, arbitrations, mediations, investigations or governmental inquiries (an “ Action ”)

pending or, to the knowledge of the Company, threatened against the Company or any of its subsidiaries, other than any such Action that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. As of the date hereof, neither the Company nor any of its subsidiaries nor any of their respective properties is or are subject to any order, writ, judgment, injunction, decree or award, except for those that would not individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, there are no pending or, to the knowledge of the Company, threatened, and since January 1, 2003 there have not been any, SEC inquiries or investigations, other governmental inquiries or investigations, or internal investigations, in each case regarding the Company or any of its subsidiaries or any malfeasance by any employee of the Company.

     SECTION 3.10   Employee Benefit Plans . (a) Section 3.10(a) of the Company Disclosure Schedule contains a true and complete list of each “ employee benefit plan ” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), but excluding any plan that is a “multiemployer plan,” as defined in Section 3(37) of ERISA (“ Multiemployer Plan ”)), and each other director and employee plan, program, agreement or arrangement, vacation or sick pay policy, fringe benefit plan, compensation, deferred compensation, incentive (including equity), bonus, severance, consulting, change in control or employment agreement or arrangement, contributed to, sponsored or maintained by the Company or any of its subsidiaries, or pursuant to which the Company or any of its subsidiaries has any liability, for the benefit of any current, former or retired employee, officer, consultant, independent contractor or director of the Company or any of its subsidiaries (collectively, the “ Company Employees” and such plans, programs, policies, agreements and arrangements, collectively, the “ Company Plans ”). Since July 15, 2004, all Options were granted at an exercise price at least equal to the fair market value of a Share on the date of grant.

     (b) With respect to each Company Plan, the Company has made available to the Parent a current, accurate and complete copy thereof (or, if a plan is not written, a written description thereof) and, to the extent applicable, (i) any related trust or custodial agreement or other funding instrument, (ii) the most recent determination letter, if any, received from the Internal Revenue Service (the “ IRS ”), (iii) any summary plan description or employee handbook, and (iv) for the most recent year (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports, if any.

     (c) Each Company Plan has been established and administered in all material respects in accordance with its terms and in compliance in all material respects with the applicable provisions of ERISA, the Internal Revenue Code of 1986, as amended (the “ Code ”), and other applicable laws, rules and regulations.

     (d) With respect to each Company Plan, no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the knowledge of the Company, threatened, that would reasonably be expected to give rise to a material liability. There is not now, nor do any circumstances exist that would reasonably be expected to give rise to, any requirement for the posting of security with respect to a Company Plan or the imposition

of any material lien on the assets of the Company or any of its subsidiaries under ERISA or the Code.

     (e) Each Company Plan which is intended to be qualified under Section 401(a) of the Code and the related trust which is intended to be exempt have received a determination letter to that effect from the IRS and, to the knowledge of the Company, no circumstances exist which would reasonably be expected to adversely affect such qualification or exemption.

     (f) No Company Plan is a Multiemployer Plan, a plan that has two or more contributing sponsors at least two of whom are not under common control, within the meaning of Section 4063 of ERISA (a “ Multiple Employer Plan ”), or a plan otherwise subject to Title IV of ERISA; and (ii) none of the Company or its subsidiaries nor any of their respective ERISA Affiliates has, at any time during the last six years, contributed to or been obligated to contribute to any Multiemployer Plan, Multiple Employer Plan or plan that is subject to Title IV. For purposes of this Section 3.10, “ ERISA Affiliate ” means, with respect to any entity, trade or business, any other entity, trade or business that is a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes the first entity, trade or business, or that is a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.

     (g) None of the Company and its subsidiaries nor any other person that the Company or any of its subsidiaries has an obligation to indemnify has engaged in any “prohibited transaction” (as defined in Section 4975 of the Code or Section 406 of ERISA) that would reasonably be expected to subject any of the Company Plans or their related trusts, the Company, any of its subsidiaries or any person that the Company or any of its subsidiaries has an obligation to indemnify, to any material tax or penalty imposed under Section 4975 of the Code or Section 502 of ERISA.

     (h) Neither the Company nor any of its subsidiaries have an obligation under a Company Plan or otherwise to provide health care benefits (whether or not insured) to Company Employees beyond their retirement or other termination of service, other than coverage mandated by applicable law the full cost of which is borne by the Company Employee.

     (i) The execution, delivery of and performance by the Company of its obligations in respect of the transactions contemplated by this Agreement will not (either alone or upon occurrence of any additional or subsequent events): (i) constitute an event under any Company Plan or any trust or loan related to any of those plans or agreements that will or may result in any payment, acceleration, forgiveness of indebtedness, vesting, distribution, increase in payments or benefits, obligation to fund payments or benefits or “parachute payments” (within the meaning of Section 280G of the Code)) with respect to any Company Employee, or (ii) result in the triggering or imposition of any restrictions or limitations on the right of the Company or any of its subsidiaries to amend, terminate or receive a reversion of assets from any Company Plan.

     SECTION 3.11   Labor and Employment Matters . None of the Company or any of its subsidiaries is a party to or bound by any collective bargaining agreement respecting its

employees, and, to the knowledge of the Company, no campaigns are being conducted to solicit cards from any employee of the Company or any of its subsidiaries to authorize representation by any labor organization.

     SECTION 3.12   Insurance . The Company and its subsidiaries maintain insurance coverage with insurers in such amounts and against such risks and with coverage customarily carried by Persons conducting business or owning assets similar to the Company and its subsidiaries except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Section 3.12 of the Company Disclosure Schedule sets forth a complete and accurate list of all insurance policies providing coverage in favor of the Company or any of its subsidiaries or any of their respective properties, and the Company has delivered to Parent a complete and accurate copy of all binders in the Company’s possession as of the date of this Agreement. Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, (i) each such policy is in full force and effect, and neither the Company nor any of its subsidiaries is in breach or default, and neither the Company nor any of its subsidiaries has taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification of, any such insurance policies and (ii) to the knowledge of the Company, there has not been any failure to give any notice or present any claim under any such policy in a timely fashion or in the manner required by any such policy, and, as of the date of this Agreement, none of the Company nor any of its subsidiaries has received any written notice of termination, cancellation or reservation of rights from any insurer.

     SECTION 3.13   Properties . (a) None of the Company or any of its subsidiaries owns any real property. With respect to the real property leased by the Company or its subsidiaries (the “ Leased Real Property ”), (i) all of the leases under which the Company or any of its subsidiaries is a tenant are in full force and effect, and the Company has delivered or otherwise made available to Parent prior to the date hereof true and correct copies of such leases, which leases are set forth on Section 3.13 of the Company Disclosure Schedule, and (ii) neither the Company or its applicable subsidiary nor, to the knowledge of the Company, any other party to any of these leases is in material breach or violation or default under any lease relating to the Leased Real Property.

     (b) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Company or one of its subsidiaries has good title to all material personal property reflected in the latest audited balance sheet included in the SEC Reports as being owned by the Company or one of its subsidiaries or acquired after the date thereof that are material to the Company’s business on a consolidated basis (except personal property sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all claims, liens, charges, security interests, easements, covenants and other restrictions or encumbrances of any nature whatsoever (“ Liens ”) except (i) statutory liens securing payments not yet due, (ii) mortgages, or deeds of trust, security interests or other encumbrances on title related to indebtedness reflected on the consolidated financial statements of the Company and (iii) Liens that do not materially affect the use of such property for its intended purposes (such Liens or encumbrances described in Sections 3.13(b)(i), (ii) and (iii), collectively, “ Permitted Liens ”).

     SECTION 3.14   Tax Matters . (a) Except as would not, individually or in the aggregate, reasonably be expected to result in, a Material Adverse Effect, (i) all Tax Returns required to be filed by, or with respect to any properties or activities of, the Company and its subsidiaries have been filed (except those under valid extension), (ii) all Taxes of the Company and its subsidiaries have been paid or adequately provided for on the most recent financial statements included in the SEC Reports, (iii) neither the Company nor any of its subsidiaries has received written notice of any action, suit, proceeding, investigation, claim or audit against, or with respect to, any Taxes, (iv) there are no liens for Taxes (other than Taxes not yet due and payable) upon any of the assets of the Company or any of its subsidiaries, and (v) neither the Company nor any of its subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income tax return (other than a group the common parent of which was the Company), (B) has any liability for the Taxes of any Person (other than the Company, or any subsidiary of the Company) under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign law) or (C) is a party to or is bound by any Tax sharing, allocation or indemnification agreement or arrangement. Neither the Company nor any of its subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock intended to qualify for tax-free treatment under Section 355(a) of the Code (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution that otherwise constitutes part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) of which the Merger is also a part. The Company has not been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Neither the Company nor any of its subsidiaries has participated in any “reportable transaction” as defined in Treasury Regulation Section 1.6011-4.

     (b) For purposes of this Agreement, “ Taxes” shall mean any taxes of any kind, including but not limited to those on or measured by or referred to as income, gross receipts, capital, sales, use, ad valorem, franchise, profits, license, withholding, payroll, employment, excise, severance, stamp, occupation, premium, value added, property or windfall profits taxes, customs, duties or similar fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts imposed by any governmental authority, domestic or foreign. For purposes of this Agreement, “ Tax Return ” shall mean any return, report or statement required to be filed with any governmental authority with respect to Taxes, including any schedule or attachment thereto or amendment thereof.

     SECTION 3.15   Proxy Statement . None of the information supplied or to be supplied by the Company for inclusion or incorporation by reference in the proxy statement to be sent to the shareholders of the Company in connection with the Stockholders Meeting (such proxy statement, as amended or supplemented, the “ Proxy Statement ”) will, at the date it is first mailed to the stockholders of the Company and at the time of the Stockholders Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they are made, not misleading. The Proxy Statement will, at the time of the Stockholders Meeting, comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information

supplied by Parent or Merger Sub or any of their respective representatives which is contained or incorporated by reference in the Proxy Statement.

     SECTION 3.16   Opinion of Financial Advisor . Goldman, Sachs & Co. has delivered to the Board of Directors of the Company its written opinion (or oral opinion to be confirmed in writing), dated as of the date hereof, that, as of such date and based upon and subject to the matters set forth therein, the Merger Consideration is fair, from a financial point of view, to the holders of the Common Stock, and, as of the date hereof, such opinion has not been rescinded, repudiated or, except as set forth therein, qualified.

     SECTION 3.17   Brokers . No broker, finder or investment banker (other than Goldman, Sachs & Co. pursuant to a written agreement, a true and complete copy of which has been provided to Parent prior to the date hereof) is entitled to any brokerage, finder’s or other fee or commission from the Company or any of its subsidiaries in connection with the transactions contemplated by this Agreement.

     SECTION 3.18   Takeover Statutes . Assuming the accuracy of the representations and warranties of Parent and Merger Sub set forth in Section 4.9, no “fair price,” “moratorium,” “control share acquisition,” “business combination” or other antitakeover statute or regulation enacted under state or federal laws in the United States applicable to the Company, including Section 203 of the DGCL, is applicable to the Merger or the other transactions expressly contemplated hereby. To the fullest extent of its powers, the Board of Directors of the Company has passed a resolution, and the Company has taken all necessary steps, to exempt this Agreement, the Stockholder Agreement and the transactions contemplated hereby or thereby from such takeover statutes, including Section 203 of the DGCL.

     SECTION 3.19   Intellectual Property . Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect: (a) the Company and its subsidiaries own or have the right to use all patents, inventions, copyrights, software, trademarks, service marks, domain names, trade dress, trade secrets and all other intellectual property rights of any kind or nature (“ Intellectual Property ”) as are necessary for, and as are used in, their businesses as currently conducted; (b) to the knowledge of the Company, such Intellectual Property does not infringe the Intellectual Property of any third party (and the Company has not, since January 1, 2003, received any written notice alleging any such infringement that has not since been resolved prior to the date hereof without remaining Liability to any of the Company or its subsidiaries (other than as may be accrued for in the Company’s balance sheet dated as of September 30, 2005 included in the SEC Reports)) and is not being infringed by any third party; (c) the Company and its subsidiaries make commercially reasonable efforts to protect and maintain their Intellectual Property; and (d) the Company is not and has not been since January 1, 2003, a party to any claim, suit or other action, and to the knowledge of the Company, no claim, suit or other action is or has been since January 1, 2003, threatened, that challenges the validity, enforceability, ownership, or right to use, sell or license the Intellectual Property.

     SECTION 3.20   Contracts . (a) Except for this Agreement, none of the Company or any of its subsidiaries is a party to or bound by any Contract: (i) that would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act; (ii) relating to (A) the borrowing of money or obtaining extensions of

credit by the Company or any of its subsidiaries in principal amount in excess of $5 million individually or $15 million in the aggregate or (B) the loaning of money or granting extensions of credit (other than student loans and other than advances made to employees or consultants for expenses in the ordinary course of business consistent with past practices not exceeding, in the aggregate $20,000, outstanding at any time) by the Company or any of its subsidiaries; (iii) with respect to the purchase, generation or sale of student loans or Successfully Completed Applications or Private Loan applications in excess of $50 million in principal amount (other than sales among the Company and its directly or indirectly wholly-owned subsidiaries in connection with a securitization transaction in which the Company or its directly or indirectly wholly-owned subsidiaries retains ownership of such student loans); (iv) under which any federal agency, state agency or other entity provides a guarantee pursuant to the Higher Education Act of the principal of and/or accrued interest on any student loan in excess of $100 million in aggregate principal amount extended by the Company or any of its subsidiaries; (v) pursuant to which the Company or any of its subsidiaries services student loans for any third party in excess of $100 million in aggregate principal amount or by which any third party services student loans for the Company or any of its subsidiaries in excess of $100 million in aggregate principal amount; (vi) containing covenants or agreements by or binding upon the Company or any of its subsidiaries that require any one of them to refrain from hiring or soliciting for employment any person or that restrict or by their terms purport to restrict the ability of the Company or any of its subsidiaries (or which, following the consummation of the Merger, would restrict the ability of the Surviving Corporation or any of its affiliates) to compete in any business or with any person or in any geographic area, or containing “exclusive dealing” or similar provisions or restrictive covenants or similar provisions, or that require the Company or any of its subsidiaries to provide pricing or other terms that are no less favorable to the other party or parties thereto than terms provided to one or more other existing or prospective customers of the Company or any of its subsidiaries, except for any such contract that may be cancelled on notice of 30 days or less without penalty or any payment and without any remaining Liability or obligation to or on the Company or any of its subsidiaries; (vii) with respect to a joint venture or partnership agreement; (viii) with an affiliate or holder of more than 5% of the outstanding Common Stock of the Company involving a nonmonetary commitment on the part of the Company or involving amounts in excess of $60,000; (ix) that involve the licensing to or from any of the Company or its subsidiaries of any intellectual property material to the conduct of the business of the Company and its subsidiaries, other than agreements entered into by College Publisher, Inc. and Collegexit.com LLC, in each case entered into in the ordinary course of business; or (x) that would prevent, materially delay or materially impede the Company’s ability to consummate the Merger or the other transactions contemplated by this Agreement. Each such Contract described in clauses (i) through (x) is referred to herein as a “ Material Contract .”

     (b) Each of the Material Contracts is valid and binding on the Company and each of its subsidiaries party thereto and, to the knowledge of the Company, each other party thereto and is in full force and effect, except for such failures to be valid and binding or to be in full force and effect that would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. There is no default under any Material Contract by the Company or any of its subsidiaries or, to the knowledge of the Company, any other party thereto, and no event has occurred that with the lapse of time or the giving of notice or both would constitute a default thereunder by the Company or any of its subsidiaries, in each case except as

would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.21   Affiliate Transactions . No executive officer or director of the Company or any of its subsidiaries or any person who beneficially owns 5% or more of the Company Common Stock is a party to any Contract with or binding upon the Company or any of its subsidiaries or any of their respective properties or assets or has any interest in any property owned by the Company or any of its subsidiaries or has engaged in any transaction with any of the foregoing since December 14, 2004, involving a nonmonetary commitment on the part of the Company or involving amounts in excess of $60,000.

     SECTION 3.22   Student Loan Portfolio . For purposes of this Agreement, “FFELP Loans” means all student loans originated or held under the Federal Family Education Loan Program authorized by Part B, Title IV of the Higher Education Act (including any such loans originated or made by others and acquired by the Company or any of its subsidiaries) and held by the Company or any of its subsidiaries; “Private Loans” means all student loans originated or held other than the FFELP loans (including any such loans originated or made by others and acquired by the Company or any of its subsidiaries) and held by the Company or any of its subsidiaries; “Student Loan Portfolio” means the FFELP Loans and the Private Loans; and “ Successfully Completed Application ” shall have the applicable meaning ascribed to such term in the applicable third party contract to which the Company or any of its subsidiaries is a party.

     (a) Except as would not, individually or in the aggregate, be material to the Company, the loans in the Student Loan Portfolio are in full force and effect and are legal, valid and binding obligations of the borrowers thereunder, enforceable in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, fraudulent conveyance and similar laws relating to creditor rights generally, subject to general principles of equity and subject to any reserves with respect thereto on the books and records of the Company not materially different than the percentage level of reserves with respect to such loans as of the date hereof and except for loans noted on the Company’s books and records as being subject to bankruptcy proceedings; and except as would not, individually or in the aggregate, interfere in any material respect with the conduct of the Company’s business as currently conducted there exists a student loan file in the possession of the Company or its designated servicer pertaining to each loan in the Student Loan Portfolio containing substantially all the documents customarily contained in a student loan file.

     (b) The Bank of New York serves as eligible lender trustee (“ Eligible Lender Trustee ”) on behalf of the Company, its subsidiaries and the securitization trusts and in that capacity holds legal title to, and is the sole legal owner of, the FFELP Loans, free and clear of all material Liens, other than as set forth in Section 3.22(b) of the Company Disclosure Schedule.

     (c) Each FFELP Loan or Successfully Completed Application originated by the Company or any of its subsidiaries or serviced by the Company or any of its subsidiaries has been duly originated or serviced, as applicable, by the Company (or the applicable subsidiary) in all material respects in compliance and in accordance with the Company’s (or the applicable subsidiary’s) applicable third party contracts and the Higher Education Act and the published rules, regulations and interpretations thereunder.

     (d) Except as would not, individually or in the aggregate, be material to the Company, each FFELP Loan is duly guaranteed by an eligible guarantor under the Federal Family Education Loan Program and such guarantees are in full force and effect. Neither the Company nor any of its subsidiaries has been notified in writing by any such guarantor to the contrary or by the Department of Education of a denial of federal reinsurance benefits, or of any failure to adhere in any material respect to any rules, standards or requirements of such guarantor, in any such case that has not been cured or is not capable of being cured without, individually or in the aggregate, any material expense or Liability to the Company or its subsidiaries.

     (e) Except as would not, individually or in the aggregate, be material to the Company, the Company (or one of its subsidiaries) has good and marketable title to (or upon final funding or disbursement and transfer to the Company will have good and marketable title to) the Private Loans, free and clear of all Liens other than liens related to the private loan warehouse facility. Each Private Loan or Private Loan application has been duly originated, and is being held and serviced, in all material respects in accordance with the applicable third party contracts to which the Company or any of its subsidiaries is a party relating to such loans and the credit and collection policies of the Company or its subsidiaries as previously disclosed to Parent.

     (f) To the knowledge of the Company, each FFELP Loan or Private Loan and each Successfully Completed Application or Private Loan application that is owned or serviced by the Company or any of its subsidiaries and that was not originated or serviced by or on behalf of the Company or any of its subsidiaries (i) was originated and serviced in a manner consistent in all material respects with the standards for such origination and servicing set forth in the agreement pursuant to which the Company or any of its subsidiaries acquired such FFELP Loan or Successfully Completed Application, or such Private Loan or Private Loan application, and (ii) was originated and serviced in compliance in all material respects with all applicable laws and regulations prior to its acquisition by the Company.

     (g) Section 3.22(g) of the Company Disclosure Schedule lists all claims involving the Company or any of its subsidiaries relating to the loss by the Company of “Exceptional Performer” status.

     SECTION 3.23   Compliance with Third Party Servicer Regulations; Audits and Inquiries .

     (a) Except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect, the Company and its subsidiaries are, and giving effect to the Merger will be, in compliance with all applicable requirements of federal law and the Higher Education Act regarding qualification and performance as a third-party servicer (as such terms are defined in the regulations of the Department of Education under the Higher Education Act) for all entities for which the Company or any of its subsidiaries acts as a third-party servicer, other than any such failure to comply relating to Parent or any of its subsidiaries. The execution, delivery and performance of this Agreement and the agreements and documentation relating thereto, and the consummation of the transactions contemplated hereby and thereby will not cause, and would not reasonably be expected to cause, the Company or any

of its subsidiaries to fail to qualify as a third-party servicer, other than any such failure relating to Parent or any of its subsidiaries.

     (b) Except for customary ongoing quality control reviews, and except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, no audit or investigation by a Governmental Entity is pending or, to the knowledge of the Company, threatened that is reasonably likely to result in (1) a claim of a failure to comply with applicable laws, rules or regulations; (2) rescission, in whole or in part, of any insurance or guaranty contract or agreement of the Company or any of its subsidiaries; or (3) payment by the Company or any of its subsidiaries of a penalty to any Governmental Entity.

     SECTION 3.24   Securitization Matters .

     (a) No registration statement, prospectus, private placement memorandum or other offering document, or any amendments or supplements to any of the foregoing, utilized in connection with the offering of securities in any Company Sponsored Asset Securitization Transaction (collectively, “ Securitization Disclosure Documents ”), true and correct copies of representative examples of which have been provided to Parent and true and correct copies of which will, after the date hereof, be made available to Parent, as of its effective date (in the case of a registration statement) or its issue date (in the case of any other such document), contained any untrue statement of any material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading. “ Company Sponsored Asset Securitization Transaction ” means any loan or other asset securitization transaction in which the Company or any of its subsidiaries was an issuer, sponsor or depositor, all of which are listed on Section 3.24(a) of the Company Disclosure Schedule.

     (b) Section 3.24(b) of the Company Disclosure Schedule sets forth a true and correct list as of the date hereof of all outstanding Company Sponsored Asset Securitization Transactions, and for each such transaction a list of all outstanding securities issued therein, including securities retained by the Company and its subsidiaries, and includes the original and current rating and the principal amount as of the most current reporting date for each security listed thereon.

     (c) Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company, any trustee, master servicer, servicer or issuer with respect to Company Sponsored Asset Securitization Transaction, has taken or failed to take any action which would reasonably be expected to adversely affect the intended tax characterization or tax treatment for federal, state or local income or franchise tax purposes of the issuer or any securities issued in any such Company Sponsored Asset Securitization Transaction. All federal, state and local income or franchise tax and information returns and reports required to be filed by the issuer, master servicer, servicer or trustee relating to any Company Sponsored Asset Securitization Transactions, and all tax elections required to be made in connection therewith, have been properly filed or made.

     SECTION 3.25   No Other Representations or Warranties . Except for the representations and warranties contained in this Article III, Parent and Merger Sub acknowledges

that neither the Company nor any other person on behalf of the Company makes any other express or implied representation or warranty with respect to the Company or with respect to any other information provided to Parent or Merger Sub, including with respect to such other information made available to Parent or Merger Sub in connection with the transactions contemplated by this Agreement.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF
PARENT AND MERGER SUB

     Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company that:

     SECTION 4.1   Organization . Each of Parent and Merger Sub is a corporation duly organized, validly existing and in good standing (with respect to jurisdictions that recognize the concept of good standing) under the laws of the jurisdiction in which it is incorporated and has all requisite corporate or similar power and authority to own, operate and lease its properties and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power or authority would not prevent or materially delay the consummation of the transactions contemplated by this Agreement. Parent owns beneficially and of record all of the outstanding capital stock of Merger Sub free and clear of all security interests, liens, claims pledges, agreements, limitations in voting rights, charges or other encumbrances of any nature whatsoever.

     SECTION 4.2   Authority . Each of Parent and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by each of Parent and Merger Sub and the consummation by each of Parent and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary action by the Boards of Directors of Parent and Merger Sub and, prior to the Effective Time, will be duly and validly authorized by all necessary action by Parent as the sole stockholder of Merger Sub, and no other corporate proceedings or stockholder vote on the part of Parent or Merger Sub or their affiliates are necessary to authorize this Agreement, to perform their respective obligations hereunder, or to consummate the transactions contemplated hereby (other than the filing with the Secretary of State of the State of Delaware of the Certificate of Merger as required by the DGCL). This Agreeme