Prior to the issuance of any revenue bonds a sinking fund shall be established, the custodian of which shall be the State Treasurer. There shall be deposited in the sinking fund the revenues from all of the sources pledged for the payment of the revenue bonds including all moneys received directly or indirectly by way of principal and interest, exclusive of the "spread" referred to in § 59-115-60, from the repayment of student loans. Except to the extent of any surplus therein, moneys in the sinking fund shall be used for the sole purpose of paying the principal of and interest on revenue bonds of the authority from time to time outstanding.

In the event that the authority shall undertake to guarantee student loans, there shall be established and maintained by the authority a trust fund which shall be designated the "State Education Assistance Authority Loan Guarantee Reserve Fund". The fund shall be used by the authority to remedy defaults on student loans to the extent such defaulted loans are not covered by any existing or future program of federal insurance or reinsurance. There shall be deposited to the credit of the loan guarantee reserve fund all premiums received by the authority for guaranteeing student loans and all moneys made available to the authority for the guaranteeing of student loans including federal funds made available for such purpose. Moneys in the fund shall not be pledged to the repayment of the authority’s revenue bonds, but if all liability of the authority to remedy defaults on student loans have been extinguished such moneys remaining in the loan guarantee reserve fund shall be deposited in the sinking fund. The liability of the State upon its obligation to guarantee student loans shall not constitute a pledge of the faith and credit of the State but shall be payable solely from moneys in the loan guarantee reserve fund.