The 1963 Tennessee General Assembly passed into law a bill creating the Tennessee Education Loan Corporation (TELC), a nonprofit group, to obtain loans for college students needing financial assistance. The TELC entered into agreements with students and with commercial banks. Under the agreements, the students agreed to repay the bank for the loan within four years after completion of the education; the bank loaned the funds at a low interest rate; and the TELC guaranteed 95 percent repayment of the loan. If the student defaulted, the TELC would repay up to 95 percent of the loan and then attempt to collect from the student. Undergraduate students could borrow up to $750 a year, while graduate students could borrow up to $1,000 a year, with $3,000 being the maximum amount a student could be loaned under the program.