**SALLIE MAE**

**20 U.S.C. 1087-2**

**Section 1087-2. Student Loan Marketing Association**

\(a\) Purpose

The Congress hereby declares that it is the purpose of this

section (1) to establish a private corporation which will be

financed by private capital and which will serve as a secondary

market and warehousing facility for student loans, including loans

which are insured by the Secretary under this part or by a guaranty

agency, and which will provide liquidity for student loan

investments; (2) in order to facilitate secured transactions

involving student loans, to provide for perfection of security

interests in student loans either through the taking of possession

or by notice filing; and (3) to assure nationwide the establishment

of adequate loan insurance programs for students, to provide for an

additional program of loan insurance to be covered by agreements

with the Secretary.

\(b\) Establishment

\(1\) In general

There is hereby created a body corporate to be known as the

Student Loan Marketing Association (hereinafter referred to as

the \'\'Association\'\'). The Association shall have succession until

dissolved. It shall maintain its principal office in the

District of Columbia and shall be deemed, for purposes of venue

and jurisdiction in civil actions, to be a resident and citizen

thereof. Offices may be established by the Association in such

other place or places as it may deem necessary or appropriate for

the conduct of its business.

\(2\) Exemption from State and local taxes

The Association, including its franchise, capital, reserves,

surplus, mortgages, or other security holdings, and income shall

be exempt from all taxation now or hereafter imposed by any

State, territory, possession, Commonwealth, or dependency of the

United States, or by the District of Columbia, or by any county,

municipality, or local taxing authority, except that any real

property of the Association shall be subject to State,

territorial, county, municipal, or local taxation to the same

extent according to its value as other real property is taxed.

\(3\) Appropriations authorized for establishment

There is hereby authorized to be appropriated to the Secretary

\$5,000,000 for making advances for the purpose of helping to

establish the Association. Such advances shall be repaid within

such period as the Secretary may deem to be appropriate in light

of the maturity and solvency of the Association. Such advances

shall bear interest at a rate not less than (A) a rate determined

by the Secretary of the Treasury taking into consideration the

current average market yield on outstanding marketable

obligations of the United States with remaining period to

maturity comparable to the maturity of such advances, adjusted to

the nearest one-eighth of 1 percent, plus (B) an allowance

adequate in the judgment of the Secretary to cover administrative

costs and probable losses. Repayments of such advances shall be

deposited into miscellaneous receipts of the Treasury.

\(c\) Board of Directors

\(1\) Composition of Board; Chairman

\(A\) The Association shall have a Board of Directors which shall

consist of 21 persons, 7 of whom shall be appointed by the

President and shall be representative of the general public. The

remaining 14 directors shall be elected by the common

stockholders of the Association entitled to vote pursuant to

subsection (f) of this section. Commencing with the annual

shareholders meeting to be held in 1993 -

\(i\) 7 of the elected directors shall be affiliated with an

eligible institution; and

\(ii\) 7 of the elected directors shall be affiliated with an

eligible lender.

\(B\) The President shall designate 1 of the directors to serve

as Chairman.

\(2\) Terms of appointed and elected members

The directors appointed by the President shall serve at the

pleasure of the President and until their successors have been

appointed and have qualified. The remaining directors shall each

be elected for a term ending on the date of the next annual

meeting of the common stockholders of the Association, and shall

serve until their successors have been elected and have

qualified. Any appointive seat on the Board which becomes vacant

shall be filled by appointment of the President. Any elective

seat on the Board which becomes vacant after the annual election

of the directors shall be filled by the Board, but only for the

unexpired portion of the term.

\(3\) Affiliated members

For the purpose of this subsection, the references to a

director \'\'affiliated with the eligible institution\'\' or a

director \'\'affiliated with an eligible lender\'\' means an

individual who is, or within 5 years of election to the Board has

been, an employee, officer, director, or similar official of -

\(A\) an eligible institution or an eligible lender;

\(B\) an association whose members consist primarily of

eligible institutions or eligible lenders; or

\(C\) a State agency, authority, instrumentality, commission,

or similar institution, the primary purpose of which relates to

educational matters or banking matters.

\(4\) Meetings and functions of the Board

The Board of Directors shall meet at the call of its Chairman,

but at least semiannually. The Board shall determine the general

policies which shall govern the operations of the Association.

The Chairman of the Board shall, with the approval of the Board,

select, appoint, and compensate qualified persons to fill the

offices as may be provided for in the bylaws, with such

functions, powers, and duties as may be prescribed by the bylaws

or by the Board of Directors, and such persons shall be the

officers of the Association and shall discharge all such

functions, powers, and duties.

\(d\) Authority of Association

\(1\) In general

The Association is authorized, subject to the provisions of

this section -

\(A\) pursuant to commitments or otherwise to make advances on

the security of, purchase, or repurchase, service, sell or

resell, offer participations, or pooled interests or otherwise

deal in, at prices and on terms and conditions determined by

the Association, student loans which are insured by the

Secretary under this part or by a guaranty agency;

\(B\) to buy, sell, hold, underwrite, and otherwise deal in

obligations, if such obligations are issued, for the purpose of

making or purchasing insured loans, by a guaranty agency or by

an eligible lender in a State described in section

1085(d)(1)(D) or (F) of this title;

\(C\) to buy, sell, hold, insure, underwrite, and otherwise

deal in obligations issued for the purpose of financing or

refinancing the construction, reconstruction, renovation,

improvement, or purchase at institutions of higher education of

any of the following facilities (including the underlying

property) and materials (including related equipment,

instrumentation, and furnishings) at an eligible institution of

higher education:

\(i\) educational and training facilities;

\(ii\) housing for students and faculties, dining halls,

student unions, and facilities specifically designed to

promote fitness and health for students, faculty, and staff

or for physical education courses; and

\(iii\) library facilities, including the acquisition of

library materials at institutions of higher education;

except that not more than 30 percent of the value of

transactions entered into under this subparagraph shall involve

transactions of the types described in clause (ii);

\(D\) to undertake a program of loan insurance pursuant to

agreements with the Secretary under section 1078 of this title,

and except with respect to loans under subsection (o) of this

section or under section 1078-3 of this title, the Secretary

may enter into an agreement with the Association for such

purpose only if the Secretary determines that (i) eligible

borrowers are seeking and unable to obtain loans under this

part, and (ii) no guaranty agency is capable of or willing to

provide a program of loan insurance for such borrowers; and

\(E\) to undertake any other activity which the Board of

Directors of the Association determines to be in furtherance of

the programs of insured student loans authorized under this

part or will otherwise support the credit needs of students,

except that -

\(i\) in carrying out all such activities the purpose shall

always be to provide secondary market and other support for

lending programs offered by other organizations and not to

replace or compete with such other programs;

\(ii\) nothing in this subparagraph (E) shall be deemed to

authorize the Association to acquire, own, operate, or

control any bank, savings and loan association, savings bank

or credit union; and

\(iii\) not later than 30 days prior to the initial

implementation of a program undertaken pursuant to this

subparagraph (E), the Association shall advise the Chairman

and the Ranking Member on the Committee on Labor and Human

Resources of the Senate and the Chairman and the Ranking

Member of the Committee on Education and Labor of the House

of Representatives in writing of its plans to offer such

program and shall provide information relating to the general

terms and conditions of such program.

The Association is further authorized to undertake any activity

with regard to student loans which are not insured or guaranteed

as provided for in this subsection as it may undertake with

regard to insured or guaranteed student loans. Any warehousing

advance made on the security of such loans shall be subject to

the provisions of paragraph (3) of this subsection to the same

extent as a warehousing advance made on the security of insured

loans.

\(2\) Warehousing advances

Any warehousing advance made under paragraph (1)(A) of this

subsection shall be made on the security of (A) insured loans,

\(B\) marketable obligations and securities issued, guaranteed, or

insured by, the United States, or for which the full faith and

credit of the United States is pledged for the repayment of

principal and interest thereof, or (C) marketable obligations

issued, guaranteed, or insured by any agency, instrumentality, or

corporation of the United States for which the credit of such

agency, instrumentality, or corporation is pledged for the

repayment of principal and interest thereof, in an amount equal

to the amount of such advance. The proceeds of any such advance

secured by insured loans shall either be invested in additional

insured loans or the lender shall provide assurances to the

Association that during the period of the borrowing it will

maintain a level of insured loans in its portfolio not less than

the aggregate outstanding balance of such loans held at the time

of the borrowing. The proceeds from any such advance secured by

collateral described in clauses (B) and (C) shall be invested in

additional insured student loans.

\(3\) Perfection of security interests in student loans

Notwithstanding the provisions of any State law to the

contrary, including the Uniform Commercial Code as in effect in

any State, a security interest in insured student loans created

on behalf of the Association or any eligible lender as defined in

section 1085(a) of this title may be perfected either through the

taking of possession of such loans or by the filing of notice of

such security interest in such loans in the manner provided by

such State law for perfection of security interests in accounts.

\(4\) Form of securities

Securities issued pursuant to the offering of participations or

pooled interests under paragraph (1) of this subsection may be in

the form of debt obligations, or trust certificates of beneficial

ownership, or both. Student loans set aside pursuant to the

offering of participations or pooled interests shall at all times

be adequate to ensure the timely principal and interest payments

on such securities.

\(5\) Restrictions on facilities and housing activities

Not less than 75 percent of the aggregate dollar amount of

obligations bought, sold, held, insured, underwritten, and

otherwise supported in accordance with the authority contained in

paragraph (1)(C) shall be obligations which are listed by a

nationally recognized statistical rating organization at a rating

below the second highest rating of such organization.

\(e\) Advances to lenders that do not discriminate

The Association, pursuant to such criteria as the Board of

Directors may prescribe, shall make advances on security or

purchase student loans pursuant to subsection (d) of this section

only after the Association is assured that the lender (1) does not

discriminate by pattern or practice against any particular class or

category of students by requiring that, as a condition to the

receipt of a loan, the student or his family maintain a business

relationship with the lender, except that this clause shall not

apply in the case of a loan made by a credit union, savings and

loan association, mutual savings bank, institution of higher

education, or any other lender with less than \$75,000,000 in

deposits, and (2) does not discriminate on the basis of race, sex,

color, creed, or national origin.

\(f\) Stock of the Association

\(1\) Voting common stock

The Association shall have voting common stock having such par

value as may be fixed by its Board of Directors from time to

time. Each share of voting common stock shall be entitled to one

vote with rights of cumulative voting at all elections of

directors.

\(2\) Number of shares; transferability

The maximum number of shares of voting common stock that the

Association may issue and have outstanding at any one time shall

be fixed by the Board of Directors from time to time. Any voting

common stock issued shall be fully transferable, except that, as

to the Association, it shall be transferred only on the books of

the Association.

\(3\) Dividends

To the extent that net income is earned and realized, subject

to subsection (g)(2) of this section, dividends may be declared

on voting common stock by the Board of Directors. Such dividends

as may be declared by the Board of Directors shall be paid to the

holders of outstanding shares of voting common stock, except that

no such dividends shall be payable with respect to any share

which has been called for redemption past the effective date of

such call.

\(4\) Single class of voting common stock

As of the effective date of the Higher Education Amendments of

1992, all of the previously authorized shares of voting common

stock and nonvoting common stock of the Association shall be

converted to shares of a single class of voting common stock on a

share-for-share basis, without any further action on the part of

the Association or any holder. Each outstanding certificate for

voting or nonvoting common stock shall evidence ownership of the

same number of shares of voting stock into which it is

converted. All preexisting rights and obligations with respect

to any class of common stock of the Association shall be deemed

to be rights and obligations with respect to such converted

shares.

\(g\) Preferred stock

\(1\) Authority of Board

The Association is authorized to issue nonvoting preferred

stock having such par value as may be fixed by its Board of

Directors from time to time. Any preferred share issued shall be

freely transferable, except that, as to the Association, it shall

be transferred only on the books of the Association.

\(2\) Rights of preferred stock

The holders of the preferred shares shall be entitled to such

rate of cumulative dividends and such shares shall be subject to

such redemption or other conversion provisions as may be provided

for at the time of issuance. No dividends shall be payable on

any share of common stock at any time when any dividend is due on

any share of preferred stock and has not been paid.

\(3\) Preference on termination of business

In the event of any liquidation, dissolution, or winding up of

the Association\'s business, the holders of the preferred shares

shall be paid in full at par value thereof, plus all accrued

dividends, before the holders of the common shares receive any

payment.

\(h\) Debt obligations

\(1\) Approval by Secretaries of Education and the Treasury

The Association is authorized with the approval of the

Secretary of Education and the Secretary of the Treasury to issue

and have outstanding obligations having such maturities and

bearing such rate or rates of interest as may be determined by

the Association. The authority of the Secretary of Education to

approve the issuance of such obligations is limited to

obligations issued by the Association and guaranteed by the

Secretary pursuant to paragraph (2) of this subsection. Such

obligations may be redeemable at the option of the Association

before maturity in such manner as may be stipulated therein. The

Secretary of the Treasury may not direct as a condition of his

approval that any such issuance of obligations by the Association

be made or sold to the Federal Financing Bank. To the extent that

the average outstanding amount of the obligations owned by the

Association pursuant to the authority contained in subsection

(d)(1)(B) and (C) of this section and as to which the income is

exempt from taxation under title 26 does not exceed the average

stockholders\' equity of the Association, the interest on

obligations issued under this paragraph shall not be deemed to be

interest on indebtedness incurred or continued to purchase or

carry obligations for the purpose of section 265 of title 26.

\(2\) Guarantee of debt

The Secretary is authorized, prior to October 1, 1984, to

guarantee payment when due of principal and interest on

obligations issued by the Association in an aggregate amount

determined by the Secretary in consultation with the Secretary of

the Treasury. Nothing in this section shall be construed so as to

authorize the Secretary of Education or the Secretary of the

Treasury to limit, control, or constrain programs of the

Association or support of the Guaranteed Student Loan Program by

the Association.

\(3\) Borrowing authority to meet guarantee obligations

To enable the Secretary to discharge his responsibilities under

guarantees issued by him, he is authorized to issue to the

Secretary of the Treasury notes or other obligations in such

forms and denominations, bearing such maturities, and subject to

such terms and conditions, as may be prescribed by the Secretary

with the approval of the Secretary of the Treasury. Such notes or

other obligations shall bear interest at a rate determined by the

Secretary of the Treasury, taking into consideration the current

average market yield on outstanding marketable obligations of the

United States of comparable maturities during the months

preceding the issuance of the notes or other obligations. The

Secretary of the Treasury is authorized and directed to purchase

any notes and other obligations issued hereunder and for that

purpose he is authorized to use as a public debt transaction the

proceeds from the sale of any securities issued under chapter 31

of title 31, and the purposes for which securities may be issued

under that chapter are extended to include any purchase of such

notes and obligations. The Secretary of the Treasury may at any

time sell any of the notes or other obligations acquired by him

under this subsection. All redemptions, purchases, and sales by

the Secretary of the Treasury of such notes or other obligations

shall be treated as public debt transactions of the United

States. There is authorized to be appropriated to the Secretary

such sums as may be necessary to pay the principal and interest

on the notes or obligations issued by him to the Secretary of the

Treasury.

\(4\) Action on request for guarantees

Upon receipt of a request from the Association under this

subsection requiring approvals by the Secretary of Education or

the Secretary of the Treasury, the Secretary of Education or the

Secretary of the Treasury shall act promptly either to grant

approval or to advise the Association of the reasons for

withholding approval. In no case shall such an approval be

withheld for a period longer than 60 days unless, prior to the

end of such period, the Secretary of Education and the Secretary

of the Treasury submit to the Congress a detailed explanation of

reasons for doing so.

\(5\) Authority of Treasury to purchase debt

The Secretary of the Treasury is authorized to purchase any

obligations issued by the Association pursuant to this subsection

as now or hereafter in force, and for such purpose the Secretary

of the Treasury is authorized to use as a public debt transaction

the proceeds of the sale of any securities hereafter issued under

chapter 31 of title 31, as now or hereafter in force, and the

purposes for which securities may be issued under chapter 31 of

title 31, as now or hereafter in force are extended to include

such purchases. The Secretary of the Treasury shall not at any

time purchase any obligations under this subsection if such

purchase would increase the aggregate principal amount of his

then outstanding holdings of such obligations under this

subsection to an amount greater than \$1,000,000,000. Each

purchase of obligations by the Secretary of the Treasury under

this subsection shall be upon such terms and conditions as to

yield a return at a rate determined by the Secretary of the

Treasury, taking into consideration the current average rate on

outstanding marketable obligations of the United States of

comparable maturities as of the last day of the month preceding

the making of such purchase. The Secretary of the Treasury may,

at any time, sell, upon such terms and conditions and at such

price or prices as he shall determine, any of the obligations

acquired by him under this subsection. All redemptions,

purchases, and sales by the Secretary of the Treasury of such

obligations under this subsection shall be treated as public debt

transactions of the United States.

\(6\) Sale of debt to Federal Financing Bank

Notwithstanding any other provision of law the Association is

authorized to sell or issue obligations on the security of

student loans, the payment of interest or principal of which has

at any time been guaranteed under section 1078 or 1079 of this

title, to the Federal Financing Bank.

\(7\) Offset fee

\(A\) The Association shall pay to the Secretary, on a monthly

basis, an offset fee calculated on an annual basis in an amount

equal to 0.30 percent of the principal amount of each loan made,

insured or guaranteed under this part that the Association holds

(except for loans made pursuant to section 1078-3 of this title,

subsection (o) of this section, or subsection (q) of this

section) and that was acquired on or after August 10, 1993.

\(B\) If the Secretary determines that the Association has

substantially failed to comply with subsection (q) of this

section, subparagraph (A) shall be applied by substituting \'\'1.0

percent\'\' for \'\'0.3 percent\'\'.

\(C\) The Secretary shall deposit all fees collected pursuant to

this paragraph into the insurance fund established in section

1081 of this title.

\(i\) General corporate powers

The Association shall have power -

\(1\) to sue and be sued, complain and defend, in its corporate

name and through its own counsel;

\(2\) to adopt, alter, and use the corporate seal, which shall be

judicially noticed;

\(3\) to adopt, amend, and repeal by its Board of Directors,

bylaws, rules, and regulations as may be necessary for the

conduct of its business;

\(4\) to conduct its business, carry on its operations, and have

officers and exercise the power granted by this section in any

State without regard to any qualification or similar statute in

any State;

\(5\) to lease, purchase, or otherwise acquire, own, hold,

improve, use, or otherwise deal in and with any property, real,

personal, or mixed, or any interest therein, wherever situated;

\(6\) to accept gifts or donations of services, or of property,

real, personal, or mixed, tangible or intangible, in aid of any

of the purposes of the Association;

\(7\) to sell, convey, mortgage, pledge, lease, exchange, and

otherwise dispose of its property and assets;

\(8\) to appoint such officers, attorneys, employees, and agents

as may be required, to determine their qualifications, to define

their duties, to fix their salaries, require bonds for them, and

fix the penalty thereof; and

\(9\) to enter into contracts, to execute instruments, to incur

liabilities, and to do all things as are necessary or incidental

to the proper management of its affairs and the proper conduct of

its business.

\(j\) Accounting, auditing, and reporting

The accounts of the Association shall be audited annually. Such

audits shall be conducted in accordance with generally accepted

auditing standards by independent certified public accountants or

by independent licensed public accountants, licensed on or before

December 31, 1970, who are certified or licensed by a regulatory

authority of a State or other political subdivision of the United

States, except that independent public accountants licensed to

practice by such regulatory authority after December 31, 1970, and

persons who, although not so certified or licensed, meet, in the

opinion of the Secretary, standards of education and experience

representative of the highest standards prescribed by the licensing

authorities of the several States which provide for the continuing

licensing of public accountants and which are prescribed by the

Secretary in appropriate regulations may perform such audits until

December 31, 1975. A report of each such audit shall be furnished

to the Secretary of the Treasury. The audit shall be conducted at

the place or places where the accounts are normally kept. The

representatives of the Secretary shall have access to all books,

accounts, financial records, reports, files, and all other papers,

things, or property belonging to or in use by the Association and

necessary to facilitate the audit, and they shall be afforded full

facilities for verifying transactions with the balances or

securities held by depositaries, fiscal agents, and custodians.

\(k\) Report on audits by Treasury

A report of each such audit for a fiscal year shall be made by

the Secretary of the Treasury to the President and to the Congress

not later than 6 months following the close of such fiscal year.

The report shall set forth the scope of the audit and shall include

a statement (showing intercorporate relations) of assets and

liabilities, capital and surplus or deficit; a statement of surplus

or deficit analysis; a statement of income and expense; a statement

of sources and application of funds; and such comments and

information as may be deemed necessary to keep the President and

the Congress informed of the operations and financial condition of

the Association, together with such recommendations with respect

thereto as the Secretary may deem advisable, including a report of

any impairment of capital or lack of sufficient capital noted in

the audit. A copy of each report shall be furnished to the

Secretary, and to the Association.

\(l\) Lawful investment instruments; effect of and exemptions from

other laws

All obligations issued by the Association including those made

under subsection (d)(4) of this section shall be lawful

investments, and may be accepted as security for all fiduciary,

trust, and public funds, the investment or deposit of which shall

be under authority or control of the United States or of any

officer or officers thereof. All stock and obligations issued by

the Association pursuant to this section shall be deemed to be

exempt securities within the meaning of laws administered by the

Securities and Exchange Commission, to the same extent as

securities which are direct obligations of, or obligations

guaranteed as to principal or interest by, the United States. The

Association shall, for the purposes of section 355(2) of title 12,

be deemed to be an agency of the United States. The obligations of

the Association shall be deemed to be obligations of the United

States for the purpose of section 3124 of title 31. For the purpose

of the distribution of its property pursuant to section 726 of

title 11, the Association shall be deemed a person within the

meaning of such title. The priority established in favor of the

United States by section 3713 of title 31 shall not establish a

priority over the indebtedness of the Association issued or

incurred on or before September 30, 1992. The Federal Reserve Banks

are authorized to act as depositaries, custodians, or fiscal

agents, or a combination thereof, for the Association in the

general performance of its powers under this section.

\(m\) Preparation of obligations

In order to furnish obligations for delivery by the Association,

the Secretary of the Treasury is authorized to prepare such

obligations in such form as the Board of Directors may approve,

such obligations when prepared to be held in the Treasury subject

to delivery upon order by the Association. The engraved plates,

dies, bed pieces, and so forth, executed in connection therewith

shall remain in the custody of the Secretary of the Treasury. The

Association shall reimburse the Secretary of the Treasury for any

expenditures made in the preparation, custody, and delivery of such

obligations. The Secretary of the Treasury is authorized to

promulgate regulations on behalf of the Association so that the

Association may utilize the book-entry system of the Federal

Reserve Banks.

\(n\) Report on operations and activities

The Association shall, as soon as practicable after the end of

each fiscal year, transmit to the President and the Congress a

report of the Association\'s operations and activities, including a

report with respect to all facilities transactions, during each

year.

\(o\) Loan consolidations

\(1\) In general

The Association or its designated agent may, upon request of a

borrower, consolidate loans received under this subchapter and

part C of subchapter I of chapter 34 of title 42 in accordance

with section 1078-3 of this title.

\(2\) Use of existing agencies as agent

The Association in making loans pursuant to this subsection in

any State served by a guaranty agency or an eligible lender in a

State described in section 1085(d)(1)(D) or (F) of this title may

designate as its agent such agency or lender to perform such

functions as the Association determines appropriate. Any

agreements made pursuant to this subparagraph shall be on such

terms and conditions as agreed upon by the Association and such

agency or lender.

\(p\) Advances for direct loans by guaranty agencies

\(1\) In general

The Association shall make advances in each fiscal year from

amounts available to it to each guaranty agency and eligible

lender described in subsection 1078(h)(1) of this title which has

an agreement with the Association which sets forth that advances

are necessary to enable such agency or lender to make student

loans in accordance with section 1078(h) of this title and that

such advances will be repaid to the Association in accordance

with such terms and conditions as may be set forth in the

agreement and agreed to by the Association and such agency or

lender. Advances made under this subsection shall not be subject

to subsection (d)(2) of this section.

\(2\) Limitation

No advance may be made under this subsection unless the

guaranty agency or lender makes an application to the

Association, which shall be accompanied by such information as

the Association determines to be reasonably necessary.

\(q\) Lender-of-last-resort

\(1\) Action at request of Secretary

\(A\) Whenever the Secretary determines that eligible borrowers

are seeking and are unable to obtain loans under this part, the

Association or its designated agent shall, not later than 90 days

after August 10, 1993, begin making loans to such eligible

borrowers in accordance with this subsection at the request of

the Secretary. The Secretary may request that the Association

make loans to borrowers within a geographic area or for the

benefit of students attending institutions of higher education

that certify, in accordance with standards established by the

Secretary, that their students are seeking and unable to obtain

loans.

\(B\) Loans made pursuant to this subsection shall be insurable

by the Secretary under section 1079 of this title with a

certificate of comprehensive insurance coverage provided for

under section 1079(b)(1) of this title or by a guaranty agency

under paragraph (2)(A) of this subsection.

\(2\) Issuance and coverage of loans

\(A\) Whenever the Secretary, after consultation with, and with

the agreement of, representatives of the guaranty agency in a

State, or an eligible lender in a State described in section

1085(d)(1)(D) of this title, determines that a substantial

portion of eligible borrowers in such State or within an area of

such State are seeking and are unable to obtain loans under this

part, the Association or its designated agent shall begin making

such loans to borrowers in such State or within an area of such

State in accordance with this subsection at the request of the

Secretary.

\(B\) Loans made pursuant to this subsection shall be insurable

by the agency identified in subparagraph (A) having an agreement

pursuant to section 1078(b) of this title. For loans insured by

such agency, the agency shall provide the Association with a

certificate of comprehensive insurance coverage, if the

Association and the agency have mutually agreed upon a means to

determine that the agency has not already guaranteed a loan under

this part to a student which would cause a subsequent loan made

by the Association to be in violation of any provision under this

part.

\(3\) Termination of lending

The Association or its designated agent shall cease making

loans under this subsection at such time as the Secretary

determines that the conditions which caused the implementation of

this subsection have ceased to exist.

\(r\) Safety and soundness of Association

\(1\) Reports by the Association

The Association shall promptly furnish to the Secretary of

Education and Secretary of the Treasury copies of all -

\(A\) periodic financial reports publicly distributed by the

Association;

\(B\) reports concerning the Association that are received by

the Association and prepared by nationally recognized

statistical rating organizations; and

(C)(i) financial statements of the Association within 45 days

of the end of each fiscal quarter; and

\(ii\) reports setting forth the calculation of the capital

ratio of the Association within 45 days of the end of each

fiscal quarter.

\(2\) Audit by Secretary of the Treasury

\(A\) The Secretary of the Treasury may -

\(i\) appoint and fix the compensation of such auditors and

examiners as may be necessary to conduct audits of the

Association from time to time to determine the condition of the

Association for the purpose of assessing the Association\'s

financial safety and soundness and to determine whether the

requirements of this section and section 1087-3 of this title

are being met; and

\(ii\) obtain the services of such experts as the Secretary of

the Treasury determines necessary and appropriate, as

authorized by section 3109 of title 5, to assist in determining

the condition of the Association for the purpose of assessing

the Association\'s financial safety and soundness, and to

determine whether the requirements of this section and section

1087-3 of this title are being met.

\(B\) Each auditor appointed under this paragraph shall conduct

an audit of the Association to the extent requested by the

Secretary of the Treasury and shall prepare and submit a report

to the Secretary of the Treasury concerning the results of such

audit. A copy of such report shall be furnished to the

Association and the Secretary of Education on the date on which

it is delivered to the Secretary of the Treasury.

\(C\) The Association shall provide full and prompt access to the

Secretary of the Treasury to its books and records and other

information requested by the Secretary of the Treasury.

\(D\) Annual assessment. -

\(i\) In general. - For each fiscal year beginning on or after

October 1, 1996, the Secretary of the Treasury may establish

and collect from the Association an assessment (or assessments)

in amounts sufficient to provide for reasonable costs and

expenses of carrying out the duties of the Secretary of the

Treasury under this section and section 1087-3 of this title

during such fiscal year. In no event may the total amount so

assessed exceed, for any fiscal year, \$800,000, adjusted for

each fiscal year ending after September 30, 1997, by the ratio

of the Consumer Price Index for All Urban Consumers (issued by

the Bureau of Labor Statistics) for the final month of the

fiscal year preceding the fiscal year for which the assessment

is made to the Consumer Price Index for All Urban Consumers for

September 1997.

\(ii\) Deposit. - Amounts collected from assessments under this

subparagraph shall be deposited in an account within the

Treasury of the United States as designated by the Secretary of

the Treasury for that purpose. The Secretary of the Treasury

is authorized and directed to pay out of any funds available in

such account the reasonable costs and expenses of carrying out

the duties of the Secretary of the Treasury under this section

and section 1087-3 of this title. None of the funds deposited

into such account shall be available for any purpose other than

making payments for such costs and expenses.

\(E\) Obligation to obtain, maintain, and report information. -

\(i\) In general. - The Association shall obtain such

information and make and keep such records as the Secretary of

the Treasury may from time to time prescribe concerning -

\(I\) the financial risk to the Association resulting from

the activities of any associated person, to the extent such

activities are reasonably likely to have a material impact on

the financial condition of the Association, including the

Association\'s capital ratio, the Association\'s liquidity, or

the Association\'s ability to conduct and finance the

Association\'s operations; and

\(II\) the Association\'s policies, procedures, and systems

for monitoring and controlling any such financial risk.

\(ii\) Summary reports. - The Secretary of the Treasury may

require summary reports of such information to be filed no more

frequently than quarterly. If, as a result of adverse market

conditions or based on reports provided pursuant to this

subparagraph or other available information, the Secretary of

the Treasury has concerns regarding the financial or

operational condition of the Association, the Secretary of the

Treasury may, notwithstanding the preceding sentence and clause

(i), require the Association to make reports concerning the

activities of any associated person, whose business activities

are reasonably likely to have a material impact on the

financial or operational condition of the Association.

\(iii\) Definition. - For purposes of this subparagraph, the

term \'\'associated person\'\' means any person, other than a

natural person, directly or indirectly controlling, controlled

by, or under common control with the Association.

\(F\) Compensation of auditors and examiners. -

\(i\) Rates of pay. - Rates of basic pay for all auditors and

examiners appointed pursuant to subparagraph (A) may be set and

adjusted by the Secretary of the Treasury without regard to the

provisions of chapter 51 or subchapter III of chapter 53 of

title 5.

\(ii\) Comparability. -

\(I\) In general. - Subject to section 5373 of title 5, the

Secretary of the Treasury may provide additional compensation

and benefits to auditors and examiners appointed pursuant to

subparagraph (A) if the same type of compensation or benefits

are then being provided by any agency referred to in section

1833b of title 12 or, if not then being provided, could be

provided by such an agency under applicable provisions of

law, rule, or regulation.

\(II\) Consultation. - In setting and adjusting the total

amount of compensation and benefits for auditors and

examiners appointed pursuant to subparagraph (A), the

Secretary of the Treasury shall consult with, and seek to

maintain comparability with, the agencies referred to in

section 1833b of title 12.

\(3\) Monitoring of safety and soundness

The Secretary of the Treasury shall conduct such studies as may

be necessary to monitor the financial safety and soundness of the

Association. In the event that the Secretary of the Treasury

determines that the financial safety and soundness of the

Association is at risk, the Secretary of the Treasury shall

inform the Chairman and ranking minority member of the Committee

on Labor and Human Resources of the Senate, the Chairman and

ranking minority member of the Committee on Education and Labor

of the House of Representatives, and the Secretary of Education

of such determination and identify any corrective actions that

should be taken to ensure the safety and soundness of the

Association.

\(4\) Capital standard

If the capital ratio is less than 2 percent and is greater than

or equal to 1.75 percent at the end of the Association\'s most

recent calendar quarter the Association shall, within 60 days of

such occurrence, submit to the Secretary of the Treasury a

capital restoration plan, in reasonable detail, that the

Association believes is adequate to cause the capital ratio to

equal or exceed 2 percent within 36 months.

\(5\) Capital restoration plan

\(A\) Submission, approval, and implementation

The Secretary of the Treasury and the Association shall

consult with respect to any capital restoration plan submitted

pursuant to paragraph (4) and the Secretary of the Treasury

shall approve such plan (or a modification thereof accepted by

the Association) or disapprove such plan within 30 days after

such plan is first submitted to the Secretary of the Treasury

by the Association, unless the Association and Secretary of the

Treasury mutually agree to a longer consideration period. If

the Secretary of the Treasury approves a capital restoration

plan (including a modification of a plan accepted by the

Association), the Association shall forthwith proceed with

diligence to implement such plan to the best of its ability.

\(B\) Disapproval

If the Secretary of the Treasury does not approve a capital

restoration plan as provided in subparagraph (A), then not

later than the earlier of the date the Secretary of the

Treasury disapproves of such plan by written notice to the

Association or the expiration of the 30-day consideration

period referred to in subparagraph (A) (as such period may have

been extended by mutual agreement), the Secretary of the

Treasury shall submit the Association\'s capital restoration

plan, in the form most recently proposed to the Secretary of

the Treasury by the Association, together with a report on the

Secretary of the Treasury\'s reasons for disapproval of such

plan and an alternative capital restoration plan, to the

Chairman and ranking minority member of the Senate Committee on

Labor and Human Resources and to the Chairman and ranking

minority member of the House Committee on Education and Labor.

A copy of such submission simultaneously shall be sent to the

Association and the Secretary of Education by the Secretary of

the Treasury.

\(C\) Association implementation and response

Upon receipt of the submission by the Association, the

Association shall forthwith proceed with diligence to implement

the most recently proposed capital restoration plan of the

Association. The Association, within 30 days after receipt from

the Secretary of the Treasury of such submission, shall submit

to such Chairmen and ranking minority members a written

response to such submission, setting out fully the nature and

extent of the Association\'s agreement or the disagreement with

the Secretary of the Treasury with respect to the capital

restoration plan submitted to the Secretary of the Treasury and

any findings of the Secretary of the Treasury.

\(6\) Substantial capital ratio reduction

\(A\) Additional plan required

If the capital ratio is less than 1.75 percent and is greater

than or equal to 1 percent at the end of the Association\'s most

recent calendar quarter, the Association shall submit to the

Secretary of the Treasury within 60 days after such occurrence

a capital restoration plan (or an appropriate modification of

any plan previously submitted or approved under paragraph (4))

to increase promptly its capital ratio to equal or exceed 1.75

percent. The Secretary of the Treasury and the Association

shall consult with respect to any plan or modified plan

submitted pursuant to this paragraph. The Secretary of the

Treasury shall approve such plan or modified plan (or a

modification thereof accepted by the Association) or disapprove

such plan or modified plan within 30 days after such plan or

modified plan is first submitted to the Secretary of the

Treasury by the Association, unless the Association and

Secretary of the Treasury mutually agree to a longer

consideration period. If the Secretary of the Treasury

approves a plan or modified plan (including a modification of a

plan accepted by the Association), the Association shall

forthwith proceed with diligence to implement such plan or

modified plan to the best of the Association\'s ability.

\(B\) Disapproval

If the Secretary of the Treasury disapproves a capital

restoration plan or modified plan submitted pursuant to

subparagraph (A), then, not later than the earlier of the date

the Secretary of the Treasury disapproves of such plan or

modified plan (by written notice to the Association) or the

expiration of the 30-day consideration period described in

subparagraph (A) (as such period may have been extended by

mutual agreement), the Secretary of the Treasury shall prepare

and submit an alternative capital restoration plan, together

with a report on his reasons for disapproval of the

Association\'s plan or modified plan, to the Chairman and

ranking minority member of the Committee on Labor and Human

Resources of the Senate and to the Chairman and ranking

minority member of the Committee on Education and Labor of the

House of Representatives. A copy of such submission

simultaneously shall be sent to the Association and the

Secretary of Education by the Secretary of the Treasury. The

Association, within 5 days after receipt from the Secretary of

the Treasury of such submission, shall submit to the Chairmen

and ranking minority members of such Committees, and the

Secretary of the Treasury, a written response to such

submission, setting out fully the nature and extent of the

Association\'s agreement or disagreement with the Secretary of

the Treasury with respect to the disapproved plan and the

alternative plan of the Secretary of the Treasury and any

findings of the Secretary of the Treasury.

\(C\) Review by Congress; Association implementation

Congress shall have 60 legislative days after the date on

which Congress receives the alternative plan under subparagraph

\(B\) from the Secretary of the Treasury to review such plan. If

Congress does not take statutory action with respect to any

such plan within such 60-day period, the Association shall

immediately proceed with diligence to implement the alternative

capital restoration plan of the Secretary of the Treasury under

subparagraph (B). If Congress is out of session when any such

alternative plan is received, such 60-day period shall begin on

the first day of the next session of Congress.

\(7\) Actions by Secretary of the Treasury

If the capital ratio of the Association does not equal or

exceed 1.75 percent at the end of the Association\'s most recent

calendar quarter, the Secretary of the Treasury may, until the

capital ratio equals or exceeds 1.75 percent, take any one or

more of the following actions:

\(A\) Limit increase in liabilities

Limit any increase in, or order the reduction of, any

liabilities of the Association, except as necessary to fund

student loan purchases and warehousing advances.

\(B\) Restrict growth

Restrict or eliminate growth of the Association\'s assets,

other than student loans purchases and warehousing advances.

\(C\) Restrict distributions

Restrict the Association from making any capital

distribution.

\(D\) Require issuance of new capital

Require the Association to issue new capital in any form and

in any amount sufficient to restore at least a 1.75 percent

capital ratio.

\(E\) Limit executive compensation

Prohibit the Association from increasing for any executive

officer any compensation including bonuses at a rate exceeding

that officer\'s average rate of compensation during the previous

12 calendar months and prohibiting the Board from adopting any

new employment severance contracts.

\(8\) Critical capital standard

\(A\) If the capital ratio is less than 1 percent at the end of

the Association\'s most recent calendar quarter and the

Association has already submitted a capital restoration plan to

the Secretary of the Treasury pursuant to paragraph (4) or

(6)(A), the Association shall forthwith proceed with diligence to

implement the most recently proposed plan with such modifications

as the Secretary of the Treasury determines are necessary to

cause the capital ratio to equal or exceed 2 percent within 60

months.

\(B\) If the capital ratio is less than 1 percent at the end of

the Association\'s most recent calendar quarter and the

Association has not submitted a capital restoration plan to the

Secretary of the Treasury pursuant to paragraph (4) or (6)(A),

the Association shall -

\(i\) within 14 days of such occurrence submit a capital

restoration plan to the Secretary of the Treasury which the

Association believes is adequate to cause the capital ratio to

equal or exceed 2 percent within 60 months; and

\(ii\) forthwith proceed with diligence to implement such plan

with such modifications as the Secretary of the Treasury

determines are necessary to cause the capital ratio to equal or

exceed 2 percent within 60 months.

\(C\) Immediately upon a determination under subparagraph (A) or

\(B\) to implement a capital restoration plan, the Secretary of the

Treasury shall submit the capital restoration plan to be

implemented to the Chairman and ranking minority member of the

Committee on Labor and Human Resources of the Senate, the

Chairman and ranking minority member of the Committee on

Education and Labor of the House of Representatives, and the

Secretary of Education.

\(9\) Additional reports to committees

The Association shall submit a copy of its capital restoration

plan, modifications proposed to the Secretary of the Treasury,

and proposed modifications received from the Secretary of the

Treasury to the Congressional Budget Office and General

Accounting Office upon their submission to the Secretary of the

Treasury or receipt from the Secretary of the Treasury.

Notwithstanding any other provision of law, the Congressional

Budget Office and General Accounting Office shall maintain the

confidentiality of information received pursuant to the previous

sentence. In the event that the Secretary of the Treasury does

not approve a capital restoration plan as provided in paragraph

(5)(A) or (6)(A), or in the event that a capital restoration plan

is modified by the Secretary of the Treasury pursuant to

paragraph (6)(B) or (8), the Congressional Budget Office and

General Accounting Office shall each submit a report within 30

days of the Secretary of the Treasury\'s submission to the

Chairmen and ranking minority members as required in paragraphs

(5)(B), (6)(B), and (8)(C) to such Chairmen and ranking members -

\(A\) analyzing the financial condition of the Association;

\(B\) analyzing the capital restoration plan and reasons for

disapproval of the plan contained in the Secretary of the

Treasury\'s submission made pursuant to paragraph (5)(B), or the

capital restoration plan proposed by the Association and the

modifications made by the Secretary of the Treasury pursuant to

paragraph (6)(B) or (8);

\(C\) analyzing the impact of the capital restoration plan and

reasons for disapproval of the plan contained in the Secretary

of the Treasury\'s submission made pursuant to paragraph (5)(B),

or the impact of the capital restoration plan proposed by the

Association and the modifications made by the Secretary of the

Treasury pursuant to paragraph (6)(B) or (8), and analyzing the

impact of the recommendations made pursuant to subparagraph (D)

of this paragraph, on -

\(i\) the ability of the Association to fulfill its purpose

and authorized activities as provided in this section, and

\(ii\) the operation of the student loan programs; and

\(D\) recommending steps which the Association should take to

increase its capital ratio without impairing its ability to

perform its purpose and authorized activities as provided in

this section.

\(10\) Review by Secretary of Education

The Secretary of Education shall review the Secretary of the

Treasury\'s submission required pursuant to paragraph (5)(B),

(6)(B), or (8) and shall submit a report within 30 days to the

Chairman and ranking minority member of the Senate Committee on

Labor and Human Resources and to the Chairman and ranking

minority member of the House Committee on Education and Labor -

\(A\) describing any administrative or legislative provisions

governing the student loan programs which contributed to the

decline in the Association\'s capital ratio; and

\(B\) recommending administrative and legislative changes in

the student loan programs to maintain the orderly operation of

such programs and to enable the Association to fulfill its

purpose and authorized activities consistent with the capital

ratio specified in paragraph (4).

\(11\) Safe harbor

The Association shall be deemed in compliance with the capital

ratios described in paragraphs (4) and (6)(A) if the Association

is rated in 1 of the 2 highest full rating categories (such

categories to be determined without regard to designations within

categories) by 2 nationally recognized statistical rating

organizations, determined without regard to the Association\'s

status as a federally chartered corporation.

\(12\) Treatment of confidential information

Notwithstanding any other provision of law, the Secretary of

the Treasury, the Secretary of Education, the Congressional

Budget Office, and the General Accounting Office shall not

disclose any information treated as confidential by the

Association or the Association\'s associated persons and obtained

pursuant to this subsection. Nothing in this paragraph shall

authorize the Secretary of the Treasury, the Secretary of

Education, the Congressional Budget Office, and the General

Accounting Office to withhold information from Congress, or

prevent the Secretary of Education, the Congressional Budget

Office, and the General Accounting Office from complying with a

request for information from any other Federal department or

agency requesting the information for purposes within the scope

of its jurisdiction, or complying with an order of a court of the

United States in an action brought by the United States. For

purposes of section 552 of title 5, this paragraph shall be

considered a statute described in subsection (b)(3) of such

section 552.

\(13\) Enforcement of safety and soundness requirements

The Secretary of Education or the Secretary of the Treasury, as

appropriate, may request that the Attorney General bring an

action in the United States District Court for the District of

Columbia for the enforcement of any provision of this section, or

may, under the direction or control of the Attorney General,

bring such an action. Such court shall have jurisdiction and

power to order and require compliance with this section.

\(14\) Actions by Secretary

\(A\) In general

For any fiscal quarter ending after January 1, 2000, the

Association shall have a capital ratio of at least 2.25

percent. The Secretary of the Treasury may, whenever such

capital ratio is not met, take any one or more of the actions

described in paragraph (7), except that -

\(i\) the capital ratio to be restored pursuant to paragraph

(7)(D) shall be 2.25 percent; and

\(ii\) if the relevant capital ratio is in excess of or equal

to 2 percent for such quarter, the Secretary of the Treasury

shall defer taking any of the actions set forth in paragraph

\(7\) until the next succeeding quarter and may then proceed

with any such action only if the capital ratio of the

Association remains below 2.25 percent.

\(B\) Applicability

The provisions of paragraphs (4), (5), (6), (8), (9), (10),

and (11) shall be of no further application to the Association

for any period after January 1, 2000.

\(15\) Definitions

As used in this subsection:

\(A\) The term \'\'nationally recognized statistical rating

organization\'\' means any entity recognized as such by the

Securities and Exchange Commission.

\(B\) The term \'\'capital ratio\'\' means the ratio of total

stockholders\' equity, as shown on the Association\'s most recent

quarterly consolidated balance sheet prepared in the ordinary

course of its business, to the sum of -

\(i\) the total assets of the Association, as shown on the

balance sheet prepared in the ordinary course of its

business; and

\(ii\) 50 percent of the credit equivalent amount of the

following off-balance sheet items of the Association as of

the date of such balance sheet -

\(I\) all financial standby letters of credit and other

irrevocable guarantees of the repayment of financial

obligations of others; and

\(II\) all interest rate contracts and exchange rate

contracts, including interest exchange agreements, floor,

cap, and collar agreements and similar arrangements.

For purposes of this subparagraph, the calculation of the

credit equivalent amount of the items set forth in clause (ii)

of this subparagraph, the netting of such items and

eliminations for the purpose of avoidance of double-counting of

such items shall be made in accordance with the measures for

computing credit conversion factors for off-balance sheet items

for capital maintenance purposes established for commercial

banks from time to time by the Federal Reserve Board, but

without regard to any risk weighting provisions in such

measures.

\(C\) The term \'\'legislative days\'\' means only days on which

either House of Congress is in session.

\(16\) Dividends

The Association may pay dividends in the form of cash or

noncash distributions so long as at the time of the declaration

of such dividends, after giving effect to the payment of such

dividends as of the date of such declaration by the Board of

Directors of the Association, the Association\'s capital would be

in compliance with the capital standards set forth in this

section.

\(17\) Certification prior to payment of dividend

Prior to the payment of any dividend under paragraph (16), the

Association shall certify to the Secretary of the Treasury that

the payment of the dividend will be made in compliance with

paragraph (16) and shall provide copies of all calculations

needed to make such certification.

\(s\) Charter sunset

\(1\) Application of provisions

This subsection applies beginning 18 months and one day after

September 30, 1996, if no reorganization of the Association

occurs in accordance with the provisions of section 1087-3 of

this title.

\(2\) Sunset plan

\(A\) Plan submission by the Association

Not later than July 1, 2007, the Association shall submit to

the Secretary of the Treasury and to the Chairman and Ranking

Member of the Committee on Labor and Human Resources of the

Senate and the Chairman and Ranking Member of the Committee on

Economic and Educational Opportunities of the House of

Representatives, a detailed plan for the orderly winding up, by

July 1, 2013, of business activities conducted pursuant to the

charter set forth in this section. Such plan shall -

\(i\) ensure that the Association will have adequate assets

to transfer to a trust, as provided in this subsection, to

ensure full payment of remaining obligations of the

Association in accordance with the terms of such obligations;

\(ii\) provide that all assets not used to pay liabilities

shall be distributed to shareholders as provided in this

subsection; and

\(iii\) provide that the operations of the Association shall

remain separate and distinct from that of any entity to which

the assets of the Association are transferred.

\(B\) Amendment of the plan by the Association

The Association shall from time to time amend such plan to

reflect changed circumstances, and submit such amendments to

the Secretary of the Treasury and to the Chairman and Ranking

Minority Member of the Committee on Labor and Human Resources

of the Senate and Chairman and Ranking Minority Member of the

Committee on Economic and Educational Opportunities of the

House of Representatives. In no case may any amendment extend

the date for full implementation of the plan beyond the

dissolution date provided in paragraph (3).

\(C\) Plan monitoring

The Secretary of the Treasury shall monitor the Association\'s

compliance with the plan and shall continue to review the plan

(including any amendments thereto).

\(D\) Amendment of the plan by the Secretary of the Treasury

The Secretary of the Treasury may require the Association to

amend the plan (including any amendments to the plan), if the

Secretary of the Treasury deems such amendments necessary to

ensure full payment of all obligations of the Association.

\(E\) Implementation by the Association

The Association shall promptly implement the plan (including

any amendments to the plan, whether such amendments are made by

the Association or are required to be made by the Secretary of

the Treasury).

\(3\) Dissolution of the Association

The Association shall dissolve and the Association\'s separate

existence shall terminate on July 1, 2013, after discharge of all

outstanding debt obligations and liquidation pursuant to this

subsection. The Association may dissolve pursuant to this

subsection prior to such date by notifying the Secretary of

Education and the Secretary of the Treasury of the Association\'s

intention to dissolve, unless within 60 days of receipt of such

notice the Secretary of Education notifies the Association that

the Association continues to be needed to serve as a lender of

last resort pursuant to subsection (q) of this section or

continues to be needed to purchase loans under an agreement with

the Secretary described in paragraph (4)(A). On the dissolution

date, the Association shall take the following actions:

\(A\) Establishment of a trust

The Association shall, under the terms of an irrevocable

trust agreement in form and substance satisfactory to the

Secretary of the Treasury, the Association, and the appointed

trustee, irrevocably transfer all remaining obligations of the

Association to a trust and irrevocably deposit or cause to be

deposited into such trust, to be held as trust funds solely for

the benefit of holders of the remaining obligations, money or

direct noncallable obligations of the United States or any

agency thereof for which payment the full faith and credit of

the United States is pledged, maturing as to principal and

interest in such amounts and at such times as are determined by

the Secretary of the Treasury to be sufficient, without

consideration of any significant reinvestment of such interest,

to pay the principal of, and interest on, the remaining

obligations in accordance with their terms.

\(B\) Use of trust assets

All money, obligations, or financial assets deposited into

the trust pursuant to this subsection shall be applied by the

trustee to the payment of the remaining obligations assumed by

the trust. Upon the fulfillment of the trustee\'s duties under

the trust, any remaining assets of the trust shall be

transferred to the persons who, at the time of the dissolution,

were the shareholders of the Association, or to the legal

successors or assigns of such persons.

\(C\) Obligations not transferred to the trust

The Association shall make proper provision for all other

obligations of the Association, including the repurchase or

redemption, or the making of proper provision for the

repurchase or redemption, of any preferred stock of the

Association outstanding.

\(D\) Transfer of remaining assets

After compliance with subparagraphs (A) and (C), the

Association shall transfer to the shareholders of the

Association any remaining assets of the Association.

\(4\) Restrictions relating to winding up

\(A\) Restrictions on new business activity or acquisition of

assets by the Association

\(i\) In general

Beginning on July 1, 2009, the Association shall not engage

in any new business activities or acquire any additional

program assets (including acquiring assets pursuant to

contractual commitments) described in subsection (d) of this

section other than in connection with the Association -

\(I\) serving as a lender of last resort pursuant to

subsection (q) of this section; and

\(II\) purchasing loans insured under this part, if the

Secretary, with the approval of the Secretary of the

Treasury, enters into an agreement with the Association for

the continuation or resumption of the Association\'s

secondary market purchase program because the Secretary

determines there is inadequate liquidity for loans made

under this part.

\(ii\) Agreement

The Secretary is authorized to enter into an agreement

described in subclause (II) of clause (i) with the

Association covering such secondary market activities. Any

agreement entered into under such subclause shall cover a

period of 12 months, but may be renewed if the Secretary

determines that liquidity remains inadequate. The fee

provided under subsection (h)(7) of this section shall not

apply to loans acquired under any such agreement with the

Secretary.

\(B\) Issuance of debt obligations during the wind up period;

attributes of debt obligations

The Association shall not issue debt obligations which mature

later than July 1, 2013, except in connection with serving as a

lender of last resort pursuant to subsection (q) of this

section or with purchasing loans under an agreement with the

Secretary as described in subparagraph (A). Nothing in this

subsection shall modify the attributes accorded the debt

obligations of the Association by this section, regardless of

whether such debt obligations are transferred to a trust in

accordance with paragraph (3).

\(C\) Use of Association name

The Association may not transfer or permit the use of the

name \'\'Student Loan Marketing Association\'\', \'\'Sallie Mae\'\', or

any variation thereof, to or by any entity other than a

subsidiary of the Association.