```

[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 1720 Reported in House (RH)]

                                                  Union Calendar No. 71

104th CONGRESS

  1st Session

                               H. R. 1720

                          [Report No. 104-153]

_______________________________________________________________________

                                 A BILL

To amend the Higher Education Act of 1965 to provide for the cessation 
of Federal sponsorship of two Government sponsored enterprises, and for 
                            other purposes.

_______________________________________________________________________

                             June 22, 1995

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed

                                                  Union Calendar No. 71
104th CONGRESS
  1st Session
                                H. R. 1720

                          [Report No. 104-153]

To amend the Higher Education Act of 1965 to provide for the cessation 
of Federal sponsorship of two Government sponsored enterprises, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                              May 25, 1995

  Mr. McKeon introduced the following bill; which was referred to the 
          Committee on Economic and Educational Opportunities

                             June 22, 1995

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
[For text of introduced bill, see copy of bill as introduced on May 25, 
                                 1995]

_______________________________________________________________________

                                 A BILL

 
To amend the Higher Education Act of 1965 to provide for the cessation 
of Federal sponsorship of two Government sponsored enterprises, and for 
                            other purposes.
    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; REFERENCES.

    (a) Short Title.--This Act may be cited as the ``Privatization Act 
of 1995''.
    (b) References.--References in this Act to ``the Act'' are 
references to the Higher Education Act of 1965.

SEC. 2. PURPOSE.

    The purpose of this Act is to provide for the cessation of Federal 
sponsorship of two Government sponsored enterprises, the Student Loan 
Marketing Association and the College Construction Loan Insurance 
Association now that both corporations are economically viable and have 
successfully fulfilled the purposes for which they were created.

              TITLE I--STUDENT LOAN MARKETING ASSOCIATION

SEC. 101. REORGANIZATION OF THE STUDENT LOAN MARKETING ASSOCIATION 
              THROUGH THE FORMATION OF A HOLDING COMPANY.

    (a) Amendment.--Part B of title IV of the Act (20 U.S.C. 1071 et 
seq.) is amended by inserting after section 439 (20 U.S.C. 1087-2) the 
following new section:

``SEC. 440. REORGANIZATION OF THE STUDENT LOAN MARKETING ASSOCIATION 
              THROUGH THE FORMATION OF A HOLDING COMPANY.

    ``(a) Actions by the Association's Board of Directors.--The Board 
of Directors of the Association shall take or cause to be taken all 
such action as it deems necessary or appropriate to effect, upon the 
shareholder approval described in subsection (b), a restructuring of 
the common stock ownership of the Association, as set forth in a plan 
of reorganization adopted by the Board of Directors (the terms of which 
shall be consistent with this Act) so that all of the outstanding 
common shares shall be directly owned by an ordinary business 
corporation chartered under State or District of Columbia law (the 
`Holding Company'), as the Board of Directors may determine. Such 
actions may include, in the Board's discretion, a merger of a wholly 
owned subsidiary of the Holding Company with and into the Association, 
which would have the effect provided in the plan of reorganization and 
the law of the jurisdiction in which such subsidiary is incorporated. 
As part of the restructuring, the Board of Directors may cause (1) the 
common shares of the Association to be converted, at the reorganization 
effective date, to common shares of the Holding Company on a one for 
one basis, consistent with applicable State or District of Columbia 
law, and (2) Holding Company common shares to be registered with the 
Securities and Exchange Commission.
    ``(b) Shareholder Approval.--The plan of reorganization adopted by 
the Board of Directors pursuant to subsection (a) shall be submitted to 
common stockholders of the Association for their approval. The 
reorganization shall occur at the reorganization effective date, 
provided that the plan of reorganization has been approved by the 
affirmative votes, cast in person or by proxy, of the holders of a 
majority of the issued and outstanding shares of the Association common 
stock.
    ``(c) Transition.--
            ``(1) In general.--Except as specifically provided in this 
        section, until the dissolution date the Association shall 
        continue to have all of the rights, privileges and obligations 
        set forth in, and shall be subject to all of the limitations 
        and restrictions of, section 439 of this Act as in effect on 
        the effective date of this section, and the Association shall 
        continue to carry out the purposes of such section. The Holding 
        Company and its affiliates other than the Association shall not 
        be entitled to any of the rights, privileges and obligations, 
        and shall not be subject to the limitations and restrictions, 
        applicable to the Association under section 439 of this Act as 
        in effect on the effective date of this section, except as 
        specifically provided in this section. The Holding Company and 
        its subsidiaries (other than the Association) shall not 
        purchase loans insured under this Act until such time as the 
        Association ceases acquiring such loans, except that the 
        Association shall continue to acquire loans as a lender of last 
        resort pursuant to section 439(q) of this Act or under an 
        agreement with the Secretary described in section 440(c)(6).
            ``(2) Transfer of certain property.--Except as specifically 
        provided in this section, at the reorganization effective date 
        or as soon as practicable thereafter, the Association shall use 
        its best efforts to transfer to the Holding Company or its 
        subsidiaries (or both), in each case, as directed by the 
        Holding Company, all real and personal property of the 
        Association (both tangible and intangible) other than the 
        remaining property. Without limiting the preceding sentence, 
        such transferred property shall include all right, title and 
        interest in (A) direct or indirect subsidiaries of the 
        Association (excluding any interest in any government sponsored 
        enterprise), (B) contracts, leases, and other agreements, (C) 
        licenses and other intellectual property, and (D) any other 
        property of the Association. Notwithstanding the preceding 
        provisions of this paragraph, nothing in this paragraph shall 
        be construed to prohibit the Association from transferring 
        remaining property from time to time to the Holding Company or 
        its subsidiaries, subject to the provisions of paragraph (4).
            ``(3) Transfer of personnel.--At the reorganization 
        effective date, employees of the Association shall become 
        employees of the Holding Company (or of the subsidiaries), and 
        the Holding Company (or the subsidiaries or both) shall provide 
        all necessary and appropriate management and operational 
        support (including loan servicing) to the Association, as 
        requested by the Association. The Association may, however, 
        obtain such management and operational support from other 
        persons or entities.
            ``(4) 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 section 439(r) of this Act. If, at any time after the 
        reorganization effective date, the Association fails to comply 
        with such capital standards, the Holding Company shall be 
        obligated to transfer to the Association additional capital in 
        such amounts as are necessary to ensure that the Association 
        again complies with the capital standards.
            ``(5) Valuation of noncash distributions.--After the 
        reorganization effective date, any distribution of noncash 
        assets by the Association to the Holding Company shall be 
        valued at book value on the date the Association's Board of 
        Directors approved such distribution for purposes of 
        calculating compliance with section 439(r) of this Act.
            ``(6) Restrictions on new business activity or acquisition 
        of assets by association.--After the reorganization effective 
        date, the Association shall not engage in any new business 
        activities or acquire any additional assets other than--
                    ``(A) in connection with (i) student loan purchases 
                through September 30, 2003, and (ii) contractual 
                commitments for future warehousing advances or pursuant 
                to letters of credit or standby bond purchase 
                agreements which are outstanding as of the 
                reorganization effective date;
                    ``(B) in connection with its serving as a lender-
                of-last-resort pursuant to section 439 of this Act; and
                    ``(C) in connection with its purchase of 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 its secondary market purchase program 
                because the Secretary determines there is inadequate 
                liquidity for loans made under this part.
        The Secretary is authorized to enter into an agreement 
        described in subparagraph (C) with the Association covering 
        such secondary market activities. Any agreement entered into 
        under subparagraph (C) shall cover a period of 12 months, but 
        may be renewed if the Secretary determines that liquidity 
        remains inadequate. The fee provided under section 439(h)(7) 
        shall not apply to loans acquired under any such agreement with 
        the Secretary.
            ``(7) Issuance of debt obligations during the transition 
        period; attributes of debt obligations.--After the 
        reorganization effective date, the Association shall not issue 
        debt obligations which mature later than September 30, 2004, 
        except in connection with serving as a lender-of-last-resort 
        pursuant to section 439 of this Act or with purchasing loans 
        under an agreement with the Secretary as described in paragraph 
        (6) of this subsection. Nothing in this subsection shall modify 
        the attributes accorded the debt obligations of the Association 
        by section 439, regardless of whether such debt obligations are 
        incurred prior to, or at any time following, the reorganization 
        effective date or are transferred to a trust in accordance with 
        subsection (d).
            ``(8) Monitoring of safety and soundness.--
                    ``(A) Obligation to obtain, maintain, and report 
                information.--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 of its 
                associated persons, to the extent such activities are 
                reasonably likely to have a material impact on the 
                financial condition of the Association, including its 
                capital ratio, its liquidity, or its ability to conduct 
                and finance its operations, and (ii) the Association's 
                policies, procedures, and systems for monitoring and 
                controlling any such financial risk. The Association's 
                obligations under this subsection with respect to any 
                associated person which is a third party servicer (as 
                defined in 34 C.F.R. 682.200(b)) shall be limited to 
                providing to the Secretary of the Treasury copies of 
                any reports or other information provided to the 
                Secretary of Education pursuant to 34 C.F.R. 682.200 et 
                seq. The Secretary of the Treasury may require summary 
                reports of such information to be filed no more 
                frequently than quarterly. For purposes of this 
                paragraph, the term `associated person' shall mean any 
                person, other than a natural person, directly or 
                indirectly controlling, controlled by, or under common 
                control with the Association.
                    ``(B) Separate operation of corporations.--
                            ``(i) The funds and assets of the 
                        Association shall at all times be maintained 
                        separately from the funds and assets of the 
                        Holding Company or any of its other 
                        subsidiaries and may be used solely by the 
                        Association to carry out its purposes and to 
                        fulfill its obligations.
                            ``(ii) The Association shall maintain books 
                        and records that clearly reflect the assets and 
                        liabilities of the Association, separate from 
                        the assets and liabilities of the Holding 
                        Company or any of its other subsidiaries.
                            ``(iii) The Association shall maintain a 
                        corporate office that is physically separate 
                        from any office of the Holding Company or any 
                        of its subsidiaries.
                            ``(iv) No director of the Association that 
                        is appointed by the President pursuant to 
                        section 439(c)(1)(A) may serve as a director of 
                        the Holding Company.
                            ``(v) At least one officer of the 
                        Association shall remain an officer solely of 
                        the Association.
                            ``(vi) Transactions between the Association 
                        and the Holding Company or its other 
                        subsidiaries, including any loan servicing 
                        arrangements, shall be on terms no less 
                        favorable to the Association than the 
                        Association could obtain from an unrelated 
                        third party.
                            ``(vii) The Association shall not extend 
                        credit to the Holding Company or any of its 
                        affiliates, nor guarantee or provide any credit 
                        enhancement to any debt obligations of the 
                        Holding Company or any of its affiliates.
                            ``(viii) Any amounts collected on behalf of 
                        the Association by the Holding Company or any 
                        of its other subsidiaries with respect to the 
                        assets of the Association, pursuant to a 
                        servicing contract or other arrangement between 
                        the Association and the Holding Company or any 
                        of its other direct or indirect subsidiaries, 
                        shall be collected solely for the benefit of 
                        the Association and shall be immediately 
                        deposited by the Holding Company or such other 
                        subsidiary to an account under the sole control 
                        of the Association.
                    ``(C) Encumbrance of assets.--Notwithstanding any 
                otherwise applicable Federal or State law, rule, or 
                regulation, or legal or equitable principle, doctrine, 
                or theory to the contrary, under no circumstances shall 
                the assets of the Association be available or used to 
                pay claims or debts of or incurred by the Holding 
                Company. Nothing in this subparagraph shall limit the 
                right of the Association to pay dividends not otherwise 
                prohibited hereunder or limit any liability of the 
                Holding Company explicitly provided for in this part.
                    ``(D) Holding company activities.--After the 
                reorganization effective date and prior to the 
                dissolution of the Association in accordance with 
                section 440(d), Holding Company activities shall be 
                limited to ownership of the Association and any other 
                subsidiaries. All business activities shall be 
                conducted through subsidiaries.
            ``(9) Association board of directors.--Notwithstanding any 
        other provision of part B of this title, after the 
        reorganization effective date, the 14 directors of the 
        Association elected by the Association's stockholders (which 
        immediately after the reorganization effective date shall be 
        the Holding Company) shall no longer be required to meet the 
        eligibility requirements set forth in section 439(c).
            ``(10) Issuance of stock warrants.--At the reorganization 
        effective date, the Holding Company shall issue to the 
        Secretary of the Treasury 200,000 stock warrants, each 
        entitling the holder of the stock warrant to purchase from the 
        Holding Company one share of the registered common stock of the 
        Holding Company at any time on or before September 30, 2007. 
        The exercise price for such warrants shall be an amount equal 
        to the average closing price of the common stock of the 
        Association for the 20 business days prior to and including the 
        date of enactment of this section on the exchange or market 
        which is then the primary exchange or market for the common 
        stock of the Association, subject to any adjustments necessary 
        to reflect the conversion of Association common stock into 
        Holding Company common stock as part of the plan of 
        reorganization approved by the Association's shareholders.
            ``(11) Restrictions on transfer of association shares and 
        bankruptcy of association.--After the reorganization effective 
        date, the Holding Company shall not sell, pledge, or otherwise 
        transfer the outstanding shares of the Association, or agree to 
        or cause the liquidation of the Association to file a petition 
        of bankruptcy under title 11, United States Code, without prior 
        approval of the Secretary of the Treasury and the Secretary of 
        Education.
    ``(d) Termination of the Association.--The Association shall 
dissolve, and its separate existence shall terminate on September 30, 
2007, 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 its 
intention to dissolve, unless within 60 days of receipt of such notice
 the Secretary of Education notifies the Association that it continues 
to be needed to serve as a lender of last resort pursuant to section 
439(q) of this Act or continues to be needed to purchase loans under an 
agreement with the Secretary described in subsection (c)(6) of this 
section. On the dissolution date, the Association shall take the 
following actions:
            ``(1) 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 the 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 of America 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. To the extent the 
        Association cannot provide money or qualifying obligations in 
        the amount required, the Holding Company shall be required to 
        transfer money or qualifying obligations to the trust in the 
        amount necessary to prevent any deficiency.
            ``(2) 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 
        Holding Company or its subsidiaries, or both, as directed by 
        the Holding Company.
            ``(3) 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 then outstanding. Any obligations of the 
        Association which cannot be fully satisfied shall become 
        liabilities of the Holding Company as of the date of 
        dissolution.
            ``(4) Transfer of remaining assets.--After compliance with 
        paragraphs (1), (2), and (3), the Association shall transfer to 
        the Holding Company any remaining assets of the Association.
    ``(e) Operation of the Holding Company.--
            ``(1) Holding company board of directors.--The number and 
        composition of the Board of Directors of the Holding Company 
        shall be determined as set forth in the Holding Company's 
        charter or like instrument (as amended from time to time) or 
        bylaws (as amended from time to time) and as permissible under 
        the laws of the jurisdiction of its incorporation.
            ``(2) Holding company name.--The names of the Holding 
        Company and any direct or indirect subsidiary of the Holding 
        Company other than the Association may not contain the name 
        `Student Loan Marketing Association' or `Sallie Mae'.
            ``(3) Use of sallie mae name.--Subject to paragraph (2), 
        the Association may assign to the Holding Company, or any 
        direct or indirect subsidiary of the Holding Company other than 
        the Association, the `Sallie Mae' name as a trademark and 
        service mark, except that neither the Holding Company nor any 
        direct or indirect subsidiary of the Holding Company may use 
        the `Sallie Mae' name on, or to identify the issuer of, any 
        debt obligation or other security offered or sold by the 
        Holding Company or any direct or indirect subsidiary. The 
        Association shall remit to the Secretary of Treasury $5,000,000 
        during fiscal year 1996 as compensation for the right to assign 
        such trademark or service mark.
            ``(4) Disclosure required.--Until 3 years after the 
        dissolution date, the Holding Company, and any direct or 
        indirect subsidiary of the Holding Company other than the 
        Association, shall prominently display in any document offering 
        its securities, and in any advertisement or promotional 
        materials which use the `Sallie Mae' name or mark, a statement 
        that--
                    ``(A) neither the Holding Company nor any such 
                subsidiary is a Government-sponsored enterprise or 
                instrumentality of the United States; and
                    ``(B) the obligations of the Holding Company and 
                any such subsidiary are not guaranteed by the full 
                faith and credit of the United States.
    ``(f) Strict Construction.--Except as specifically set forth in 
this section, nothing contained in this section shall be construed to 
limit the authority of the Association as a federally chartered 
corporation, or of the Holding Company as a State or District of 
Columbia chartered corporation.
    ``(g) Right To Enforce.--The Secretary of Education or the 
Secretary of the Treasury, as appropriate, may request the Attorney 
General of the United States to bring an action in the United States 
District Court for the District of Columbia for the enforcement of any 
provisions 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.
    ``(h) Deadline for Reorganization Effective Date.--This section 
shall be of no further force and effect in the event that the 
reorganization effective date does not occur on or before 18 months 
after the date of enactment of this section.
    ``(i) Definitions.--For purposes of this section:
            ``(1) The term `Association' means the Student Loan 
        Marketing Association.
            ``(2) The term `dissolution date' shall mean September 30, 
        2007, or such earlier date as the Secretary of Education 
        permits the transfer of remaining obligations in accordance 
        with subsection (d) of this section.
            ``(3) The term `reorganization effective date' means the 
        effective date of the reorganization as determined by the Board 
        of Directors of the Association, which shall not be earlier 
        than the date that stockholder approval is obtained pursuant to 
        subsection (b) of this section and shall not be later than the 
        date that is 18 months after the date of enactment of this 
        section.
            ``(4) The term `Holding Company' means the new business 
        corporation formed pursuant to this section by the Association 
        under the laws of any State of the United States or the 
        District of Columbia.
            ``(5) The term `remaining obligations' shall mean the debt 
        obligations of the Association outstanding as of the 
        dissolution date.
            ``(6) The term `remaining property' shall mean the 
        following assets and liabilities of the Association which are 
        outstanding as of the reorganization effective date: (A) debt 
        obligations issued by the Association, (B) contracts relating 
        to interest rate, currency, or commodity positions or 
        protections, (C) investment securities owned by the 
        Association, (D) any instruments, assets, or agreements 
        described in section 439(d) of this Act (including without 
        limitation all student loans, forward purchase and lending 
        commitments, warehousing advances, academic facilities 
        obligations, letters of credit, standby bond purchase 
        agreements, liquidity agreements, and student loan revenue 
        bonds or other loans), and (E) except as specifically 
        prohibited by this Act, any other nonmaterial assets or 
        liabilities of the Association which the Association's Board of 
        Directors determines to be necessary or appropriate to its 
        operations.
            ``(7) The term `reorganization' means the restructuring 
        event or events (including any merger event) giving effect to 
        the holding company structure described in subsection (a) of 
        this section.
            ``(8) The term `subsidiaries' shall mean one or more direct 
        or indirect subsidiaries of the Holding Company.''.
    (b) Technical Amendments.--
            (1) Amendments to the higher education act.--Effective on 
        the reorganization effective date (as defined in section 
        440(h)(3) of the Act, as added by subsection (a))--
                    (A) section 435(d)(1)(F) of the Act (20 U.S.C. 
                1085(d)(1)(F)) is amended by inserting after ``Student 
                Loan Marketing Association'' the following: ``or the 
                Holding Company of the Student Loan Marketing 
                Association, including all subsidiaries of such Holding 
                Company, created pursuant to section 440 of this 
                Act,''; and
                    (B) sections 435(d)(1)(G) and 428C(a)(1)(A) of such 
                Act (20 U.S.C. 1085(d)(1)(G); 1078-3(a)(1)(A)) are each 
                amended by inserting after ``Student Loan Marketing 
                Association'' the following: ``or the Holding Company 
                of the Student Loan Marketing Association, including 
                all subsidiaries of such Holding Company, created 
                pursuant to section 440 of this Act''.
            (2) Enforcement of safety and soundness requirements.--
        Section 439(r) of the Act (20 U.S.C. 1087-2(r)) is amended--
                    (A) by redesignating paragraph (13) as paragraph 
                (15); and
                    (B) by inserting after paragraph (12) the following 
                new paragraph:
            ``(13) Enforcement of safety and soundness requirements.--
        The Secretary of Education or the Secretary of the Treasury, as 
        appropriate, may request the Attorney General of the United 
        States to bring an action in the United States District Court 
        for the District of Columbia for the enforcement of any 
        provisions of this subsection, 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 subsection.''.
            (3) Capital ratio amendments.--Section 439(r) of the Act is 
        further amended--
                    (A) in paragraph (1)--
                            (i) by striking ``and'' at the end of 
                        subparagraph (A);
                            (ii) by striking the period at the end of 
                        subparagraph (B) and inserting ``; and''; and
                            (iii) by adding at the end the following 
                        new subparagraph:
                    ``(C) within 45 days of the end of each calendar 
                quarter, (i) financial statements of the Association, 
                and (ii) a report setting forth the calculation of the 
                capital ratio of the Association.'';
                    (B) in paragraph (11), by striking ``paragraphs (4) 
                and (6)(A)'' and inserting ``paragraphs (4), (6)(A), 
                and (14)''; and
                    (C) by inserting after paragraph (13) (as added by 
                paragraph (2) of this subsection) the following new 
                paragraph:
            ``(14) Actions by secretary.--If the shareholders of the 
        Association shall have approved a reorganization plan in 
        accordance with section 440(b) and, for any quarter after 
        January 1, 2000, the Association shall have a capital ratio of 
        less than 2.25 percent, the Secretary of the Treasury may, 
        until such capital ratio is met, take any one or more of the 
        actions described in paragraph (7), except that--
                    ``(A) the capital ratio to be restored pursuant to 
                paragraph (7)(D) shall be 2.25 percent; and
                    ``(B) 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.
        Upon approval by the shareholders of the Association of a 
        reorganization plan in accordance with section 440(b) for any 
        period after January 1, 2000, the provisions of paragraphs (4), 
        (5), (6), (8), (9), and (10) shall be of no further application 
        to the Association.''.
            (4) Repeal of the association's charter.--Effective on the 
        dissolution date (as defined in section 440(h)(2) of the Act, 
        as added by subsection (a)), section 439 of the Act (20 U.S.C. 
        1087-2) is repealed.
       TITLE II--COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION

SEC. 201. PRIVATIZATION OF COLLEGE CONSTRUCTION LOAN INSURANCE 
              ASSOCIATION.

    (a) Repeal of Statutory Restrictions.--Part D of title VII of the 
Act (20 U.S.C. 1132f et seq.) is repealed.
    (b) Status of the Corporation.--
            (1) Status of the corporation.--The Corporation shall not 
        be an agency, instrumentality, or establishment of the United 
        States Government and shall not be a ``Government corporation'' 
        nor a ``Government controlled corporation'' as defined in 
        section 103 of title 5, United States Code. No action under 
        section 1491 of title 28, United States Code (commonly known as 
        the Tucker Act) shall be allowable against the United States 
        based on the actions of the Corporation.
            (2) Corporate powers.--The Corporation shall have the power 
        to engage in any business or other activities for which 
        corporations may be organized under the laws of any State of 
        the United States or the District of Columbia. The Corporation 
        shall have the power to enter into contracts, to execute 
        instruments, to incur liabilities, to provide products and 
        services, and to do all things as are necessary or incidental 
        to the proper management of its affairs and the efficient 
        operation of a private, for-profit business.
    (c) Related Privatization Requirements.--
            (1) Notice requirements.--During the 5-year period 
        following the date of the enactment of this Act, the 
        Corporation shall include in any document offering the 
        Corporation's securities, or in any contracts for insurance, 
        guarantee, or reinsurance of obligations, a statement that--
                    (A) the Corporation is not a Government-sponsored 
                enterprise or instrumentality of the United States; and
                    (B) the Corporation's obligations are not 
                guaranteed by the full faith and credit of the United 
                States.
            (2) Corporate charter.--The Corporation's charter shall be 
        amended as necessary and without delay to conform the 
        requirements of this Act.
            (3) Corporate name.--The name of the Corporation, or of any 
        direct or indirect subsidiary thereof, may not contain the term 
        ``College Construction Loan Insurance Association''.
            (4) Articles of incorporation.--The Corporation shall amend 
        its articles of incorporation without delay to reflect that one 
        of the purposes of the Corporation shall be to guarantee, 
        insure and reinsure bonds, leases, and other evidences of debt 
        of educational institutions, including Historically Black 
        Colleges and Universities and other academic institutions which 
        are ranked in the lower investment grade category using a 
        nationally recognized credit rating system.
            (5) Transition requirements.--
                    (A) Requirements until stock sale.--Notwithstanding 
                subsection (a), the requirements of section 754 of the 
                Act (20 U.S.C. 1132f-3), as in existence as of the day 
                before enactment of this Act, shall continue to be 
                effective until the day immediately following the date 
                of closing of the purchase of the Secretary's stock (or 
                the date of closing of the final purchase, in the case 
                of multiple transactions) pursuant to subsection (d) of 
                this section.
                    (B) Reports after stock sale.--The Corporation 
                shall, not later than March 30 of the first full 
                calendar year immediately following the sale pursuant 
                to subsection (d), and each of the 2 succeeding years, 
                submit to the Secretary of Education a report 
                describing the Corporation's efforts to assist in the 
                financing of education facilities projects, including 
                projects for elementary, secondary, and postsecondary 
                educational institution infrastructure, and detailing, 
                on a project-by-project basis, the Corporation's 
                business dealings with educational institutions that 
                are rated by a nationally recognized statistical rating 
                organization at or below the organization's third 
                highest ratings.
    (d) Sale of Federally Owned Stock.--
            (1) Sale of stock required.--The Secretary of the Treasury 
        shall, upon the request of the Secretary of Education make 
        every effort to sell, pursuant to section 324 of title 31, 
        United States Code, the voting common stock of the Corporation 
        owned by the Secretary of Education not later than one year 
        after the date of the enactment of this Act.
            (2) Purchase by the corporation.--In the event that the 
        Secretary of the Treasury is unable to sell the voting common 
        stock, or any portion thereof, at a price acceptable to the 
        Secretary of Education and the Secretary of the Treasury within 
        the period specified in paragraph (1), the Corporation shall 
        purchase such stock at a price determined by the Secretary of 
        the Treasury and acceptable to the Corporation based on 
        independent appraisal by one or more nationally recognized 
        financial firms. Such firms shall be selected by the Secretary 
        of the Treasury in consultation with the Secretary of Education 
        and the Corporation.
    (e) Assistance by the Corporation.--The Corporation shall provide 
such assistance as the Secretary of the Treasury and the Secretary of 
Education may require to facilitate the sale of the stock under this 
section.
    (f) Definition.--As used in this section, the term ``Corporation'' 
means the Corporation established pursuant to the provision of law 
repealed by subsection (a).
               TITLE III--REPEALERS AND OTHER AMENDMENTS
SEC. 301. HIGHER EDUCATION PROVISIONS.

    (a) Higher Education Act of 1965 Provisions.--The following 
provisions of the Higher Education Act of 1965 are repealed:
            (1) Part B of title I (20 U.S.C. 1011 et seq.), relating to 
        articulation agreements.
            (2) Part C of title I (20 U.S.C. 1015 et seq.), relating to 
        access and equity to education for all Americans through 
        telecommunications.
            (3) Title II (20 U.S.C. 1021 et seq.), relating to academic 
        libraries and information services.
            (4) Chapter 2 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-21 et seq.), relating to national early intervention 
        scholarships.
            (5) Chapter 3 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-31 et seq.), relating to presidential access 
        scholarships.
            (6) Chapter 4 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-41 et seq.), relating to model program community 
        partnerships and counseling grants.
            (7) Chapter 5 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-52 et seq.), relating to an early awareness information 
        program.
            (8) Chapter 8 of subpart 2 of part A of title IV (20 U.S.C. 
        1070a-81), relating to technical assistance for teachers and 
        counselors.
            (9) Subpart 5 of part A of title IV (20 U.S.C. 1070d-2), 
        relating to special programs for students whose families are 
        engaged in migrant and seasonal farmwork.
            (10) Subpart 8 of part A of title IV (20 U.S.C. 1070f), 
        relating to special child care services for disadvantaged 
        college students.
            (11) Section 428J (20 U.S.C. 1078-10), relating to loan 
        forgiveness for teachers, individuals performing national 
        community service and nurses.
            (12) Section 486 (20 U.S.C. 1093), relating to training in 
        financial aid services.
            (13) Subpart 1 of part H of title IV (20 U.S.C. 1099a et 
        seq.) relating to State postsecondary review entity programs.
            (14) Part A of title V (20 U.S.C. 1102 et seq.), relating 
        to State and local programs for teacher excellence.
            (15) Part B of title V (20 U.S.C. 1103 et seq.), relating 
        to national teacher academies.
            (16) Subpart 1 of part C of title V (20 U.S.C. 1104 et 
        seq.), relating to Douglas teacher scholarships.
            (17) Subpart 3 of part C of title V (20 U.S.C. 1106 et 
        seq.), relating to the teacher corps.
            (18) Subpart 3 of part D of title V (20 U.S.C. 1109 et 
        seq.), relating to class size demonstration grants.
            (19) Subpart 4 of part D of title V (20 U.S.C. 1110 et 
        seq.), relating to middle school teaching demonstration 
        programs.
            (20) Subpart 1 of part E of title V (20 U.S.C. 1111 et 
        seq.), relating to new teaching careers.
            (21) Subpart 1 of part F of title V (20 U.S.C. 1113 et 
        seq.), relating to the national mini corps programs.
            (22) Section 586 (20 U.S.C. 1114), relating to 
        demonstration grants for critical language and area studies.
            (23) Section 587 (20 U.S.C. 1114a), relating to development 
        of foreign languages and cultures instructional materials.
            (24) Subpart 3 of part F of title V (20 U.S.C. 1115), 
        relating to small State teaching initiatives.
            (25) Subpart 4 of part F of title V (20 U.S.C. 1116), 
        relating to faculty development grants.
            (26) Subpart 5 of part F of title V (20 U.S.C. 1117), 
        relating to early childhood staff training and professional 
        enhancement.
            (27) Section 605 (20 U.S.C. 1124a), relating to intensive 
        summer language institutes.
            (28) Section 607 (20 U.S.C. 1125a), relating to foreign 
        language periodicals.
            (29) Part A of title VII (20 U.S.C. 11326 et seq.), 
        relating to academic and library facilities.
            (30) Title VIII (20 U.S.C. 1133 et seq.), relating to 
        cooperative education programs.
            (31) Part A of title IX (20 U.S.C. 1134a et seq.), relating 
        to women and minority participation in graduate education.
            (32) Part B of title IX (20 U.S.C. 1134d et seq.), relating 
        to Harris fellowships.
            (33) Part C of title IX (20 U.S.C. 1134h et seq.), relating 
        to Javits fellowships.
            (34) Part E of title IX (20 U.S.C. 1134r et seq.), relating 
        to the faculty development fellowship program.
            (35) Part F of title IX (20 U.S.C. 1134s et seq.), relating 
        to legal training for the disadvantaged.
            (36) Part G of title IX (20 U.S.C. 1134u et seq.), relating 
        to law school clinical programs.
            (37) Section 1011 (20 U.S.C. 1135a-11), relating to special 
        projects in areas of national need.
            (38) Subpart 2 of part B of title X (20 U.S.C. 1135c et 
        seq.), relating to science and engineering access programs.
            (39) Part C of title X (20 U.S.C. 1135e et seq.), relating 
        to women and minorities science and engineering outreach 
        demonstration programs.
            (40) Part D of title X (20 U.S.C. 1135f), relating to 
        Eisenhower leadership programs.
            (41) Title XI (20 U.S.C. 1136 et seq.), relating to 
        community service programs.
    (b) Education Amendments of 1986 Provisions.--The following 
provisions of the Higher Education Amendments of 1986 are repealed:
            (1) Part E of title XIII (20 U.S.C. 1221-1 note), relating 
        to a National Academy of Science study.
            (2) Part B of title XV (20 U.S.C. 4441 et seq.), relating 
        to Native Hawaiian culture and art development.
    (c) Education Amendments of 1992 Provisions.--The following 
provisions of the Higher Education Amendments of 1992 are repealed:
            (1) Part F of title XIII (25 U.S.C. 3351 et seq.), relating 
        to American Indian postsecondary economic development 
        scholarships.
            (2) Part G of title XIII (25 U.S.C. 3371), relating to 
        American Indian teacher training.
            (3) Section 1406 (20 U.S.C. 1221e-1 note), relating to a 
        national survey of factors associated with participation.
            (4) Section 1409 (20 U.S.C. 1132a note), relating to a 
        study of environmental hazards in institutions of higher 
        education.
            (5) Section 1412 (20 U.S.C. 1101 note), relating to a 
        national job bank for teacher recruitment.
            (6) Part B of title XV (20 U.S.C. 1452 note), relating to a 
        national clearinghouse for postsecondary education materials.
            (7) Part C of title XV (20 U.S.C. 1101 note), relating to 
        school-based decisionmakers.
            (8) Part D of title XV (20 U.S.C. 1145h note), relating to 
        grants for sexual offenses education.
            (9) Part E of title XV (20 U.S.C. 1070 note), relating to 
        Olympic scholarships.
            (10) Part G of title XV (20 U.S.C. 1070a-11 note), relating 
        to advanced placement fee payment programs.
    (d) Conforming Amendments.--The Act is amended--
            (1) in section 453(c)(2)--
                    (A) by striking subparagraph (E); and
                    (B) by redesignating subparagraphs (F) through (H) 
                as subparagraphs (E) through (G), respectively;
            (2) in section 487(a)(3), by striking subparagraph (B) and 
        redesignating subparagraphs (C) and (D) as subparagraphs (B) 
        and (C), respectively;
            (3) in section 487(a)(15), by striking ``the Secretary of 
        Veterans Affairs, and State review entities under subpart 1 of 
        part H'' and inserting ``and the Secretary of Veterans 
        Affairs'';
            (4) in section 487(a)(21), by striking ``, State 
        postsecondary review entities,'';
            (5) in section 487(c)(1)(A)(i), by striking ``State 
        agencies, and the State review entities referred to in subpart 
        1 of part H'' and inserting ``and State agencies'';
            (6) in section 487(c)(4), by striking ``, after 
        consultation with each State review entity designated under 
        subpart 1 of part H,'';
            (7) in section 487(c)(5), by striking ``State review 
        entities designated under subpart 1 of part H,'';
            (8) in section 496(a)(7), by striking ``and the appropriate 
        State postsecondary review entity'';
            (9) in section 496(a)(8), by striking ``and the State 
        postsecondary review entity of the State in which the 
        institution of higher education is located'';
            (10) in section 498(g)(2), by striking everything after the 
        first sentence;
            (11) in section 498A(a)(2)(D), by striking ``by the 
        appropriate State postsecondary review entity designated under 
        subpart 1 of this part or'';
            (12) in section 498A(a)(2)--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (E);
                    (B) by striking subparagraph (F); and
                    (C) by redesignating subparagraph (G) as 
                subparagraph (F); and
            (13) in section 498A(a)(3)--
                    (A) by inserting ``and'' after the semicolon at the 
                end of subparagraph (C);
                    (B) by striking ``; and'' at the end of 
                subparagraph (D) and inserting a period; and
                    (C) by striking subparagraph (E).

SEC. 302. EFFECTIVE DATE.

    The repeals and amendments made by this title shall take effect on 
October 1, 1996.

  TITLE IV--GENERAL PROVISIONS RELATING TO STUDENT ASSISTANCE PROGRAMS

SEC. 401. AMENDMENT TO HIGHER EDUCATION ACT.

    (a) Amendment.--Section 481(b) of the Act (20 U.S.C. 1088(b)) is 
amended by inserting after the first sentence the following: ``For the 
purposes of determining whether an institution meets the requirements 
of clause (6), the Secretary shall not consider the financial 
information of any institution for a fiscal year that began on or 
before April 30, 1994.''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
apply to any determination made on or after July 1, 1994, by the 
Secretary of Education pursuant to section 481(b)(6) of the Act.
HR 1720 RH----2
HR 1720 RH----3
HR 1720 RH----4
```