I

104TH CONGRESS

1ST SESSION H. R. 1720

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

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.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; REFERENCES.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Privatization Act of 1995’’.

6 (b) REFERENCES.—References in this Act to ‘‘the

7 Act’’ are references to the Higher Education Act of 1965.
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1 SEC. 2. PURPOSE.

2 The purpose of this Act is to provide for the cessation

3 of Federal sponsorship of two Government sponsored en4 terprises, the Student Loan Marketing Association and

5 the College Construction Loan Insurance Association now

6 that both corporations are economically viable and have

7 successfully fulfilled the purposes for which they were cre8 ated.

9 TITLE I—STUDENT LOAN

10 MARKETING ASSOCIATION

11 SEC. 101. REORGANIZATION OF THE STUDENT LOAN MAR12 KETING ASSOCIATION THROUGH THE FOR13 MATION OF A HOLDING COMPANY.

14 (a) AMENDMENT.—Part B of title IV of the Higher

15 Education Act of 1965 (20 U.S.C. 1071 et seq. (1988))

16 is amended by inserting after section 439 (20 U.S.C.

17 1087–2) the following new section:

18 ‘‘SEC. 440. REORGANIZATION OF THE STUDENT LOAN MAR19 KETING ASSOCIATION THROUGH THE FOR20 MATION OF A HOLDING COMPANY.

21 ‘‘(a) ACTIONS BY THE ASSOCIATION’S BOARD OF DI22 RECTORS.—The Board of Directors of the Association

23 shall take or cause to be taken all such action as it deems

24 necessary or appropriate to effect, upon the shareholder

25 approval described in subsection (b), a restructuring of the

26 common stock ownership of the Association, as set forth
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1 in a plan of reorganization adopted by the Board of Direc2 tors (the terms of which shall be consistent with this Act)

3 so that all of the outstanding common shares shall be di4 rectly owned by an ordinary business corporation char5 tered under State or District of Columbia law (the ‘Hold6 ing Company’), as the Board of Directors may determine.

7 Such actions may include, in the Board’s discretion, a

8 merger of a wholly owned subsidiary of the Holding Com9 pany with and into the Association, which would have the

10 effect provided in the plan of reorganization and the law

11 of the jurisdiction in which such subsidiary is incor12 porated. As part of the restructuring, the Board of Direc13 tors may cause (1) the common shares of the Association

14 to be converted, at the reorganization effective date, to

15 common shares of the Holding Company on a one for one

16 basis, consistent with applicable State or District of Co17 lumbia law, and (2) Holding Company common shares to

18 be registered with the Securities and Exchange Commis19 sion.

20 ‘‘(b) SHAREHOLDER APPROVAL.—The plan of reor21 ganization adopted by the Board of Directors pursuant to

22 subsection (a) shall be submitted to common stockholders

23 of the Association for their approval. The reorganization

24 shall occur at the reorganization effective date, provided

25 that the plan of reorganization has been approved by the
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1 affirmative votes, cast in person or by proxy, of the holders

2 of a majority of the issued and outstanding shares of the

3 Association common stock.

4 ‘‘(c) TRANSITION.—

5 ‘‘(1) IN GENERAL.—Except as specifically pro6 vided in this section, until the dissolution date the

7 Association shall continue to have all of the rights,

8 privileges and obligations set forth in, and shall be

9 subject to all of the limitations and restrictions of,

10 section 439 of this Act as in effect on the effective

11 date of this section. The Holding Company and its

12 affiliates other than the Association shall not be en13 titled to any of the rights, privileges and obligations,

14 and shall not be subject to the limitations and re15 strictions, applicable to the Association under section

16 439 of this Act as in effect on the effective date of

17 this section, except as specifically provided in this

18 section. The Holding Company and its subsidiaries

19 (other than the Association) shall not purchase loans

20 insured under this Act until such time as the Asso21 ciation ceases acquiring such loans, except that the

22 Association may continue to acquire loans as a lend23 er of last resort pursuant to section 439(q) of this

24 Act or under an agreement with the Secretary de25 scribed in section 440(c)(6).
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1 ‘‘(2) TRANSFER OF CERTAIN PROPERTY.—Ex2 cept as specifically provided in this section, at the

3 reorganization effective date or as soon as prac4 ticable thereafter, the Association shall use its best

5 efforts to transfer to the Holding Company or its

6 subsidiaries (or both), in each case, as directed by

7 the Holding Company, all real and personal property

8 of the Association (both tangible and intangible)

9 other than the remaining property. Without limiting

10 the preceding sentence, such transferred property

11 shall include all right, title and interest in (A) direct

12 or indirect subsidiaries of the Association (excluding

13 any interest in any government sponsored enter14 prise), (B) contracts, leases, and other agreements,

15 (C) licenses and other intellectual property, and (D)

16 any other property of the Association. Notwithstand17 ing the preceding provisions of this paragraph, noth18 ing in this paragraph shall be construed to prohibit

19 the Association from transferring remaining prop20 erty from time to time to the Holding Company or

21 its subsidiaries, subject to the provisions of para22 graph (4).

23 ‘‘(3) TRANSFER OF PERSONNEL.—At the reor24 ganization effective date, employees of the Associa25 tion shall become employees of the Holding Com-
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1 pany (or of the subsidiaries), and the Holding Com2 pany (or the subsidiaries or both) shall provide all

3 necessary and appropriate management and oper4 ational support (including loan servicing) to the As5 sociation, as requested by the Association. The Asso6 ciation may, however, obtain such management and

7 operational support from other persons or entities.

8 ‘‘(4) DIVIDENDS.—The Association may pay

9 dividends in the form of cash or noncash distribu10 tions so long as at the time of the declaration of

11 such dividends, after giving effect to the payment of

12 such dividends as of the date of such declaration by

13 the Board of Directors of the Association, the Asso14 ciation’s capital would be in compliance with the

15 capital standards set forth in section 439(r) of this

16 Act. If, at any time after the reorganization effective

17 date, the Association fails to comply with such cap18 ital standards, the Holding Company shall be obli19 gated to transfer to the Association additional cap20 ital in such amounts as are necessary to ensure that

21 the Association again complies with the capital

22 standards, but not to exceed that amount received

23 by the Holding Company as dividends during the 6-

24 month period immediately preceding such failure.
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1 ‘‘(5) VALUATION OF NONCASH DISTRIBU2 TIONS.—After the reorganization effective date, any

3 distribution of noncash assets by the Association to

4 the Holding Company shall be valued at book value

5 on the date the Association’s Board of Directors ap6 proved such distribution for purposes of calculating

7 compliance with section 439(r) of this Act.

8 ‘‘(6) RESTRICTIONS ON NEW BUSINESS ACTIV9 ITY OR ACQUISITION OF ASSETS BY ASSOCIATION.—

10 After the reorganization effective date, the Associa11 tion shall not engage in any new business activities

12 or acquire any additional assets other than—

13 ‘‘(A) in connection with (i) student loan

14 purchases through September 30, 2003, and (ii)

15 contractual commitments for future

16 warehousing advances or pursuant to letters of

17 credit or standby bond purchase agreements

18 which are outstanding as of the reorganization

19 effective date;

20 ‘‘(B) in connection with its serving as a

21 lender-of-last-resort pursuant to section 439 of

22 this Act; and

23 ‘‘(C) in connection with its purchase of

24 loans insured under this part, if the Secretary,

25 with the approval of the Secretary of the Treas-
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1 ury, requests the Association to continue or re2 sume its secondary market purchase program

3 because the Secretary determines there is inad4 equate liquidity for loans made under this part,

5 the Secretary is authorized to enter into agree6 ments with the Association covering these addi7 tional secondary market activities.

8 Any agreement entered into under subparagraph (C)

9 shall cover a period of 12 months, but may be re10 newed if the Secretary determines that liquidity re11 mains inadequate. The fee provided under section

12 439(h)(7) shall not apply to loans acquired under

13 any such agreement with the Secretary.

14 ‘‘(7) ISSUANCE OF DEBT OBLIGATIONS DURING

15 THE TRANSITION PERIOD; ATTRIBUTES OF DEBT OB16 LIGATIONS.—After the reorganization effective date,

17 the Association shall not issue debt obligations which

18 mature later than September 30, 2007, except in

19 connection with serving as a lender-of-last-resort

20 pursuant to section 439 of this Act or with purchas21 ing loans under an agreement with the Secretary as

22 described in paragraph (6) of this subsection. Noth23 ing in this subsection shall modify the attributes ac24 corded the debt obligations of the Association by sec25 tion 439, regardless of whether such debt obligations
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1 are incurred prior to, or at any time following, the

2 reorganization effective date or are transferred to a

3 trust in accordance with subsection (d).

4 ‘‘(8) MONITORING OF SAFETY AND SOUND5 NESS.—

6 ‘‘(A) OBLIGATION TO OBTAIN, MAINTAIN,

7 AND REPORT INFORMATION.—The Association

8 shall obtain such information and make and

9 keep such records as the Secretary of the

10 Treasury may from time to time prescribe con11 cerning the Association’s policies, procedures,

12 or systems for monitoring and controlling finan13 cial risk to it resulting from the activities of

14 any of its associated persons, to the extent such

15 activities are reasonably likely to have a mate16 rial impact on the financial condition of the As17 sociation, including its capital ratio, its liquid18 ity, or its ability to conduct and finance its op19 erations, except that the Association’s obliga20 tions under this subsection with respect to any

21 associated person which is a third party servicer

22 (as defined in 34 C.F.R. 682.200(b)) shall be

23 limited to providing to the Secretary of the

24 Treasury copies of any reports or other infor25 mation provided to the Secretary of Education
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1 pursuant to 34 C.F.R. 682.200 et seq. The Sec2 retary of the Treasury may require summary

3 reports of such information to be filed no more

4 frequently than quarterly. For purposes of this

5 paragraph, the term ‘associated person’ shall

6 mean any person, other than a natural person,

7 directly or indirectly controlling, controlled by,

8 or under common control with the Association.

9 ‘‘(B) SEPARATE OPERATION OF CORPORA10 TIONS.—

11 ‘‘(i) The funds and assets of the Asso12 ciation shall at all times be maintained

13 separately from the funds and assets of the

14 Holding Company or any of its other sub15 sidiaries and may be used solely by the As16 sociation to carry out its purposes and to

17 fulfill its obligations.

18 ‘‘(ii) The Association shall maintain

19 books and records that clearly reflect the

20 assets and liabilities of the Association,

21 separate from the assets and liabilities of

22 the Holding Company or any of its other

23 subsidiaries.

24 ‘‘(iii) The Association shall maintain a

25 corporate office that is physically separate
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1 from any office of the Holding Company or

2 any of its subsidiaries.

3 ‘‘(iv) No director of the Association

4 that is appointed by the President pursu5 ant to section 439(c)(1)(A) may serve as a

6 director of the Holding Company.

7 ‘‘(v) At least one officer of the Asso8 ciation shall remain an officer solely of the

9 Association.

10 ‘‘(vi) Transactions between the Asso11 ciation and the Holding Company or its

12 other subsidiaries, including any loan serv13 icing arrangements, shall be on terms no

14 less favorable to the Association than the

15 Association could obtain from an unrelated

16 third party.

17 ‘‘(vii) The Association shall not extend

18 credit to the Holding Company or any of

19 its affiliates, nor guarantee or provide any

20 credit enhancement to any debt obligations

21 of the Holding Company or any of its af22 filiates.

23 ‘‘(C) ENCUMBRANCE OF ASSETS.—Not24 withstanding any otherwise applicable Federal

25 or State law, rule, or regulation, or legal or eq-
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1 uitable principle, doctrine, or theory to the con2 trary, under no circumstances shall the assets

3 of—

4 ‘‘(i) the Association be available or

5 used to pay claims or debts of or incurred

6 by the Holding Company; or

7 ‘‘(ii) the Holding Company be avail8 able or used to pay claims or debts of or

9 incurred by the Association.

10 Nothing in this subparagraph shall limit the

11 right of the Association to pay dividends not

12 otherwise prohibited hereunder or limit any li13 ability of the Holding Company explicitly pro14 vided for in this part.

15 ‘‘(D) HOLDING COMPANY ACTIVITIES.—

16 After the reorganization effective date and prior

17 to the dissolution of the Association in accord18 ance with section 440(d), Holding Company ac19 tivities shall be limited to ownership of the As20 sociation and any other subsidiaries. All busi21 ness activities shall be conducted through sub22 sidiaries.

23 ‘‘(9) ASSOCIATION BOARD OF DIRECTORS.—

24 Notwithstanding any other provision of part B of

25 this title, after the reorganization effective date, the
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1 14 directors of the Association elected by the Asso2 ciation’s stockholders (which immediately after the

3 reorganization effective date shall be the Holding

4 Company) shall no longer be required to meet the

5 eligibility requirements set forth in section 439(c).

6 ‘‘(10) ISSUANCE OF STOCK WARRANTS.—At the

7 reorganization effective date, the Holding Company

8 shall issue to the Secretary of the Treasury 100,000

9 stock warrants, each entitling the holder of the stock

10 warrant to purchase from the Holding Company one

11 share of the registered common stock of the Holding

12 Company at any time on or before September 30,

13 2007. The exercise price for such warrants shall be

14 an amount equal to (A) the average closing price of

15 the common stock of the Association for the 20 busi16 ness days prior to and including the date of enact17 ment of this section on the exchange or market

18 which is then the primary exchange or market for

19 the common stock of the Association, plus (B) 10

20 percent of the average price described in clause (A)

21 subject to any adjustments necessary to reflect the

22 conversion of Association common stock into Hold23 ing Company common stock as part of the plan of

24 reorganization approved by the Association’s share25 holders.
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1 ‘‘(11) RESTRICTIONS ON TRANSFER OF ASSO2 CIATION SHARES AND BANKRUPTCY OF ASSOCIA3 TION.—After the reorganization effective date, the

4 Holding Company shall not sell, pledge, or otherwise

5 transfer the outstanding shares of the Association,

6 or agree to or cause the liquidation of the Associa7 tion to file a petition of bankruptcy under title 11,

8 United States Code, without prior approval of the

9 Secretary of the Treasury.

10 ‘‘(d) TERMINATION OF THE ASSOCIATION.—The As11 sociation shall dissolve, and its separate existence shall

12 terminate on September 30, 2007, after discharge of all

13 outstanding debt obligations and liquidation pursuant to

14 this subsection. The Association may dissolve pursuant to

15 this subsection prior to such date by notifying the Sec16 retary of Education and the Secretary of the Treasury of

17 its intention to dissolve, unless within 60 days of receipt

18 of such notice the Secretary of Education notifies the As19 sociation that it continues to be needed to serve as a lend20 er of last resort pursuant to section 439(q) of this Act

21 or continues to be needed to purchase loans under an

22 agreement with the Secretary described in subsection

23 (c)(6) of this section. On the dissolution date, the Associa24 tion shall take the following actions:
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1 ‘‘(1) ESTABLISHMENT OF A TRUST.—The Asso2 ciation shall, under the terms of an irrevocable trust

3 agreement in form and substance satisfactory to the

4 Secretary of the Treasury, the Association and the

5 appointed trustee, irrevocably transfer all remaining

6 obligations of the Association to the trust and irrev7 ocably deposit or cause to be deposited into such

8 trust, to be held as trust funds solely for the benefit

9 of holders of the remaining obligations, money or di10 rect noncallable obligations of the United States of

11 America or any agency thereof for which payment

12 the full faith and credit of the United States is

13 pledged, maturing as to principal and interest in

14 such amounts and at such times as are determined

15 by the Secretary of the Treasury to be sufficient,

16 without consideration of any significant reinvestment

17 of such interest, to pay the principal of, and interest

18 on, the remaining obligations in accordance with

19 their terms. To the extent the Association cannot

20 provide money or qualifying obligations in the

21 amount required, the Holding Company shall be re22 quired to transfer money or qualifying obligations to

23 the trust in the amount necessary to prevent any de24 ficiency.
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1 ‘‘(2) USE OF TRUST ASSETS.—All money, obli2 gations, or financial assets deposited into the trust

3 pursuant to this subsection shall be applied by the

4 trustee to the payment of the remaining obligations

5 assumed by the trust. Upon the fulfillment of the

6 trustee’s duties under the trust, any remaining as7 sets of the trust shall be transferred to the Holding

8 Company or its subsidiaries, or both, as directed by

9 the Holding Company.

10 ‘‘(3) OBLIGATIONS NOT TRANSFERRED TO THE

11 TRUST.—The Association shall make proper provi12 sion for all other obligations of the Association, in13 cluding the repurchase or redemption, or the making

14 of proper provision for the repurchase or redemp15 tion, of any preferred stock of the Association then

16 outstanding. Any obligations of the Association

17 which cannot be fully satisfied shall become liabil18 ities of the Holding Company as of the date of dis19 solution.

20 ‘‘(4) TRANSFER OF REMAINING ASSETS.—After

21 compliance with paragraphs (1), (2), and (3), the

22 Association shall transfer to the Holding Company

23 any remaining assets of the Association.

24 ‘‘(e) OPERATION OF THE HOLDING COMPANY.—
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1 ‘‘(1) HOLDING COMPANY BOARD OF DIREC2 TORS.—The number and composition of the Board

3 of Directors of the Holding Company shall be deter4 mined as set forth in the Holding Company’s charter

5 or like instrument (as amended from time to time)

6 or bylaws (as amended from time to time) and as

7 permissible under the laws of the jurisdiction of its

8 incorporation.

9 ‘‘(2) HOLDING COMPANY NAME.—The names of

10 the Holding Company and any direct or indirect

11 subsidiary of the Holding Company other than the

12 Association (A) may not contain the name ‘Student

13 Loan Marketing Association’, and (B) may contain

14 (to the extent permitted by the applicable State or

15 District of Columbia law), ‘Sallie Mae’, or variations

16 thereof or such other name as the Board of Direc17 tors of the Association or the Holding Company

18 shall deem appropriate.

19 ‘‘(f) STRICT CONSTRUCTION.—Except as specifically

20 set forth in this section, nothing contained in this section

21 shall be construed to limit the authority of the Association

22 as a federally chartered corporation, or of the Holding

23 Company as a State or District of Columbia chartered cor24 poration.
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1 ‘‘(g) DEADLINE FOR REORGANIZATION EFFECTIVE

2 DATE.—This section shall be of no further force and effect

3 in the event that the reorganization effective date does not

4 occur on or before 18 months after the date of enactment

5 of this section.

6 ‘‘(h) DEFINITIONS.—For purposes of this section—

7 ‘‘(1) The term ‘Association’ means the Student

8 Loan Marketing Association.

9 ‘‘(2) The term ‘dissolution date’ shall mean

10 September 30, 2007, or such earlier date as the Sec11 retary of Education permits the transfer of remain12 ing obligations in accordance with subsection (d) of

13 this section.

14 ‘‘(3) The term ‘reorganization effective date’

15 means the effective date of the reorganization as de16 termined by the Board of Directors of the Associa17 tion, which shall not be earlier than the date that

18 stockholder approval is obtained pursuant to sub19 section (b) of this section and shall not be later than

20 the date that is 18 months after the date of enact21 ment of this section.

22 ‘‘(4) The term ‘Holding Company’ means the

23 new business corporation formed pursuant to this

24 section by the Association under the laws of any
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1 State of the United States or the District of Colum2 bia.

3 ‘‘(5) The term ‘remaining obligations’ shall

4 mean the debt obligations of the Association out5 standing as of the dissolution date.

6 ‘‘(6) The term ‘remaining property’ shall mean

7 the following assets and liabilities of the Association

8 which are outstanding as of the reorganization effec9 tive date: (A) debt obligations issued by the Associa10 tion, (B) contracts relating to interest rate, cur11 rency, or commodity positions or protections, (C) in12 vestment securities owned by the Association, (D)

13 any instruments, assets, or agreements described in

14 section 439(d) of this Act (including without limita15 tion all student loans, forward purchase and lending

16 commitments, warehousing advances, academic fa17 cilities obligations, letters of credit, standby bond

18 purchase agreements, liquidity agreements, and stu19 dent loan revenue bonds or other loans), and (E) ex20 cept as specifically prohibited by this Act, any other

21 nonmaterial assets or liabilities of the Association

22 which the Association’s Board of Directors deter23 mines to be necessary or appropriate to its oper24 ations.
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1 ‘‘(7) The term ‘reorganization’ means the re2 structuring event or events (including any merger

3 event) giving effect to the holding company structure

4 described in subsection (a) of this section.

5 ‘‘(8) The term ‘subsidiaries’ shall mean one or

6 more direct or indirect subsidiaries of the Holding

7 Company.’’.

8 (b) TECHNICAL AMENDMENTS.—

9 (1) AMENDMENTS TO THE HIGHER EDUCATION

10 ACT.—Effective on the reorganization effective date

11 (as defined in section 440(h)(3) of the Higher Edu12 cation Act of 1965, as added by subsection (a)), sec13 tions 435(d)(1) (F) and (G) and 428C(a)(1)(A) of

14 such Act (20 U.S.C. 1085(d)(1)(F), (G); 1078–

15 3(a)(1)(A)) are each amended by inserting after

16 ‘‘Student Loan Marketing Association’’ the follow17 ing: ‘‘or the Holding Company of the Student Loan

18 Marketing Association, including all subsidiaries of

19 such Holding Company, created pursuant to section

20 440 of this Act,’’.

21 (2) REPEAL OF THE ASSOCIATION’S CHAR22 TER.—Effective on the dissolution date (as defined

23 in section 440(h)(2) of the Higher Education Act of

24 1965, as added by subsection (a)), section 439 of
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1 the Higher Education Act of 1965 (20 U.S.C. 1087–

2 2) is repealed.

3 TITLE II—COLLEGE CONSTRUC4 TION LOAN INSURANCE ASSO5 CIATION

6 SEC. 201. PRIVATIZATION OF COLLEGE CONSTRUCTION

7 LOAN INSURANCE ASSOCIATION.

8 (a) REPEAL OF STATUTORY RESTRICTIONS.—Part D

9 of title VII of the Higher Education Act of 1965 (20

10 U.S.C. 1132f et seq.) is repealed.

11 (b) STATUS OF THE CORPORATION.—

12 (1) STATUS OF THE CORPORATION.—The Cor13 poration shall not be an agency, instrumentality, or

14 establishment of the United States Government and

15 shall not be a ‘‘Government corporation’’ nor a

16 ‘‘Government controlled corporation’’ as defined in

17 section 103 of title 5, United States Code. No action

18 under section 1491 of title 28, United States Code

19 (commonly known as the Tucker Act) shall be allow20 able against the United States based on the actions

21 of the Corporation.

22 (2) CORPORATE POWERS.—The Corporation

23 shall have the power to engage in any business or

24 other activities for which corporations may be orga25 nized under the laws of any State of the United
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1 States or the District of Columbia. The Corporation

2 shall have the power to enter into contracts, to exe3 cute instruments, to incur liabilities, to provide prod4 ucts and services, and to do all things as are nec5 essary or incidental to the proper management of its

6 affairs and the efficient operation of a private, for7 profit business.

8 (c) RELATED PRIVATIZATION REQUIREMENTS.—

9 (1) NOTICE REQUIREMENTS.—During the 5-

10 year period following the date of the enactment of

11 this Act, the Corporation shall include in any docu12 ment offering the Corporation’s securities a state13 ment that—

14 (A) the Corporation is not a Government15 sponsored enterprise or instrumentality of the

16 United States; and

17 (B) the Corporation’s obligations are not

18 guaranteed by the full faith and credit of the

19 United States.

20 (2) CORPORATE CHARTER.—The Corporation’s

21 charter shall be amended as necessary and without

22 delay to conform the requirements of this Act.

23 (3) CORPORATE NAME.—The name of the Cor24 poration, or of any direct or indirect subsidiary
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1 thereof, may not contain the term ‘‘College Con2 struction Loan Insurance Association’’.

3 (4) ARTICLES OF INCORPORATION.—The Cor4 poration shall amend its articles of incorporation

5 without delay to reflect that one of the purposes of

6 the Corporation shall be to guarantee, insure and re7 insure bonds, leases, and other evidences of debt of

8 educational institutions, including Historically Black

9 Colleges and Universities and other academic insti10 tutions which are ranked in the lower investment

11 grade category using a nationally recognized credit

12 rating system.

13 (5) TRANSITION REQUIREMENTS.—

14 (A) REQUIREMENTS UNTIL STOCK SALE.—

15 Notwithstanding subsection (a), the require16 ments of section 754 of the Higher Education

17 Act of 1965 (20 U.S.C. 1132f–3), as in exist18 ence as of the day before enactment of this Act,

19 shall continue to be effective until the day im20 mediately following the date of closing of the

21 purchase of the Secretary’s stock (or the date

22 of closing of the final purchase, in the case of

23 multiple transactions) pursuant to subsection

24 (d) of this section.
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1 (B) REPORTS AFTER STOCK SALE.—The

2 Corporation shall, not later than March 30 of

3 the first full calendar year immediately follow4 ing the sale pursuant to subsection (d), and

5 each of the 2 succeeding years, submit to the

6 Secretary of Education a report describing the

7 Corporation’s efforts to assist in the financing

8 of education facilities projects, including

9 projects for elementary, secondary, and post10 secondary educational institution infrastructure,

11 and detailing, on a project-by-project basis, the

12 Corporation’s business dealings with edu13 cational institutions that are rated by a nation14 ally recognized statistical rating organization at

15 or below the organization’s third highest rat16 ings.

17 (d) SALE OF FEDERALLY OWNED STOCK.—

18 (1) SALE OF STOCK REQUIRED.—The Secretary

19 of the Treasury shall, upon the request of the Sec20 retary of Education sell, pursuant to section 324 of

21 title 31, United States Code, the voting common

22 stock of the Corporation owned by the Secretary of

23 Education not later than one year after the date of

24 the enactment of this Act.
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1 (2) PURCHASE BY THE CORPORATION.—In the

2 event that the Secretary of the Treasury is unable

3 to sell the voting common stock, or any portion

4 thereof, at a price acceptable to the Secretary of

5 Education and the Secretary of the Treasury within

6 the period specified in paragraph (1), the Corpora7 tion shall purchase such stock at a price determined

8 by the Secretary of the Treasury and acceptable to

9 the Corporation based on independent appraisal by

10 one or more nationally recognized financial advisory

11 firms. Such firms shall be selected by the Secretary

12 of the Treasury in consultation with the Secretary of

13 Education and the Corporation.

14 (e) ASSISTANCE BY THE CORPORATION.—The Cor15 poration shall provide such assistance as the Secretary of

16 the Treasury and the Secretary of Education may require

17 to facilitate the sale of the stock under this section.

18 (f) DEFINITION.—As used in this section, the term

19 ‘‘Corporation’’ means the Corporation established pursu20 ant to the provision of law repealed by subsection (a).
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1 TITLE III—GENERAL PROVI2 SIONS RELATING TO STU3 DENT ASSISTANCE PRO4 GRAMS

5 SEC. 301. AMENDMENT TO HIGHER EDUCATION ACT.

6 Section 481(b)(6) of the Higher Education Act of

7 1965 (20 U.S.C. 1088(b)(6)) is amended by striking ‘‘(6)

8 which has’’ and all that follows through the period and

9 insert the following: ‘‘which has at least 15 percent of total

10 institutional revenues from all sources, including all con11 tract training and education revenue, that are not derived

12 from funds under this title, as certified by the institution’s

13 independent auditor using generally accepted accounting

14 practices. For the purposes of determining an institution’s

15 eligibility under this subsection, the Secretary shall not

16 retroactively review any institution’s fiscal year which

17 began prior to April 30, 1994.’’.

18 TITLE IV—REPEALERS AND

19 OTHER AMENDMENTS

20 SEC. 401. HIGHER EDUCATION PROVISIONS.

21 (a) HIGHER EDUCATION ACT OF 1965 PROVI22 SIONS.—The following provisions of the Higher Education

23 Act of 1965 are repealed:

24 (1) Part B of title I (20 U.S.C. 1011 et seq.),

25 relating to articulation agreements.
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1 (2) Part C of title I (20 U.S.C. 1015 et seq.),

2 relating to access and equity to education for all

3 Americans through telecommunications.

4 (3) Title II (20 U.S.C. 1021 et seq.), relating

5 to academic libraries and information services.

6 (4) Chapter 2 of subpart 2 of part A of title IV

7 (20 U.S.C. 1070a–21 et seq.), relating to national

8 early intervention scholarships.

9 (5) Chapter 3 of subpart 2 of part A of title IV

10 (20 U.S.C. 1070a–31 et seq.), relating to presi11 dential access scholarships.

12 (6) Chapter 4 of subpart 2 of part A of title IV

13 (20 U.S.C. 1070a–41 et seq.), relating to model pro14 gram community partnerships and counseling

15 grants.

16 (7) Chapter 5 of subpart 2 of part A of title IV

17 (20 U.S.C. 1070a–52 et seq.), relating to a database

18 and information line concerning student financial as19 sistance.

20 (8) Chapter 8 of subpart 2 of part A of title IV

21 (20 U.S.C. 1070a–81), relating to technical assist22 ance for teachers and counselors.

23 (9) Subpart 4 of part A of title IV (20 U.S.C.

24 1070c et seq.), relating to State student incentive

25 grants.
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1 (10) Subpart 5 of part A of title IV of the

2 Higher Education Act of 1965 (20 U.S.C. 1070d–

3 2).

4 (11) Subpart 8 of part A of title IV (20 U.S.C.

5 1070f), relating to special child care services for dis6 advantaged college students.

7 (12) Section 428J (20 U.S.C. 1078–10), relat8 ing to loan forgiveness for teachers, individuals per9 forming national community service and nurses.

10 (13) Section 486 (20 U.S.C. 1093), relating to

11 training in financial aid services.

12 (14) Subpart 1 of part H of title IV (20 U.S.C.

13 1099a et seq.) relating to State postsecondary re14 view entity programs.

15 (15) Part A of title V (20 U.S.C. 1102 et seq.),

16 relating to State and local programs for teacher ex17 cellence.

18 (16) Part B of title V (20 U.S.C. 1103 et seq.),

19 relating to national teacher academies.

20 (17) Subpart 1 of part C of title V (20 U.S.C.

21 1104 et seq.), relating to Douglas teacher scholar22 ships.

23 (18) Subpart 3 of part C of title V (20 U.S.C.

24 1106 et seq.), relating to the teacher corps.
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1 (19) Subpart 3 of part D of title V (20 U.S.C.

2 1109 et seq.), relating to class size demonstration

3 grants.

4 (20) Subpart 4 of part D of title V (20 U.S.C.

5 1110 et seq.), relating to middle school teaching

6 demonstration programs.

7 (21) Subpart 1 of part E of title V (20 U.S.C.

8 1111 et seq.), relating to new teaching careers.

9 (22) Subpart 1 of part F of title V (20 U.S.C.

10 1113 et seq.), relating to the national mini corps

11 programs.

12 (23) Section 586 (20 U.S.C. 1114), relating to

13 demonstration grants for critical language and area

14 studies.

15 (24) Section 587 (20 U.S.C. 1114a), relating to

16 development of foreign languages and cultures in17 structional materials.

18 (25) Subpart 3 of part F of title V (20 U.S.C.

19 1115), relating to small State teaching initiatives.

20 (26) Subpart 4 of part F of title V (20 U.S.C.

21 1116), relating to faculty development grants.

22 (27) Subpart 5 of part F of title V (20 U.S.C.

23 1117), relating to early childhood staff training and

24 professional enhancement.
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1 (28) Section 605 (20 U.S.C. 1124a), relating to

2 intensive summer language institutes.

3 (29) Section 607 (20 U.S.C. 1125a), relating to

4 foreign language periodicals.

5 (30) Part A of title VII (20 U.S.C. 11326 et

6 seq.), relating to academic and library facilities.

7 (31) Title VIII (20 U.S.C. 1133 et seq.), relat8 ing to cooperative education programs.

9 (32) Part A of title IX (20 U.S.C. 1134a et

10 seq.), relating to women and minority participation

11 in graduate education.

12 (33) Part B of title IX (20 U.S.C. 1134d et

13 seq.), relating to Harris fellowships.

14 (34) Part C of title IX (20 U.S.C. 1134h et

15 seq.), relating to Javits fellowships.

16 (35) Part E of title IX (20 U.S.C. 1134r et

17 seq.), relating to the faculty development fellowship

18 program.

19 (36) Part F of title IX (20 U.S.C. 1134s et

20 seq.), relating to legal training for the disadvan21 taged.

22 (37) Part G of title IX (20 U.S.C. 1134u et

23 seq.), relating to law school clinical programs.

24 (38) Section 1011 (20 U.S.C. 1135a–11), relat25 ing to special projects in areas of national need.
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1 (39) Subpart 2 of part B of title X (20 U.S.C.

2 1135c et seq.), relating to science and engineering

3 access programs.

4 (40) Part C of title X (20 U.S.C. 1135e et

5 seq.), relating to women and minorities science and

6 engineering outreach demonstration programs.

7 (41) Part D of title X (20 U.S.C. 1135f), relat8 ing to Eisenhower leadership programs.

9 (42) Title XI (20 U.S.C. 1136 et seq.), relating

10 to community service programs.

11 (b) EDUCATION AMENDMENTS OF 1986 PROVI12 SIONS.—The following provisions of the Education

13 Amendments of 1986 are repealed:

14 (1) Part E of title XIII (20 U.S.C. 1221–1

15 note), relating to a National Academy of Science

16 study.

17 (2) Title XV (20 U.S.C. 4401 et seq.), relating

18 to American Indian, Alaska Native, and Native Ha19 waiian culture and art development.

20 (c) EDUCATION AMENDMENTS OF 1992 PROVI21 SIONS.—The following provisions of the Education

22 Amendments of 1992 are repealed:

23 (1) Part F of title XIII (25 U.S.C. 3351 et

24 seq.), relating to American Indian postsecondary

25 economic development scholarships.
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1 (2) Part G of title XIII (25 U.S.C. 3371), re2 lating to American Indian teacher training.

3 (3) Section 1406 (20 U.S.C. 1221e–1 note), re4 lating to a national survey of factors associated with

5 participation.

6 (4) Section 1409 (20 U.S.C. 1132a note), relat7 ing to a study of environmental hazards in institu8 tions of higher education.

9 (5) Section 1412 (20 U.S.C. 1101 note), relat10 ing to a national job bank for teacher recruitment.

11 (6) Part B of title XV (20 U.S.C. 1452 note),

12 relating to a national clearinghouse for postsecond13 ary education materials.

14 (7) Part C of title XV (20 U.S.C. 1101 note),

15 relating to school-based decisionmakers.

16 (8) Part D of title XV (20 U.S.C. 1145h note),

17 relating to grants for sexual offenses education.

18 (9) Part E of title XV (20 U.S.C. 1070 note),

19 relating to Olympic scholarships.

20 (10) Part G of title XV (20 U.S.C. 1070a–11

21 note), relating to advanced placement fee payment

22 programs.

23 (d) CONFORMING AMENDMENTS.—The Higher Edu24 cation Act of 1965 is amended—

25 (1) in section 453(c)(2)—
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1 (A) by striking subparagraph (E); and

2 (B) by redesignating subparagraphs (F)

3 through (H) as subparagraphs (E) through (G),

4 respective;

5 (2) in section 487(a)(3), by striking subpara6 graph (B) and redesignating subparagraphs (C) and

7 (D) as subparagraphs (B) and (C), respectively;

8 (3) in section 487(a)(15), by striking ‘‘the Sec9 retary of Veterans Affairs, and State review entities

10 under subpart 1 of part H’’ and inserting ‘‘and the

11 Secretary of Veterans Affairs’’;

12 (4) in section 487(a)(21), by striking ‘‘, State

13 postsecondary review entities,’’;

14 (5) in section 487(c)(1)(A)(i), by striking

15 ‘‘State agencies, and the State review entities re16 ferred to in subpart 1 of part H’’ and inserting ‘‘and

17 State agencies’’;

18 (6) in section 487(c)(4), by striking ‘‘, after

19 consultation with each State review entity designated

20 under subpart 1 of part H,’’;

21 (7) in section 487(c)(5), by striking ‘‘State re22 view entities designated under subpart 1 of part

23 H,’’;

24 (8) in section 496(a)(7), by striking ‘‘and the

25 appropriate State postsecondary review entity’’;
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•HR 1720 IH

1 (9) in section 496(a)(8), by striking ‘‘and the

2 State postsecondary review entity of the State in

3 which the institution of higher education is located’’;

4 (10) in section 498(g)(2), by striking everything

5 after the first sentence;

6 (11) in section 498A(a)(2)(D), by striking ‘‘by

7 the appropriate State postsecondary review entity

8 designated under subpart 1 of this part or’’;

9 (12) in section 498A(a)(2)—

10 (A) by inserting ‘‘and’’ after the semicolon

11 at the end of subparagraph (E);

12 (B) by striking subparagraph (F); and

13 (C) by redesignating subparagraph (G) as

14 subparagraph (F); and

15 (13) in section 498A(a)(3)—

16 (A) by inserting ‘‘and’’ after the semicolon

17 at the end of subparagraph (C);

18 (B) by striking ‘‘; and’’ at the end of sub19 paragraph (D) and inserting a period; and

20 (C) by striking subparagraph (E).

21 SEC. 402. EFFECTIVE DATE.

22 The repeals and amendments made by this title shall

23 take effect on October 1, 1996.

Æ

HR 1720 IH——2
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•HR 1720 IH

HR 1720 IH——3

HR 1720 IH——4