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SEC. 455. USES OF FUNDS.
(a) IN GENERAL.—Of the funds provided to a State
library administrative agency under section 454(a)(2)(A),
the agency shall expend (either directly or through
subgrants or cooperative agreements) at least 97 percent
for one or more of the following purposes:
(1) Electronically connecting libraries with inte-
grated career center systems designated or estab-
lished under section 107 and local service providers
receiving grants under paragraph (1) or (2) of sec-
tion 432(a).
(2) Establishing or enhancing linkages among
libraries.
(3) Assisting libraries in accessing information
through electronic networks.
(4) Encouraging libraries in different Federal,
State, and local jurisdictions, and different types of
libraries, to establish consortia and share resources.
(5) Paying costs for libraries to acquire or
share computer systems and telecommunications
technologies.
(6) Improving library and information services
for individuals who have difficulty using a library or
who need special library materials or services, in-
cluding individuals under the age of 18.
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(b) ADMINISTRATIVE EXPENSES.—In any fiscal year,
a State library administrative agency may use not more
than 3 percent of the funds provided to the agency under
section 454(a)(2)(A) for planning, administration, evalua-
tions, and interagency coordination associated with a
grant under this subtitle.
SEC. 456. ANNUAL APPLICATIONS.
(a) SUBMISSION.—A State that desires to receive a
grant under this subtitle for a fiscal year shall submit to
the Secretary, in such form and manner and before such
deadline as the Secretary shall specify in regulations, an
application for such year. Such application shall—
(1) establish goals, and specify priorities, for
the State consistent with the purposes of this sub-
title;
(2) describe activities that are consistent with
such goals and priorities, the purposes of this sub-
title, and the requirements of section 455 that the
State library administrative agency will carry out
during such year using such grant;
(3) describe the procedures that such agency
will use to carry out such activities;
(4) describe the methodology that such agency
will use to evaluate the success of such activities in
achieving such goals and meeting such priorities;
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(5) describe procedures that such agency will
use to involve libraries and library users throughout
the State in policy decisions regarding implementa-
tion of this subtitle; and
(6) provide assurances satisfactory to the Sec-
retary that such agency will make such reports, in
such form and containing such information, as the
Secretary may reasonably require to carry out this
subtitle and to determine the extent to which funds
provided under this subtitle have been effective in
carrying out its purposes.
(b) APPROVAL.—
(1) IN GENERAL.—The Secretary shall approve
each application submitted under subsection (a) that
satisfies the requirements of the subsection.
(2) RIGHTS OF STATES UPON DISAPPROVAL.—
If the Secretary determines that an application sub-
mitted by a State under subsection (a) does not sat-
isfy the requirements of such subsection, the Sec-
retary shall—
(A) immediately notify the State of such
determination and the reasons for such deter-
mination; and
(B) offer the State an opportunity to re-
vise its application to correct any deficiencies.
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TITLE V—MISCELLANEOUS
PROVISIONS
SEC. 501. EFFECT ON REHABILITATION ACT OF 1973.
Notwithstanding any other provision of this Act, this
Act does not have any legal effect on any program under
the Rehabilitation Act of 1973.
TITLE VI—HIGHER EDUCATION
PRIVATIZATION
SEC. 601. REORGANIZATION OF THE STUDENT LOAN MAR-
KETING ASSOCIATION THROUGH THE FOR-
MATION OF A HOLDING COMPANY.
(a) AMENDMENT.—Part B of title IV of the Higher
Education Act of 1965 (20 U.S.C. 1071 et seq.) is amend-
ed by inserting after section 439 (20 U.S.C. 1087–2) the
following new section:
‘‘SEC. 440. REORGANIZATION OF THE STUDENT LOAN MAR-
KETING ASSOCIATION THROUGH THE FOR-
MATION OF A HOLDING COMPANY.
‘‘(a) ACTIONS BY THE ASSOCIATION’S BOARD OF DI-
RECTORS.—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 Direc-
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tors (the terms of which shall be consistent with this Act)
so that all of the outstanding common shares shall be di-
rectly owned by an ordinary business corporation char-
tered under State or District of Columbia law (the ‘Hold-
ing 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 Com-
pany 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 incor-
porated. As part of the restructuring, the Board of Direc-
tors 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 Co-
lumbia law, and (2) Holding Company common shares to
be registered with the Securities and Exchange Commis-
sion.
‘‘(b) SHAREHOLDER APPROVAL.—The plan of reor-
ganization 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
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of a majority of the issued and outstanding shares of the
Association common stock.
‘‘(c) TRANSITION.—
‘‘(1) IN GENERAL.—Except as specifically pro-
vided 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 con-
tinue 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 As-
sociation under section 439 of this Act as in effect
on the effective date of this section, except as spe-
cifically provided in this section. The Holding Com-
pany and its subsidiaries (other than the Associa-
tion) shall not purchase loans insured under this Act
until such time as the Association ceases acquiring
such loans, except that the Association shall con-
tinue to acquire loans as a lender of last resort pur-
suant to section 439(q) of this Act or under an
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agreement with the Secretary described in section
440(c)(6).
‘‘(2) TRANSFER OF CERTAIN PROPERTY.—Ex-
cept as specifically provided in this section, at the
reorganization effective date or as soon as prac-
ticable 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 enter-
prise), (B) contracts, leases, and other agreements,
(C) licenses and other intellectual property, and (D)
any other property of the Association. Notwithstand-
ing the preceding provisions of this paragraph, noth-
ing in this paragraph shall be construed to prohibit
the Association from transferring remaining prop-
erty from time to time to the Holding Company or
its subsidiaries, subject to the provisions of para-
graph (4).
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‘‘(3) TRANSFER OF PERSONNEL.—At the reor-
ganization effective date, employees of the Associa-
tion shall become employees of the Holding Com-
pany (or of the subsidiaries), and the Holding Com-
pany (or the subsidiaries or both) shall provide all
necessary and appropriate management and oper-
ational support (including loan servicing) to the As-
sociation, as requested by the Association. The Asso-
ciation 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 distribu-
tions 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 Asso-
ciation’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 cap-
ital standards, the Holding Company shall be obli-
gated to transfer to the Association additional cap-
ital in such amounts as are necessary to ensure that
the Association again complies with the capital
standards.
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‘‘(5) VALUATION
OF
NONCASH
DISTRIBU-
TIONS.—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 ap-
proved such distribution for purposes of calculating
compliance with section 439(r) of this Act.
‘‘(6) RESTRICTIONS ON NEW BUSINESS ACTIV-
ITY OR ACQUISITION OF ASSETS BY ASSOCIATION.—
After the reorganization effective date, the Associa-
tion shall not engage in any new business activities
or acquire any additional program assets described
in section 439(d) of the Act other than—
‘‘(A) in connection with (i) student loan
purchases through September 30, 2005, 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,
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with the approval of the Secretary of the Treas-
ury, enters into an agreement with the Associa-
tion for the continuation or resumption of its
secondary market purchase program because
the Secretary determines there is inadequate li-
quidity for loans made under this part.
The Secretary is authorized to enter into an agree-
ment described in subparagraph (C) with the Asso-
ciation covering such secondary market activities.
Any agreement entered into under subparagraph (C)
shall cover a period of 12 months, but may be re-
newed if the Secretary determines that liquidity re-
mains 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 OB-
LIGATIONS.—After the reorganization effective date,
the Association shall not issue debt obligations which
mature later than September 30, 2009, except in
connection with serving as a lender-of-last-resort
pursuant to section 439 of this Act or with purchas-
ing loans under an agreement with the Secretary as
described in paragraph (6) of this subsection. Noth-
ing in this subsection shall modify the attributes ac-
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corded the debt obligations of the Association by sec-
tion 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
SOUND-
NESS.—
‘‘(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 con-
cerning (i) the financial risk to the Association
resulting from the activities of any of its associ-
ated persons, to the extent such activities are
reasonably likely to have a material impact on
the financial condition of the Association, in-
cluding its capital ratio, its liquidity, or its abil-
ity 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 obliga-
tions 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
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limited to providing to the Secretary of the
Treasury copies of any reports or other infor-
mation provided to the Secretary of Education
pursuant to 34 C.F.R. 682.200 et seq. The Sec-
retary 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 CORPORA-
TIONS.—
‘‘(i) The funds and assets of the Asso-
ciation shall at all times be maintained
separately from the funds and assets of the
Holding Company or any of its other sub-
sidiaries and may be used solely by the As-
sociation 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
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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 pursu-
ant to section 439(c)(1)(A) may serve as a
director of the Holding Company.
‘‘(v) At least one officer of the Asso-
ciation shall remain an officer solely of the
Association.
‘‘(vi) Transactions between the Asso-
ciation and the Holding Company or its
other subsidiaries, including any loan serv-
icing arrangements, shall be on terms no
less favorable to the Association than the
Association could obtain from an unrelated
third party offering comparable services.
‘‘(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
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limit any liability of the Holding Company ex-
plicitly provided for in this part.
‘‘(D) HOLDING
COMPANY
ACTIVITIES.—
After the reorganization effective date and prior
to the dissolution of the Association in accord-
ance with section 440(d), Holding Company ac-
tivities shall be limited to ownership of the As-
sociation and any other subsidiaries. All busi-
ness activities shall be conducted through sub-
sidiaries.
‘‘(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 Asso-
ciation’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,
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2009. 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 ASSO-
CIATION
SHARES
AND
BANKRUPTCY
OF
ASSOCIA-
TION.—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 Associa-
tion or cause the Association to file a petition for
bankruptcy under title 11, United States Code, with-
out prior approval of the Secretary of the Treasury
and the Secretary of Education.
‘‘(d) TERMINATION OF THE ASSOCIATION.—The As-
sociation shall dissolve, and its separate existence shall
terminate on September 30, 2009, after discharge of all
outstanding debt obligations and liquidation pursuant to
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this subsection. The Association may dissolve pursuant to
this subsection prior to such date by notifying the Sec-
retary 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 As-
sociation that it continues to be needed to serve as a lend-
er 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 Associa-
tion shall take the following actions:
‘‘(1) ESTABLISHMENT OF A TRUST.—The Asso-
ciation 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 irrev-
ocably 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 di-
rect 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
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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 re-
quired to transfer money or qualifying obligations to
the trust in the amount necessary to prevent any de-
ficiency.
‘‘(2) USE OF TRUST ASSETS.—All money, obli-
gations, 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 as-
sets 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 provi-
sion for all other obligations of the Association, in-
cluding the repurchase or redemption, or the making
of proper provision for the repurchase or redemp-
tion, of any preferred stock of the Association then
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outstanding. Any obligations of the Association
which cannot be fully satisfied shall become liabil-
ities of the Holding Company as of the date of dis-
solution.
‘‘(4) TRANSFER OF REMAINING ASSETS.—After
compliance with paragraphs (1), and (3), the Asso-
ciation shall transfer to the Holding Company any
remaining assets of the Association.
‘‘(e) OPERATION OF THE HOLDING COMPANY.—
‘‘(1) HOLDING
COMPANY
BOARD
OF
DIREC-
TORS.—The number and composition of the Board
of Directors of the Holding Company shall be deter-
mined 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 subsidiary of the
Holding Company other than the Association—
‘‘(A) may not contain the name ‘Student
Loan Marketing Association’; and
‘‘(B) may contain, to the extent permitted
by applicable State or District of Columbia law,
‘Sallie Mae’, or variations thereof or such other
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names as the Board of Directors of the Associa-
tion of the Holding Company shall deem appro-
priate.
‘‘(3) USE OF SALLIE MAE NAME.—Without lim-
iting paragraph (2), the Association may assign to
the Holding Company, or any other subsidiary of the
Holding Company, the ‘Sallie Mae’ name as a trade-
mark and service mark, except that neither the
Holding Company nor any subsidiary of the Holding
Company other than the Association or a subsidiary
of the Association 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 Com-
pany or any such subsidiary. The Association shall
remit to the Secretary of Treasury $5,000,000 dur-
ing 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 subsidiary of the Holding Company other
than the Association, shall prominently display—
‘‘(A) in any document offering its securi-
ties, that the obligations of the Holding Com-
pany and any such subsidiary are not guaran-
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teed by the full faith and credit of the United
States; and
‘‘(B) in any advertisement or promotional
materials which use the ‘Sallie Mae’ name or
mark, a statement that neither the Holding
Company nor any such subsidiary is a Govern-
ment-sponsored enterprise or instrumentality 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 cor-
poration.
‘‘(g) RIGHT TO ENFORCE.—The Secretary of Edu-
cation 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 provi-
sions 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
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‘‘(5) The term ‘remaining obligations’ shall
mean the debt obligations of the Association out-
standing 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 effec-
tive date: (A) debt obligations issued by the Associa-
tion, (B) contracts relating to interest rate, cur-
rency, or commodity positions or protections, (C) in-
vestment securities owned by the Association, (D)
any instruments, assets, or agreements described in
section 439(d) of this Act (including without limita-
tion all student loans, forward purchase and lending
commitments, warehousing advances, academic fa-
cilities obligations, letters of credit, standby bond
purchase agreements, liquidity agreements, and stu-
dent loan revenue bonds or other loans), and (E) ex-
cept as specifically prohibited by this Act, any other
nonmaterial assets or liabilities of the Association
which the Association’s Board of Directors deter-
mines to be necessary or appropriate to its oper-
ations.
‘‘(7) The term ‘reorganization’ means the re-
structuring event or events (including any merger
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event) giving effect to the holding company structure
described in subsection (a) of this section.
‘‘(8) The term ‘subsidiary’ or ‘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 Higher Edu-
cation Act of 1965, as added by subsection (a))—
(A) section 435(d)(1)(F) of such 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, cre-
ated 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 Market-
ing Association, including all subsidiaries of
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such Holding Company, created pursuant to
section 440 of this Act’’.
(2) ENFORCEMENT
OF
SAFETY
AND
SOUND-
NESS REQUIREMENTS.—Section 439(r) of the High-
er Education Act of 1965 (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 SOUND-
NESS 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 Dis-
trict Court for the District of Columbia for the en-
forcement 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 compli-
ance with this subsection.’’.
(3) CAPITAL
RATIO
AMENDMENTS.—Section
439(r) of the Higher Education Act of 1965 is fur-
ther amended—
(A) in paragraph (1)—
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(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 follow-
ing new subparagraph:
‘‘(C) within 45 days of the end of each fis-
cal quarter, (i) financial statements of the Asso-
ciation, and (ii) a report setting forth the cal-
culation of the capital ratio of the Associa-
tion.’’;
(B) in paragraph (11), by striking ‘‘para-
graphs (4) and (6)(A)’’ and inserting ‘‘para-
graphs (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 share-
holders of the Association shall have approved a re-
organization plan in accordance with section 440(b)
and, for any fiscal quarter ended after January 1,
2000, the Association shall have a capital ratio of
less than 2.25 percent, the Secretary of the Treas-
ury may, until such capital ratio is met, take any
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one or more of the actions described in paragraph
(7), except that—
‘‘(A) the capital ratio to be restored pursu-
ant to paragraph (7)(D) shall be 2.25 percent;
and
‘‘(B) if the relevant capital ratio is in ex-
cess 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 per-
cent.
Upon approval by the shareholders of the Associa-
tion of a reorganization plan in accordance with sec-
tion 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 As-
sociation.’’.
(4) REPEAL
OF
THE
ASSOCIATION’S
CHAR-
TER.—Effective on the dissolution date (as defined
in section 440(h)(2) of the Higher Education Act of
1965, as added by subsection (a)), section 439 of
such Act (20 U.S.C. 1087–2) is repealed.
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SEC. 602. PRIVATIZATION OF COLLEGE CONSTRUCTION
LOAN INSURANCE ASSOCIATION.
(a) REPEAL OF STATUTORY RESTRICTIONS.—Part D
of title VII of the Higher Education Act of 1965 (20
U.S.C. 1132f et seq.) is repealed.
(b) STATUS OF THE CORPORATION.—
(1) STATUS OF THE CORPORATION.—The Cor-
poration 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 allow-
able 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 orga-
nized 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 exe-
cute instruments, to incur liabilities, to provide prod-
ucts and services, and to do all things as are nec-
essary or incidental to the proper management of its
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affairs and the efficient operation of a private, for-
profit business.
(3) LIMITATION ON OWNERSHIP OF STOCK.—
Except as provided in subsection (d)(2) of this sec-
tion, no stock of the Corporation may be sold or is-
sued to an agency, instrumentality, or establishment
of the United States Government, to a Government
corporation or a Government controlled corporation
(as such terms are defined in section 103 of title 5,
United States Code), or to a Government sponsored
enterprise (as such term is defined in section 622 of
title 2, United States Code). The Student Loan
Marketing Association shall not own any stock of
the Corporation, except that it may retain the stock
it owns on the date of enactment. The Student Loan
Marketing Association shall not control the oper-
ation of the Corporation, except that the Student
Loan Marketing Association may participate in the
election of directors as a shareholder, and may con-
tinue to exercise its right to appoint directors under
section 754 of the Higher Education Act of 1965 as
long as that section is in effect. The Student Loan
Marketing Association shall not provide financial
support or guarantees to the Corporation. Notwith-
standing the prohibitions in this subsection, the
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United States may pursue any remedy against a
holder of the Corporation’s stock to which it would
otherwise be entitled.
(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 docu-
ment offering the Corporation’s securities, in any
contracts for insurance, guarantee, or reinsurance of
obligations, and in any advertisement or promotional
material, 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 Cor-
poration, or of any direct or indirect subsidiary
thereof, may not contain the term ‘‘College Con-
struction Loan Insurance Association’’.
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(4) ARTICLES OF INCORPORATION.—The Cor-
poration shall amend its articles of incorporation
without delay to reflect that one of the purposes of
the Corporation shall be to guarantee, insure and re-
insure bonds, leases, and other evidences of debt of
educational institutions, including Historically Black
Colleges and Universities and other academic insti-
tutions 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 require-
ments of section 754 of the Higher Education
Act of 1965 (20 U.S.C. 1132f–3), as in exist-
ence as of the day before enactment of this Act,
shall continue to be effective until the day im-
mediately 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 follow-
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ing 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 post-
secondary educational institution infrastructure,
and detailing, on a project-by-project basis, the
Corporation’s business dealings with edu-
cational institutions that are rated by a nation-
ally recognized statistical rating organization at
or below the organization’s third highest rat-
ings.
(d) SALE OF FEDERALLY OWNED STOCK.—
(1) SALE OF STOCK REQUIRED.—The Secretary
of the Treasury shall make every effort to sell, pur-
suant to section 324 of title 31, United States Code,
the stock of the Corporation owned by the Secretary
of Education not later than 6 months 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 stock, or any portion thereof, at a price
acceptable to the Secretary of Education and the
Secretary of the Treasury, the Corporation shall
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purchase, within the period specified in paragraph
(1), such stock at a price determined by the Sec-
retary of the Treasury and acceptable to the Cor-
poration based on independent appraisal by one or
more nationally recognized financial firms, however,
such price shall not exceed the value of the Sec-
retary’s stock as determined by the Congressional
Budget Office in House Report 104–153 dated June
22, 1995. Such firms shall be selected by the Sec-
retary of the Treasury in consultation with the Sec-
retary of Education and the Corporation.
(e) ASSISTANCE BY THE CORPORATION.—The Cor-
poration 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 pursu-
ant to the provision of law repealed by subsection (a).
TITLE VII—REPEALERS AND
OTHER AMENDMENTS
SEC. 701. HIGHER EDUCATION PROVISIONS.
(a) HIGHER EDUCATION ACT
OF 1965 PROVI-
SIONS.—The following provisions of the Higher Education
Act of 1965 are repealed:
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(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 presi-
dential 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 pro-
gram 
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 assist-
ance for teachers and counselors.
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(9) Subpart 8 of part A of title IV (20 U.S.C.
1070f), relating to special child care services for dis-
advantaged college students.
(10) Section 428J (20 U.S.C. 1078–10), relat-
ing to loan forgiveness for teachers, individuals per-
forming national community service and nurses.
(11) Section 486 (20 U.S.C. 1093), relating to
training in financial aid services.
(12) Subpart 1 of part H of title IV (20 U.S.C.
1099a et seq.) relating to State postsecondary re-
view entity programs.
(13) Part A of title V (20 U.S.C. 1102 et seq.),
relating to State and local programs for teacher ex-
cellence.
(14) Part B of title V (20 U.S.C. 1103 et seq.),
relating to national teacher academies.
(15) Subpart 1 of part C of title V (20 U.S.C.
1104 et seq.), relating to Douglas teacher scholar-
ships.
(16) Subpart 3 of part C of title V (20 U.S.C.
1106 et seq.), relating to the teacher corps.
(17) Subpart 3 of part D of title V (20 U.S.C.
1109 et seq.), relating to class size demonstration
grants.
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(18) Subpart 4 of part D of title V (20 U.S.C.
1110 et seq.), relating to middle school teaching
demonstration programs.
(19) Subpart 1 of part E of title V (20 U.S.C.
1111 et seq.), relating to new teaching careers.
(20) Subpart 1 of part F of title V (20 U.S.C.
1113 et seq.), relating to the national mini corps
programs.
(21) Section 586 (20 U.S.C. 1114), relating to
demonstration grants for critical language and area
studies.
(22) Section 587 (20 U.S.C. 1114a), relating to
development of foreign languages and cultures in-
structional materials.
(23) Subpart 3 of part F of title V (20 U.S.C.
1115), relating to small State teaching initiatives.
(24) Subpart 4 of part F of title V (20 U.S.C.
1116), relating to faculty development grants.
(25) Section 597 and section 599(b) (20 U.S.C.
1117a, 1117c(b)), relating to early childhood staff
training and professional enhancement.
(26) Section 605 (20 U.S.C. 1124a), relating to
intensive summer language institutes.
(27) Section 607 (20 U.S.C. 1125a), relating to
foreign language periodicals.
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(28) Part A of title VII (20 U.S.C. 11326 et
seq.), relating to academic and library facilities.
(29) Title VIII (20 U.S.C. 1133 et seq.), relat-
ing to cooperative education programs.
(30) Part A of title IX (20 U.S.C. 1134a et
seq.), relating to women and minority participation
in graduate education.
(31) Part B of title IX (20 U.S.C. 1134d et
seq.), relating to Harris fellowships.
(32) Part C of title IX (20 U.S.C. 1134h et
seq.), relating to Javits fellowships.
(33) Part E of title IX (20 U.S.C. 1134r et
seq.), relating to the faculty development fellowship
program.
(34) Part F of title IX (20 U.S.C. 1134s et
seq.), relating to legal training for the disadvan-
taged.
(35) Part G of title IX (20 U.S.C. 1134u et
seq.), relating to law school clinical programs.
(36) Section 1011 (20 U.S.C. 1135a–11), relat-
ing to special projects in areas of national need.
(37) Subpart 2 of part B of title X (20 U.S.C.
1135c et seq.), relating to science and engineering
access programs.
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(38) Part C of title X (20 U.S.C. 1135e et
seq.), relating to women and minorities science and
engineering outreach demonstration programs.
(39) Part D of title X (20 U.S.C. 1135f), relat-
ing to Eisenhower leadership programs.
(40) Title XI (20 U.S.C. 1136 et seq.), relating
to community service programs.
(b) EDUCATION AMENDMENTS
OF 1986 PROVI-
SIONS.—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 PROVI-
SIONS.—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), re-
lating to American Indian teacher training.
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(3) Section 1406 (20 U.S.C. 1221e–1 note), re-
lating to a national survey of factors associated with
participation.
(4) Section 1409 (20 U.S.C. 1132a note), relat-
ing to a study of environmental hazards in institu-
tions of higher education.
(5) Section 1412 (20 U.S.C. 1101 note), relat-
ing 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 postsecond-
ary 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 Higher Edu-
cation Act of 1965 is amended—
(1) in section 453(c)(2)—
(A) by striking subparagraph (E); and
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(B) by redesignating subparagraphs (F)
through (H) as subparagraphs (E) through (G),
respectively;
(2) in section 487(a)(3), by striking subpara-
graph (B) and redesignating subparagraphs (C) and
(D) as subparagraphs (B) and (C), respectively;
(3) in section 487(a)(15), by striking ‘‘the Sec-
retary 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 re-
ferred 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 re-
view entities designated under subpart 1 of part
H,’’;
(8) in section 496(a)(7), by striking ‘‘and the
appropriate State postsecondary review entity’’;
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(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 sub-
paragraph (D) and inserting a period; and
(C) by striking subparagraph (E).
SEC. 702. ELIGIBLE INSTITUTION.
(a) AMENDMENTS.—Section 481(b) of the Higher
Education Act of 1965 (20 U.S.C. 1088(b)) is amended—
(1) by inserting before the period at the end of
the first sentence the following: ‘‘on the basis of a
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review by the institution’s independent auditor using
generally accepted accounting principles’’; and
(2) by inserting after the end of such first sen-
tence the following new sentences: ‘‘For the purposes
of clause (6), revenues from sources that are not de-
rived from funds provided under this title include
revenues from programs of education or training
that do not meet the definition of an eligible pro-
gram in subsection (e), but are provided on a con-
tractual basis under Federal, State, or local training
programs, or to business and industry. For the pur-
poses of determining whether an institution meets
the requirements of clause (6), the Secretary shall
not consider the financial information of any institu-
tion for a fiscal year began on or before April 30,
1994.’’.
(b) EFFECTIVE DATE.—Notwithstanding section 713
of this Act, the amendments 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 Higher Education Act of 1965.
SEC. 703. CARL D. PERKINS VOCATIONAL AND APPLIED
TECHNOLOGY EDUCATION ACT.
The Carl D. Perkins Vocational and Applied Tech-
nology Education Act (20 U.S.C. 2301 et seq.) is repealed.
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SEC. 704. SMITH-HUGHES ACT.
(a) REPEAL.—The Smith-Hughes Act (39 Stat. 929
as amended (20 U.S.C. 11–15, 16–28)) is repealed.
(b) EFFECTIVE DATE.—Notwithstanding section 713
of this Act, the repeal in subsection (a) of this section shall
take effect on October 1, 1995.
SEC. 705. SCHOOL-TO-WORK OPPORTUNITIES ACT OF 1994.
The School-to-Work Opportunities Act of 1994 (20
U.S.C. 6101 et seq.) is repealed.
SEC. 706. SCHOOL DROPOUT ASSISTANCE ACT.
The School Dropout Assistance Act, (part C of title
V of the Elementary and Secondary Education Act (20
U.S.C. 7261)) is repealed.
SEC. 707. ADULT EDUCATION ACT.
(a) IN GENERAL.—The Adult Education Act (20
U.S.C. 1201 et seq.) is repealed.
(b) CONFORMING AMENDMENTS.—
(1) ESEA.—The Elementary and Secondary
Education Act of 1965 (20 U.S.C. 6301 et seq.) is
amended—
(A) in section 1202(c)(1), by striking ‘‘the
Adult Education Act,’’ and inserting ‘‘title IV
of the CAREERS Act,’’;
(B) in section 1205(8)(B), by striking ‘‘the
Adult Education Act,’’ and inserting ‘‘title IV
of the CAREERS Act,’’;
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(C) in section 1206(a)(1)(A), by striking
‘‘the Adult Education Act;’’ and inserting ‘‘title
IV of the CAREERS Act;’’; and
(D) in section 9161(2), by striking ‘‘sec-
tion 312(2) of the Adult Education Act.’’ and
inserting ‘‘section 5 of the CAREERS Act.’’.
(2) TECHNOLOGY FOR EDUCATION ACT.—The
Technology for Education Act of 1994 (20 U.S.C.
6801 et seq.) is amended in section 3113(1) by
striking ‘‘section 312 of the Adult Education Act;’’
and inserting ‘‘section 5 of the CAREERS Act;’’;
SEC. 708. NATIONAL LITERACY ACT.
The National Literacy Act of 1991, except section
101 of such Act, is repealed.
SEC. 709. LIBRARY SERVICES AND CONSTRUCTION ACT.
(a) IN GENERAL.—The Library Services and Con-
struction Act (20 U.S.C. 351 et seq.) is repealed.
(b) CONFORMING AMENDMENT.—The Technology for
Education Act of 1994 (20 U.S.C. 6801 et seq.) is amend-
ed in section 3113(10) by striking ‘‘section 3 of the Li-
brary Services and Construction Act;’’ and inserting ‘‘sec-
tion 5 of the CAREERS Act;’’.
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SEC. 710. TECHNOLOGY FOR EDUCATION ACT OF 1994.
Part F of the Technology for Education Act of 1994
(contained in title III of the Elementary and Secondary
Education Act (20 U.S.C. 7001 et seq.)) is repealed.
SEC. 711. JOB TRAINING PARTNERSHIP ACT.
(a) IN GENERAL.—The Job Training Partnership
Act (29 U.S.C. 1501 et seq.), except section 1, sections
421 through 439 (relating to the Job Corps), and section
441 of such Act (relating to veterans’ employment pro-
grams), is hereby repealed.
(b) CONFORMING AMENDMENTS.—
(1) SHORT TITLE.—Section 1 of the Job Train-
ing Partnership Act (29 U.S.C. 1501, note) is
amended—
(A) in the heading, by striking ‘‘; TABLE
OF CONTENTS’’; and
(B) by striking all that follows after ‘‘Job
Training Partnership Act’’.
(2) JOB CORPS.—Such Act (29 U.S.C. 1501 et
seq.), as amended by this section, is further amend-
ed—
(A) by redesignating sections 421 through
439 as sections 2 through 21, respectively;
(B) in section 2 (as redesignated), by
striking ‘‘part’’ each place it appears and in-
serting ‘‘Act’’;