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 Commit-
tee of the Whole House on the State of the Union, and
ordered to be printed
IB
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 Govern-
ment sponsored enterprises, and for other purposes.
Be it enacted by the Senate and House of Representa-
tives 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 enter-
prises, the Student Loan Marketing Association and the
College Construction Loan Insurance Association now that
both corporations are economically viable and have success-
fully fulfilled the purposes for which they were created.
TITLE I—STUDENT LOAN
MARKETING ASSOCIATION
SEC. 101. REORGANIZATION OF THE STUDENT LOAN MAR-
KETING ASSOCIATION THROUGH THE FORMA-
TION 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 MAR-
KETING ASSOCIATION THROUGH THE FORMA-
TION 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 nec-
essary or appropriate to effect, upon the shareholder ap-
proval 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 re-
structuring, the Board of Directors may cause (1) the com-
mon shares of the Association to be converted, at the reorga-
nization 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 Com-
pany common shares to be registered with the Securities
and Exchange Commission.
‘‘(b) SHAREHOLDER APPROVAL.—The plan of reorga-
nization adopted by the Board of Directors pursuant to sub-
section (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 major-
ity 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 As-
sociation 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 limita-
tions and restrictions, applicable to the Association
under section 439 of this Act as in effect on the effec-
tive date of this section, except as specifically pro-
vided 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 de-
scribed in section 440(c)(6).
‘‘(2) TRANSFER OF CERTAIN PROPERTY.—Except
as specifically provided in this section, at the reorga-
nization effective date or as soon as practicable there-
after, the Association shall use its best efforts to trans-
fer to the Holding Company or its subsidiaries (or
both), in each case, as directed by the Holding Com-
pany, all real and personal property of the Associa-
tion (both tangible and intangible) other than the re-
maining property. Without limiting the preceding
sentence, such transferred property shall include all
right, title and interest in (A) direct or indirect sub-
sidiaries 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 provi-
sions 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 reorga-
nization 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 sup-
port (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 divi-
dends, after giving effect to the payment of such divi-
dends as of the date of such declaration by the Board
of Directors of the Association, the Association’s cap-
ital would be in compliance with the capital stand-
ards set forth in section 439(r) of this Act. If, at any
time after the reorganization effective date, the Asso-
ciation 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 distribu-
tion of noncash assets by the Association to the Hold-
ing Company shall be valued at book value on the
date the Association’s Board of Directors approved
such distribution for purposes of calculating compli-
ance 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 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 liquid-
ity for loans made under this part.
The Secretary is authorized to enter into an agree-
ment described in subparagraph (C) with the Associa-
tion 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 inad-
equate. The fee provided under section 439(h)(7) shall
not apply to loans acquired under any such agree-
ment with the Secretary.
‘‘(7) ISSUANCE OF DEBT OBLIGATIONS DURING
THE TRANSITION PERIOD; ATTRIBUTES OF DEBT OBLI-
GATIONS.—After the reorganization effective date, the
Association shall not issue debt obligations which ma-
ture later than September 30, 2004, except in connec-
tion 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, re-
gardless 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 accord-
ance 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 Treas-
ury may from time to time prescribe concerning
(i) the financial risk to the Association resulting
from the activities of any of its associated per-
sons, to the extent such activities are reasonably
likely to have a material impact on the financial
condition of the Association, including its cap-
ital ratio, its liquidity, or its ability to conduct
and finance its operations, and (ii) the Associa-
tion’s policies, procedures, and systems for mon-
itoring and controlling any such financial risk.
The Association’s obligations under this sub-
section 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 re-
ports or other information provided to the Sec-
retary of Education pursuant to 34 C.F.R.
682.200 et seq. The Secretary of the Treasury
may require summary reports of such informa-
tion to be filed no more frequently than quar-
terly. For purposes of this paragraph, the term
‘associated person’ shall mean any person, other
than a natural person, directly or indirectly con-
trolling, 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 sep-
arately 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 as-
sets and liabilities of the Association, sepa-
rate from the assets and liabilities of the
Holding Company or any of its other sub-
sidiaries.
‘‘(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 di-
rector of the Holding Company.
‘‘(v) At least one officer of the Associa-
tion shall remain an officer solely of the
Association.
‘‘(vi) Transactions between the Associa-
tion and the Holding Company or its other
subsidiaries, including any loan servicing
arrangements, shall be on terms no less fa-
vorable to the Association than the Associa-
tion 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 affili-
ates.
‘‘(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 indi-
rect subsidiaries, shall be collected solely for
the benefit of the Association and shall be
immediately deposited by the Holding Com-
pany or such other subsidiary to an account
under the sole control of the Association.
‘‘(C) ENCUMBRANCE OF ASSETS.—Notwith-
standing any otherwise applicable Federal or
State law, rule, or regulation, or legal or equi-
table principle, doctrine, or theory to the con-
trary, 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 divi-
dends not otherwise prohibited hereunder or
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 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.—Not-
withstanding any other provision of part B of this
title, after the reorganization effective date, the 14 di-
rectors of the Association elected by the Association’s
stockholders (which immediately after the reorganiza-
tion effective date shall be the Holding Company)
shall no longer be required to meet the eligibility re-
quirements 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 com-
mon 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 ASSOCIA-
TION 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 pe-
tition 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 Asso-
ciation shall dissolve, and its separate existence shall termi-
nate on September 30, 2007, after discharge of all outstand-
ing debt obligations and liquidation pursuant to this sub-
section. The Association may dissolve pursuant to this sub-
section prior to such date by notifying the Secretary of Edu-
cation 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 Sec-
retary described in subsection (c)(6) of this section. On the
dissolution date, the Association shall take the following ac-
tions:
‘‘(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 ap-
pointed trustee, irrevocably transfer all remaining ob-
ligations 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 hold-
ers of the remaining obligations, money or direct
noncallable obligations of the United States of Amer-
ica or any agency thereof for which payment the full
faith and credit of the United States is pledged, ma-
turing 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 ex-
tent the Association cannot provide money or qualify-
ing obligations in the amount required, the Holding
Company shall be required to transfer money or
qualifying obligations to the trust in the amount nec-
essary to prevent any deficiency.
‘‘(2) USE OF TRUST ASSETS.—All money, obliga-
tions, or financial assets deposited into the trust pur-
suant 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 du-
ties 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 Com-
pany.
‘‘(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 prop-
er 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 As-
sociation 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 per-
missible under the laws of the jurisdiction of its in-
corporation.
‘‘(2) HOLDING COMPANY NAME.—The names of
the Holding Company and any direct or indirect sub-
sidiary of the Holding Company other than the Asso-
ciation 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 subsidi-
ary of the Holding Company other than the Associa-
tion, the ‘Sallie Mae’ name as a trademark and serv-
ice 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 se-
curity 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 as-
sign 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 Com-
pany 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 en-
terprise or instrumentality of the United States;
and
‘‘(B) the obligations of the Holding Com-
pany and any such subsidiary are not guaran-
teed 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 Com-
pany as a State or District of Columbia chartered corpora-
tion.
‘‘(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 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 compli-
ance 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 Sep-
tember 30, 2007, or such earlier date as the Secretary
of Education permits the transfer of remaining obli-
gations in accordance with subsection (d) of this sec-
tion.
‘‘(3) The term ‘reorganization effective date’
means the effective date of the reorganization as deter-
mined by the Board of Directors of the Association,
which shall not be earlier than the date that stock-
holder 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 sec-
tion 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 outstand-
ing 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, currency,
or commodity positions or protections, (C) investment
securities owned by the Association, (D) any instru-
ments, assets, or agreements described in section
439(d) of this Act (including without limitation all
student loans, forward purchase and lending commit-
ments, warehousing advances, academic facilities obli-
gations, letters of credit, standby bond purchase agree-
ments, 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 Associa-
tion’s Board of Directors determines to be necessary
or appropriate to its operations.
‘‘(7) The term ‘reorganization’ means the re-
structuring 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 Stu-
dent 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 Mar-
keting Association’’ the following: ‘‘or the Hold-
ing Company of the Student Loan Marketing As-
sociation, 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
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 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 sub-
section.’’.
(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 sub-
paragraph (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 cal-
endar quarter, (i) financial statements of the As-
sociation, and (ii) a report setting forth the cal-
culation of the capital ratio of the Association.’’;
(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 reor-
ganization plan in accordance with section 440(b)
and, for any quarter after January 1, 2000, the Asso-
ciation 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 ac-
tions 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 pro-
ceed 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 Association
of a reorganization plan in accordance with section
440(b) for any period after January 1, 2000, the pro-
visions 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)), sec-
tion 439 of the Act (20 U.S.C. 1087–2) is repealed.
TITLE II—COLLEGE CONSTRUC-
TION LOAN INSURANCE ASSO-
CIATION
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 Cor-
poration shall not be an agency, instrumentality, or
establishment of the United States Government and
shall not be a ‘‘Government corporation’’ nor a ‘‘Gov-
ernment controlled corporation’’ as defined in section
103 of title 5, United States Code. No action under
section 1491 of title 28, United States Code (com-
monly 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 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 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 offer-
ing the Corporation’s securities, or in any contracts
for insurance, guarantee, or reinsurance of obliga-
tions, 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 Construc-
tion Loan Insurance Association’’.
(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 rein-
sure bonds, leases, and other evidences of debt of edu-
cational institutions, including Historically Black
Colleges and Universities and other academic institu-
tions 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 fa-
cilities projects, including projects for elemen-
tary, secondary, and postsecondary educational
institution infrastructure, and detailing, on a
project-by-project basis, the Corporation’s busi-
ness dealings with educational institutions that
are rated by a nationally recognized statistical
rating organization at or below the organiza-
tion’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 Sec-
retary of Education make every effort to sell, pursu-
ant 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 pur-
chase such stock at a price determined by the Sec-
retary of the Treasury and acceptable to the Corpora-
tion 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 Corpora-
tion 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.), re-
lating to articulation agreements.
(2) Part C of title I (20 U.S.C. 1015 et seq.), re-
lating to access and equity to education for all Ameri-
cans 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 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 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 dis-
advantaged college students.
(11) Section 428J (20 U.S.C. 1078–10), relating
to loan forgiveness for teachers, individuals perform-
ing 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 excel-
lence.
(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.
(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 pro-
gram.
(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), relat-
ing 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 ac-
cess programs.
(39) Part C of title X (20 U.S.C. 1135e et seq.),
relating to women and minorities science and engi-
neering 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 Amend-
ments 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 develop-
ment.
(c) EDUCATION AMENDMENTS OF 1992 PROVISIONS.—
The following provisions of the Higher Education Amend-
ments 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), relat-
ing to American Indian teacher training.
(3) Section 1406 (20 U.S.C. 1221e–1 note), relat-
ing 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), relating
to a national job bank for teacher recruitment.
(6) Part B of title XV (20 U.S.C. 1452 note), re-
lating to a national clearinghouse for postsecondary
education materials.
(7) Part C of title XV (20 U.S.C. 1101 note), re-
lating 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), re-
lating 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 amend-
ed—
(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 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 referred to in
subpart 1 of part H’’ and inserting ‘‘and State agen-
cies’’;
(6) in section 487(c)(4), by striking ‘‘, after con-
sultation 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’’;
(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. 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 AS-
SISTANCE 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 sen-
tence the following: ‘‘For the purposes of determining wheth-
er 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 sub-
section (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.
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