 
      CHAPTER 28--HIGHER EDUCATION RESOURCES AND STUDENT ASSISTANCE
 
                    SUBCHAPTER IV--STUDENT ASSISTANCE
 
              Part B--Federal Family Education Loan Program
 
Sec. 1087-2. Student Loan Marketing Association


(a) Purpose

    The Congress hereby declares that it is the purpose of this section 
(1) to establish a private corporation which will be financed by private 
capital and which will serve as a secondary market and warehousing 
facility for student loans, including loans which are insured by the 
Secretary under this part or by a guaranty agency, and which will 
provide liquidity for student loan investments; (2) in order to 
facilitate secured transactions involving student loans, to provide for 
perfection of security interests in student loans either through the 
taking of possession or by notice filing; and (3) to assure nationwide 
the establishment of adequate loan insurance programs for students, to 
provide for an additional program of loan insurance to be covered by 
agreements with the Secretary.

(b) Establishment

                           (1) In general

        There is hereby created a body corporate to be known as the 
    Student Loan Marketing Association (hereinafter referred to as the 
    ``Association''). The Association shall have succession until 
    dissolved. It shall maintain its principal office in the District of 
    Columbia and shall be deemed, for purposes of venue and jurisdiction 
    in civil actions, to be a resident and citizen thereof. Offices may 
    be established by the Association in such other place or places as 
    it may deem necessary or appropriate for the conduct of its 
    business.

              (2) Exemption from State and local taxes

        The Association, including its franchise, capital, reserves, 
    surplus, mortgages, or other security holdings, and income shall be 
    exempt from all taxation now or hereafter imposed by any State, 
    territory, possession, Commonwealth, or dependency of the United 
    States, or by the District of Columbia, or by any county, 
    municipality, or local taxing authority, except that any real 
    property of the Association shall be subject to State, territorial, 
    county, municipal, or local taxation to the same extent according to 
    its value as other real property is taxed.

           (3) Appropriations authorized for establishment

        There is hereby authorized to be appropriated to the Secretary 
    $5,000,000 for making advances for the purpose of helping to 
    establish the Association. Such advances shall be repaid within such 
    period as the Secretary may deem to be appropriate in light of the 
    maturity and solvency of the Association. Such advances shall bear 
    interest at a rate not less than (A) a rate determined by the 
    Secretary of the Treasury taking into consideration the current 
    average market yield on outstanding marketable obligations of the 
    United States with remaining period to maturity comparable to the 
    maturity of such advances, adjusted to the nearest one-eighth of 1 
    percent, plus (B) an allowance adequate in the judgment of the 
    Secretary to cover administrative costs and probable losses. 
    Repayments of such advances shall be deposited into miscellaneous 
    receipts of the Treasury.

(c) Board of Directors

                 (1) Composition of Board; Chairman

        (A) The Association shall have a Board of Directors which shall 
    consist of 21 persons, 7 of whom shall be appointed by the President 
    and shall be representative of the general public. The remaining 14 
    directors shall be elected by the common stockholders of the 
    Association entitled to vote pursuant to subsection (f) of this 
    section. Commencing with the annual shareholders meeting to be held 
    in 1993--
            (i) 7 of the elected directors shall be affiliated with an 
        eligible institution; and
            (ii) 7 of the elected directors shall be affiliated with an 
        eligible lender.

        (B) The President shall designate 1 of the directors to serve as 
    Chairman.

             (2) Terms of appointed and elected members

        The directors appointed by the President shall serve at the 
    pleasure of the President and until their successors have been 
    appointed and have qualified. The remaining directors shall each be 
    elected for a term ending on the date of the next annual meeting of 
    the common stockholders of the Association, and shall serve until 
    their successors have been elected and have qualified. Any 
    appointive seat on the Board which becomes vacant shall be filled by 
    appointment of the President. Any elective seat on the Board which 
    becomes vacant after the annual election of the directors shall be 
    filled by the Board, but only for the unexpired portion of the term.

                       (3) Affiliated members

        For the purpose of this subsection, the references to a director 
    ``affiliated with the eligible institution'' or a director 
    ``affiliated with an eligible lender'' means an individual who is, 
    or within 5 years of election to the Board has been, an employee, 
    officer, director, or similar official of--
            (A) an eligible institution or an eligible lender;
            (B) an association whose members consist primarily of 
        eligible institutions or eligible lenders; or
            (C) a State agency, authority, instrumentality, commission, 
        or similar institution, the primary purpose of which relates to 
        educational matters or banking matters.

               (4) Meetings and functions of the Board

        The Board of Directors shall meet at the call of its Chairman, 
    but at least semiannually. The Board shall determine the general 
    policies which shall govern the operations of the Association. The 
    Chairman of the Board shall, with the approval of the Board, select, 
    appoint, and compensate qualified persons to fill the offices as may 
    be provided for in the bylaws, with such functions, powers, and 
    duties as may be prescribed by the bylaws or by the Board of 
    Directors, and such persons shall be the officers of the Association 
    and shall discharge all such functions, powers, and duties.

(d) Authority of Association

                           (1) In general

        The Association is authorized, subject to the provisions of this 
    section--
            (A) pursuant to commitments or otherwise to make advances on 
        the security of, purchase, or repurchase, service, sell or 
        resell, offer participations, or pooled interests or otherwise 
        deal in, at prices and on terms and conditions determined by the 
        Association, student loans which are insured by the Secretary 
        under this part or by a guaranty agency;
            (B) to buy, sell, hold, underwrite, and otherwise deal in 
        obligations, if such obligations are issued, for the purpose of 
        making or purchasing insured loans, by a guaranty agency or by 
        an eligible lender in a State described in section 1085(d)(1)(D) 
        or (F) of this title;
            (C) to buy, sell, hold, insure, underwrite, and otherwise 
        deal in obligations issued for the purpose of financing or 
        refinancing the construction, reconstruction, renovation, 
        improvement, or purchase at institutions of higher education of 
        any of the following facilities (including the underlying 
        property) and materials (including related equipment, 
        instrumentation, and furnishings) at an eligible institution of 
        higher education:
                (i) educational and training facilities;
                (ii) housing for students and faculties, dining halls, 
            student unions, and facilities specifically designed to 
            promote fitness and health for students, faculty, and staff 
            or for physical education courses; and
                (iii) library facilities, including the acquisition of 
            library materials at institutions of higher education;

        except that not more than 30 percent of the value of 
        transactions entered into under this subparagraph shall involve 
        transactions of the types described in clause (ii);
            (D) to undertake a program of loan insurance pursuant to 
        agreements with the Secretary under section 1078 of this title, 
        and except with respect to loans under subsection (o) of this 
        section or under section 1078-3 of this title, the Secretary may 
        enter into an agreement with the Association for such purpose 
        only if the Secretary determines that (i) eligible borrowers are 
        seeking and unable to obtain loans under this part, and (ii) no 
        guaranty agency is capable of or willing to provide a program of 
        loan insurance for such borrowers; and
            (E) to undertake any other activity which the Board of 
        Directors of the Association determines to be in furtherance of 
        the programs of insured student loans authorized under this part 
        or will otherwise support the credit needs of students, except 
        that--
                (i) in carrying out all such activities the purpose 
            shall always be to provide secondary market and other 
            support for lending programs offered by other organizations 
            and not to replace or compete with such other programs;
                (ii) nothing in this subparagraph (E) shall be deemed to 
            authorize the Association to acquire, own, operate, or 
            control any bank, savings and loan association, savings bank 
            or credit union; and
                (iii) not later than 30 days prior to the initial 
            implementation of a program undertaken pursuant to this 
            subparagraph (E), the Association shall advise the Chairman 
            and the Ranking Member on the Committee on Labor and Human 
            Resources of the Senate and the Chairman and the Ranking 
            Member of the Committee on Education and Labor of the House 
            of Representatives in writing of its plans to offer such 
            program and shall provide information relating to the 
            general terms and conditions of such program.

    The Association is further authorized to undertake any activity with 
    regard to student loans which are not insured or guaranteed as 
    provided for in this subsection as it may undertake with regard to 
    insured or guaranteed student loans. Any warehousing advance made on 
    the security of such loans shall be subject to the provisions of 
    paragraph (3) of this subsection to the same extent as a warehousing 
    advance made on the security of insured loans.

                      (2) Warehousing advances

        Any warehousing advance made under paragraph (1)(A) of this 
    subsection shall be made on the security of (A) insured loans, (B) 
    marketable obligations and securities issued, guaranteed, or insured 
    by, the United States, or for which the full faith and credit of the 
    United States is pledged for the repayment of principal and interest 
    thereof, or (C) marketable obligations issued, guaranteed, or 
    insured by any agency, instrumentality, or corporation of the United 
    States for which the credit of such agency, instrumentality, or 
    corporation is pledged for the repayment of principal and interest 
    thereof, in an amount equal to the amount of such advance. The 
    proceeds of any such advance secured by insured loans shall either 
    be invested in additional insured loans or the lender shall provide 
    assurances to the Association that during the period of the 
    borrowing it will maintain a level of insured loans in its portfolio 
    not less than the aggregate outstanding balance of such loans held 
    at the time of the borrowing. The proceeds from any such advance 
    secured by collateral described in clauses (B) and (C) shall be 
    invested in additional insured student loans.

        (3) Perfection of security interests in student loans

        Notwithstanding the provisions of any State law to the contrary, 
    including the Uniform Commercial Code as in effect in any State, a 
    security interest in insured student loans created on behalf of the 
    Association or any eligible lender as defined in section 1085(a) of 
    this title may be perfected either through the taking of possession 
    of such loans or by the filing of notice of such security interest 
    in such loans in the manner provided by such State law for 
    perfection of security interests in accounts.

                       (4) Form of securities

        Securities issued pursuant to the offering of participations or 
    pooled interests under paragraph (1) of this subsection may be in 
    the form of debt obligations, or trust certificates of beneficial 
    ownership, or both. Student loans set aside pursuant to the offering 
    of participations or pooled interests shall at all times be adequate 
    to ensure the timely principal and interest payments on such 
    securities.

        (5) Restrictions on facilities and housing activities

        Not less than 75 percent of the aggregate dollar amount of 
    obligations bought, sold, held, insured, underwritten, and otherwise 
    supported in accordance with the authority contained in paragraph 
    (1)(C) shall be obligations which are listed by a nationally 
    recognized statistical rating organization at a rating below the 
    second highest rating of such organization.

(e) Advances to lenders that do not discriminate

    The Association, pursuant to such criteria as the Board of Directors 
may prescribe, shall make advances on security or purchase student loans 
pursuant to subsection (d) of this section only after the Association is 
assured that the lender (1) does not discriminate by pattern or practice 
against any particular class or category of students by requiring that, 
as a condition to the receipt of a loan, the student or his family 
maintain a business relationship with the lender, except that this 
clause shall not apply in the case of a loan made by a credit union, 
savings and loan association, mutual savings bank, institution of higher 
education, or any other lender with less than $75,000,000 in deposits, 
and (2) does not discriminate on the basis of race, sex, color, creed, 
or national origin.

(f) Stock of the Association

                       (1) Voting common stock

        The Association shall have voting common stock having such par 
    value as may be fixed by its Board of Directors from time to time. 
    Each share of voting common stock shall be entitled to one vote with 
    rights of cumulative voting at all elections of directors.

                (2) Number of shares; transferability

        The maximum number of shares of voting common stock that the 
    Association may issue and have outstanding at any one time shall be 
    fixed by the Board of Directors from time to time. Any voting common 
    stock issued shall be fully transferable, except that, as to the 
    Association, it shall be transferred only on the books of the 
    Association.

                            (3) Dividends

        To the extent that net income is earned and realized, subject to 
    subsection (g)(2) of this section, dividends may be declared on 
    voting common stock by the Board of Directors. Such dividends as may 
    be declared by the Board of Directors shall be paid to the holders 
    of outstanding shares of voting common stock, except that no such 
    dividends shall be payable with respect to any share which has been 
    called for redemption past the effective date of such call.

               (4) Single class of voting common stock

        As of the effective date of the Higher Education Amendments of 
    1992, all of the previously authorized shares of voting common stock 
    and nonvoting common stock of the Association shall be converted to 
    shares of a single class of voting common stock on a share-for-share 
    basis, without any further action on the part of the Association or 
    any holder. Each outstanding certificate for voting or nonvoting 
    common stock shall evidence ownership of the same number of shares 
    of voting stock into which it is converted. All preexisting rights 
    and obligations with respect to any class of common stock of the 
    Association shall be deemed to be rights and obligations with 
    respect to such converted shares.

(g) Preferred stock

                       (1) Authority of Board

        The Association is authorized to issue nonvoting preferred stock 
    having such par value as may be fixed by its Board of Directors from 
    time to time. Any preferred share issued shall be freely 
    transferable, except that, as to the Association, it shall be 
    transferred only on the books of the Association.

                    (2) Rights of preferred stock

        The holders of the preferred shares shall be entitled to such 
    rate of cumulative dividends and such shares shall be subject to 
    such redemption or other conversion provisions as may be provided 
    for at the time of issuance. No dividends shall be payable on any 
    share of common stock at any time when any dividend is due on any 
    share of preferred stock and has not been paid.

              (3) Preference on termination of business

        In the event of any liquidation, dissolution, or winding up of 
    the Association's business, the holders of the preferred shares 
    shall be paid in full at par value thereof, plus all accrued 
    dividends, before the holders of the common shares receive any 
    payment.

(h) Debt obligations

      (1) Approval by Secretaries of Education and the Treasury

        The Association is authorized with the approval of the Secretary 
    of Education and the Secretary of the Treasury to issue and have 
    outstanding obligations having such maturities and bearing such rate 
    or rates of interest as may be determined by the Association. The 
    authority of the Secretary of Education to approve the issuance of 
    such obligations is limited to obligations issued by the Association 
    and guaranteed by the Secretary pursuant to paragraph (2) of this 
    subsection. Such obligations may be redeemable at the option of the 
    Association before maturity in such manner as may be stipulated 
    therein. The Secretary of the Treasury may not direct as a condition 
    of his approval that any such issuance of obligations by the 
    Association be made or sold to the Federal Financing Bank. To the 
    extent that the average outstanding amount of the obligations owned 
    by the Association pursuant to the authority contained in subsection 
    (d)(1)(B) and (C) of this section and as to which the income is 
    exempt from taxation under title 26 does not exceed the average 
    stockholders' equity of the Association, the interest on obligations 
    issued under this paragraph shall not be deemed to be interest on 
    indebtedness incurred or continued to purchase or carry obligations 
    for the purpose of section 265 of title 26.

                        (2) Guarantee of debt

        The Secretary is authorized, prior to October 1, 1984, to 
    guarantee payment when due of principal and interest on obligations 
    issued by the Association in an aggregate amount determined by the 
    Secretary in consultation with the Secretary of the Treasury. 
    Nothing in this section shall be construed so as to authorize the 
    Secretary of Education or the Secretary of the Treasury to limit, 
    control, or constrain programs of the Association or support of the 
    Guaranteed Student Loan Program by the Association.

        (3) Borrowing authority to meet guarantee obligations

        To enable the Secretary to discharge his responsibilities under 
    guarantees issued by him, he is authorized to issue to the Secretary 
    of the Treasury notes or other obligations in such forms and 
    denominations, bearing such maturities, and subject to such terms 
    and conditions, as may be prescribed by the Secretary with the 
    approval of the Secretary of the Treasury. Such notes or other 
    obligations shall bear interest at a rate determined by the 
    Secretary of the Treasury, taking into consideration the current 
    average market yield on outstanding marketable obligations of the 
    United States of comparable maturities during the months preceding 
    the issuance of the notes or other obligations. The Secretary of the 
    Treasury is authorized and directed to purchase any notes and other 
    obligations issued hereunder and for that purpose he is authorized 
    to use as a public debt transaction the proceeds from the sale of 
    any securities issued under chapter 31 of title 31, and the purposes 
    for which securities may be issued under that chapter are extended 
    to include any purchase of such notes and obligations. The Secretary 
    of the Treasury may at any time sell any of the notes or other 
    obligations acquired by him under this subsection. All redemptions, 
    purchases, and sales by the Secretary of the Treasury of such notes 
    or other obligations shall be treated as public debt transactions of 
    the United States. There is authorized to be appropriated to the 
    Secretary such sums as may be necessary to pay the principal and 
    interest on the notes or obligations issued by him to the Secretary 
    of the Treasury.

                (4) Action on request for guarantees

        Upon receipt of a request from the Association under this 
    subsection requiring approvals by the Secretary of Education or the 
    Secretary of the Treasury, the Secretary of Education or the 
    Secretary of the Treasury shall act promptly either to grant 
    approval or to advise the Association of the reasons for withholding 
    approval. In no case shall such an approval be withheld for a period 
    longer than 60 days unless, prior to the end of such period, the 
    Secretary of Education and the Secretary of the Treasury submit to 
    the Congress a detailed explanation of reasons for doing so.

             (5) Authority of Treasury to purchase debt

        The Secretary of the Treasury is authorized to purchase any 
    obligations issued by the Association pursuant to this subsection as 
    now or hereafter in force, and for such purpose the Secretary of the 
    Treasury is authorized to use as a public debt transaction the 
    proceeds of the sale of any securities hereafter issued under 
    chapter 31 of title 31, as now or hereafter in force, and the 
    purposes for which securities may be issued under chapter 31 of 
    title 31, as now or hereafter in force are extended to include such 
    purchases. The Secretary of the Treasury shall not at any time 
    purchase any obligations under this subsection if such purchase 
    would increase the aggregate principal amount of his then 
    outstanding holdings of such obligations under this subsection to an 
    amount greater than $1,000,000,000. Each purchase of obligations by 
    the Secretary of the Treasury under this subsection shall be upon 
    such terms and conditions as to yield a return at a rate determined 
    by the Secretary of the Treasury, taking into consideration the 
    current average rate on outstanding marketable obligations of the 
    United States of comparable maturities as of the last day of the 
    month preceding the making of such purchase. The Secretary of the 
    Treasury may, at any time, sell, upon such terms and conditions and 
    at such price or prices as he shall determine, any of the 
    obligations acquired by him under this subsection. All redemptions, 
    purchases, and sales by the Secretary of the Treasury of such 
    obligations under this subsection shall be treated as public debt 
    transactions of the United States.

             (6) Sale of debt to Federal Financing Bank

        Notwithstanding any other provision of law the Association is 
    authorized to sell or issue obligations on the security of student 
    loans, the payment of interest or principal of which has at any time 
    been guaranteed under section 1078 or 1079 of this title, to the 
    Federal Financing Bank.

                           (7) Offset fee

        (A) The Association shall pay to the Secretary, on a monthly 
    basis, an offset fee calculated on an annual basis in an amount 
    equal to 0.30 percent of the principal amount of each loan made, 
    insured or guaranteed under this part that the Association holds 
    (except for loans made pursuant to section 1078-3 of this title, 
    subsection (o) of this section, or subsection (q) of this section) 
    and that was acquired on or after August 10, 1993.
        (B) If the Secretary determines that the Association has 
    substantially failed to comply with subsection (q) of this section, 
    subparagraph (A) shall be applied by substituting ``1.0 percent'' 
    for ``0.3 percent''.
        (C) The Secretary shall deposit all fees collected pursuant to 
    this paragraph into the insurance fund established in section 1081 
    of this title.

(i) General corporate powers

    The Association shall have power--
        (1) to sue and be sued, complain and defend, in its corporate 
    name and through its own counsel;
        (2) to adopt, alter, and use the corporate seal, which shall be 
    judicially noticed;
        (3) to adopt, amend, and repeal by its Board of Directors, 
    bylaws, rules, and regulations as may be necessary for the conduct 
    of its business;
        (4) to conduct its business, carry on its operations, and have 
    officers and exercise the power granted by this section in any State 
    without regard to any qualification or similar statute in any State;
        (5) to lease, purchase, or otherwise acquire, own, hold, 
    improve, use, or otherwise deal in and with any property, real, 
    personal, or mixed, or any interest therein, wherever situated;
        (6) to accept gifts or donations of services, or of property, 
    real, personal, or mixed, tangible or intangible, in aid of any of 
    the purposes of the Association;
        (7) to sell, convey, mortgage, pledge, lease, exchange, and 
    otherwise dispose of its property and assets;
        (8) to appoint such officers, attorneys, employees, and agents 
    as may be required, to determine their qualifications, to define 
    their duties, to fix their salaries, require bonds for them, and fix 
    the penalty thereof; and
        (9) to enter into contracts, to execute instruments, to incur 
    liabilities, and to do all things as are necessary or incidental to 
    the proper management of its affairs and the proper conduct of its 
    business.

(j) Accounting, auditing, and reporting

    The accounts of the Association shall be audited annually. Such 
audits shall be conducted in accordance with generally accepted auditing 
standards by independent certified public accountants or by independent 
licensed public accountants, licensed on or before December 31, 1970, 
who are certified or licensed by a regulatory authority of a State or 
other political subdivision of the United States, except that 
independent public accountants licensed to practice by such regulatory 
authority after December 31, 1970, and persons who, although not so 
certified or licensed, meet, in the opinion of the Secretary, standards 
of education and experience representative of the highest standards 
prescribed by the licensing authorities of the several States which 
provide for the continuing licensing of public accountants and which are 
prescribed by the Secretary in appropriate regulations may perform such 
audits until December 31, 1975. A report of each such audit shall be 
furnished to the Secretary of the Treasury. The audit shall be conducted 
at the place or places where the accounts are normally kept. The 
representatives of the Secretary shall have access to all books, 
accounts, financial records, reports, files, and all other papers, 
things, or property belonging to or in use by the Association and 
necessary to facilitate the audit, and they shall be afforded full 
facilities for verifying transactions with the balances or securities 
held by depositaries, fiscal agents, and custodians.

(k) Report on audits by Treasury

    A report of each such audit for a fiscal year shall be made by the 
Secretary of the Treasury to the President and to the Congress not later 
than 6 months following the close of such fiscal year. The report shall 
set forth the scope of the audit and shall include a statement (showing 
intercorporate relations) of assets and liabilities, capital and surplus 
or deficit; a statement of surplus or deficit analysis; a statement of 
income and expense; a statement of sources and application of funds; and 
such comments and information as may be deemed necessary to keep the 
President and the Congress informed of the operations and financial 
condition of the Association, together with such recommendations with 
respect thereto as the Secretary may deem advisable, including a report 
of any impairment of capital or lack of sufficient capital noted in the 
audit. A copy of each report shall be furnished to the Secretary, and to 
the Association.

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

    All obligations issued by the Association including those made under 
subsection (d)(4) of this section shall be lawful investments, and may 
be accepted as security for all fiduciary, trust, and public funds, the 
investment or deposit of which shall be under authority or control of 
the United States or of any officer or officers thereof. All stock and 
obligations issued by the Association pursuant to this section shall be 
deemed to be exempt securities within the meaning of laws administered 
by the Securities and Exchange Commission, to the same extent as 
securities which are direct obligations of, or obligations guaranteed as 
to principal or interest by, the United States. The Association shall, 
for the purposes of section 355(2) of title 12, be deemed to be an 
agency of the United States. The obligations of the Association shall be 
deemed to be obligations of the United States for the purpose of section 
3124 of title 31. For the purpose of the distribution of its property 
pursuant to section 726 of title 11, the Association shall be deemed a 
person within the meaning of such title. The priority established in 
favor of the United States by section 3713 of title 31 shall not 
establish a priority over the indebtedness of the Association issued or 
incurred on or before September 30, 1992. The Federal Reserve Banks are 
authorized to act as depositaries, custodians, or fiscal agents, or a 
combination thereof, for the Association in the general performance of 
its powers under this section.

(m) Preparation of obligations

    In order to furnish obligations for delivery by the Association, the 
Secretary of the Treasury is authorized to prepare such obligations in 
such form as the Board of Directors may approve, such obligations when 
prepared to be held in the Treasury subject to delivery upon order by 
the Association. The engraved plates, dies, bed pieces, and so forth, 
executed in connection therewith shall remain in the custody of the 
Secretary of the Treasury. The Association shall reimburse the Secretary 
of the Treasury for any expenditures made in the preparation, custody, 
and delivery of such obligations. The Secretary of the Treasury is 
authorized to promulgate regulations on behalf of the Association so 
that the Association may utilize the book-entry system of the Federal 
Reserve Banks.

(n) Report on operations and activities

    The Association shall, as soon as practicable after the end of each 
fiscal year, transmit to the President and the Congress a report of the 
Association's operations and activities, including a report with respect 
to all facilities transactions, during each year.

(o) Loan consolidations

                           (1) In general

        The Association or its designated agent may, upon request of a 
    borrower, consolidate loans received under this subchapter and part 
    C of subchapter I of chapter 34 of title 42 in accordance with 
    section 1078-3 of this title.

                (2) Use of existing agencies as agent

        The Association in making loans pursuant to this subsection in 
    any State served by a guaranty agency or an eligible lender in a 
    State described in section 1085(d)(1)(D) or (F) of this title may 
    designate as its agent such agency or lender to perform such 
    functions as the Association determines appropriate. Any agreements 
    made pursuant to this subparagraph shall be on such terms and 
    conditions as agreed upon by the Association and such agency or 
    lender.

(p) Advances for direct loans by guaranty agencies

                           (1) In general

        The Association shall make advances in each fiscal year from 
    amounts available to it to each guaranty agency and eligible lender 
    described in subsection 1078(h)(1) of this title which has an 
    agreement with the Association which sets forth that advances are 
    necessary to enable such agency or lender to make student loans in 
    accordance with section 1078(h) of this title and that such advances 
    will be repaid to the Association in accordance with such terms and 
    conditions as may be set forth in the agreement and agreed to by the 
    Association and such agency or lender. Advances made under this 
    subsection shall not be subject to subsection (d)(2) of this 
    section.

                           (2) Limitation

        No advance may be made under this subsection unless the guaranty 
    agency or lender makes an application to the Association, which 
    shall be accompanied by such information as the Association 
    determines to be reasonably necessary.

(q) Lender-of-last-resort

                 (1) Action at request of Secretary

        (A) Whenever the Secretary determines that eligible borrowers 
    are seeking and are unable to obtain loans under this part, the 
    Association or its designated agent shall, not later than 90 days 
    after August 10, 1993, begin making loans to such eligible borrowers 
    in accordance with this subsection at the request of the Secretary. 
    The Secretary may request that the Association make loans to 
    borrowers within a geographic area or for the benefit of students 
    attending institutions of higher education that certify, in 
    accordance with standards established by the Secretary, that their 
    students are seeking and unable to obtain loans.
        (B) Loans made pursuant to this subsection shall be insurable by 
    the Secretary under section 1079 of this title with a certificate of 
    comprehensive insurance coverage provided for under section 
    1079(b)(1) of this title or by a guaranty agency under paragraph 
    (2)(A) of this subsection.

                 (2) Issuance and coverage of loans

        (A) Whenever the Secretary, after consultation with, and with 
    the agreement of, representatives of the guaranty agency in a State, 
    or an eligible lender in a State described in section 1085(d)(1)(D) 
    of this title, determines that a substantial portion of eligible 
    borrowers in such State or within an area of such State are seeking 
    and are unable to obtain loans under this part, the Association or 
    its designated agent shall begin making such loans to borrowers in 
    such State or within an area of such State in accordance with this 
    subsection at the request of the Secretary.
        (B) Loans made pursuant to this subsection shall be insurable by 
    the agency identified in subparagraph (A) having an agreement 
    pursuant to section 1078(b) of this title. For loans insured by such 
    agency, the agency shall provide the Association with a certificate 
    of comprehensive insurance coverage, if the Association and the 
    agency have mutually agreed upon a means to determine that the 
    agency has not already guaranteed a loan under this part to a 
    student which would cause a subsequent loan made by the Association 
    to be in violation of any provision under this part.

                     (3) Termination of lending

        The Association or its designated agent shall cease making loans 
    under this subsection at such time as the Secretary determines that 
    the conditions which caused the implementation of this subsection 
    have ceased to exist.

(r) Safety and soundness of Association

                   (1) Reports by the Association

        The Association shall promptly furnish to the Secretary of 
    Education and Secretary of the Treasury copies of all--
            (A) periodic financial reports publicly distributed by the 
        Association;
            (B) reports concerning the Association that are received by 
        the Association and prepared by nationally recognized 
        statistical rating organizations; and
            (C)(i) financial statements of the Association within 45 
        days of the end of each fiscal quarter; and
            (ii) reports setting forth the calculation of the capital 
        ratio of the Association within 45 days of the end of each 
        fiscal quarter.

               (2) Audit by Secretary of the Treasury

        (A) The Secretary of the Treasury may--
            (i) appoint and fix the compensation of such auditors and 
        examiners as may be necessary to conduct audits of the 
        Association from time to time to determine the condition of the 
        Association for the purpose of assessing the Association's 
        financial safety and soundness and to determine whether the 
        requirements of this section and section 1087-3 of this title 
        are being met; and
            (ii) obtain the services of such experts as the Secretary of 
        the Treasury determines necessary and appropriate, as authorized 
        by section 3109 of title 5, to assist in determining the 
        condition of the Association for the purpose of assessing the 
        Association's financial safety and soundness, and to determine 
        whether the requirements of this section and section 1087-3 of 
        this title are being met.

        (B) Each auditor appointed under this paragraph shall conduct an 
    audit of the Association to the extent requested by the Secretary of 
    the Treasury and shall prepare and submit a report to the Secretary 
    of the Treasury concerning the results of such audit. A copy of such 
    report shall be furnished to the Association and the Secretary of 
    Education on the date on which it is delivered to the Secretary of 
    the Treasury.
        (C) The Association shall provide full and prompt access to the 
    Secretary of the Treasury to its books and records and other 
    information requested by the Secretary of the Treasury.
        (D) Annual assessment.--
            (i) In general.--For each fiscal year beginning on or after 
        October 1, 1996, the Secretary of the Treasury may establish and 
        collect from the Association an assessment (or assessments) in 
        amounts sufficient to provide for reasonable costs and expenses 
        of carrying out the duties of the Secretary of the Treasury 
        under this section and section 1087-3 of this title during such 
        fiscal year. In no event may the total amount so assessed 
        exceed, for any fiscal year, $800,000, adjusted for each fiscal 
        year ending after September 30, 1997, by the ratio of the 
        Consumer Price Index for All Urban Consumers (issued by the 
        Bureau of Labor Statistics) for the final month of the fiscal 
        year preceding the fiscal year for which the assessment is made 
        to the Consumer Price Index for All Urban Consumers for 
        September 1997.
            (ii) Deposit.--Amounts collected from assessments under this 
        subparagraph shall be deposited in an account within the 
        Treasury of the United States as designated by the Secretary of 
        the Treasury for that purpose. The Secretary of the Treasury is 
        authorized and directed to pay out of any funds available in 
        such account the reasonable costs and expenses of carrying out 
        the duties of the Secretary of the Treasury under this section 
        and section 1087-3 of this title. None of the funds deposited 
        into such account shall be available for any purpose other than 
        making payments for such costs and expenses.

        (E) Obligation to obtain, maintain, and report information.--
            (i) In general.--The Association shall obtain such 
        information and make and keep such records as the Secretary of 
        the Treasury may from time to time prescribe concerning--
                (I) the financial risk to the Association resulting from 
            the activities of any associated person, to the extent such 
            activities are reasonably likely to have a material impact 
            on the financial condition of the Association, including the 
            Association's capital ratio, the Association's liquidity, or 
            the Association's ability to conduct and finance the 
            Association's operations; and
                (II) the Association's policies, procedures, and systems 
            for monitoring and controlling any such financial risk.

            (ii) Summary reports.--The Secretary of the Treasury may 
        require summary reports of such information to be filed no more 
        frequently than quarterly. If, as a result of adverse market 
        conditions or based on reports provided pursuant to this 
        subparagraph or other available information, the Secretary of 
        the Treasury has concerns regarding the financial or operational 
        condition of the Association, the Secretary of the Treasury may, 
        notwithstanding the preceding sentence and clause (i), require 
        the Association to make reports concerning the activities of any 
        associated person, whose business activities are reasonably 
        likely to have a material impact on the financial or operational 
        condition of the Association.
            (iii) Definition.--For purposes of this subparagraph, the 
        term ``associated person'' means any person, other than a 
        natural person, directly or indirectly controlling, controlled 
        by, or under common control with the Association.

        (F) Compensation of auditors and examiners.--
            (i) Rates of pay.--Rates of basic pay for all auditors and 
        examiners appointed pursuant to subparagraph (A) may be set and 
        adjusted by the Secretary of the Treasury without regard to the 
        provisions of chapter 51 or subchapter III of chapter 53 of 
        title 5.
            (ii) Comparability.--
                (I) In general.--Subject to section 5373 of title 5, the 
            Secretary of the Treasury may provide additional 
            compensation and benefits to auditors and examiners 
            appointed pursuant to subparagraph (A) if the same type of 
            compensation or benefits are then being provided by any 
            agency referred to in section 1833b of title 12 or, if not 
            then being provided, could be provided by such an agency 
            under applicable provisions of law, rule, or regulation.
                (II) Consultation.--In setting and adjusting the total 
            amount of compensation and benefits for auditors and 
            examiners appointed pursuant to subparagraph (A), the 
            Secretary of the Treasury shall consult with, and seek to 
            maintain comparability with, the agencies referred to in 
            section 1833b of title 12.

               (3) Monitoring of safety and soundness

        The Secretary of the Treasury shall conduct such studies as may 
    be necessary to monitor the financial safety and soundness of the 
    Association. In the event that the Secretary of the Treasury 
    determines that the financial safety and soundness of the 
    Association is at risk, the Secretary of the Treasury shall inform 
    the Chairman and ranking minority member of the Committee on Labor 
    and Human Resources of the Senate, the Chairman and ranking minority 
    member of the Committee on Education and Labor of the House of 
    Representatives, and the Secretary of Education of such 
    determination and identify any corrective actions that should be 
    taken to ensure the safety and soundness of the Association.

                        (4) Capital standard

        If the capital ratio is less than 2 percent and is greater than 
    or equal to 1.75 percent at the end of the Association's most recent 
    calendar quarter the Association shall, within 60 days of such 
    occurrence, submit to the Secretary of the Treasury a capital 
    restoration plan, in reasonable detail, that the Association 
    believes is adequate to cause the capital ratio to equal or exceed 2 
    percent within 36 months.

                    (5) Capital restoration plan

        (A) Submission, approval, and implementation

            The Secretary of the Treasury and the Association shall 
        consult with respect to any capital restoration plan submitted 
        pursuant to paragraph (4) and the Secretary of the Treasury 
        shall approve such plan (or a modification thereof accepted by 
        the Association) or disapprove such plan within 30 days after 
        such plan is first submitted to the Secretary of the Treasury by 
        the Association, unless the Association and Secretary of the 
        Treasury mutually agree to a longer consideration period. If the 
        Secretary of the Treasury approves a capital restoration plan 
        (including a modification of a plan accepted by the 
        Association), the Association shall forthwith proceed with 
        diligence to implement such plan to the best of its ability.

        (B) Disapproval

            If the Secretary of the Treasury does not approve a capital 
        restoration plan as provided in subparagraph (A), then not later 
        than the earlier of the date the Secretary of the Treasury 
        disapproves of such plan by written notice to the Association or 
        the expiration of the 30-day consideration period referred to in 
        subparagraph (A) (as such period may have been extended by 
        mutual agreement), the Secretary of the Treasury shall submit 
        the Association's capital restoration plan, in the form most 
        recently proposed to the Secretary of the Treasury by the 
        Association, together with a report on the Secretary of the 
        Treasury's reasons for disapproval of such plan and an 
        alternative capital restoration plan, to the Chairman and 
        ranking minority member of the Senate Committee on Labor and 
        Human Resources and to the Chairman and ranking minority member 
        of the House Committee on Education and Labor. A copy of such 
        submission simultaneously shall be sent to the Association and 
        the Secretary of Education by the Secretary of the Treasury.

        (C) Association implementation and response

            Upon receipt of the submission by the Association, the 
        Association shall forthwith proceed with diligence to implement 
        the most recently proposed capital restoration plan of the 
        Association. The Association, within 30 days after receipt from 
        the Secretary of the Treasury of such submission, shall submit 
        to such Chairmen and ranking minority members a written response 
        to such submission, setting out fully the nature and extent of 
        the Association's agreement or the disagreement with the 
        Secretary of the Treasury with respect to the capital 
        restoration plan submitted to the Secretary of the Treasury and 
        any findings of the Secretary of the Treasury.

               (6) Substantial capital ratio reduction

        (A) Additional plan required

            If the capital ratio is less than 1.75 percent and is 
        greater than or equal to 1 percent at the end of the 
        Association's most recent calendar quarter, the Association 
        shall submit to the Secretary of the Treasury within 60 days 
        after such occurrence a capital restoration plan (or an 
        appropriate modification of any plan previously submitted or 
        approved under paragraph (4)) to increase promptly its capital 
        ratio to equal or exceed 1.75 percent. The Secretary of the 
        Treasury and the Association shall consult with respect to any 
        plan or modified plan submitted pursuant to this paragraph. The 
        Secretary of the Treasury shall approve such plan or modified 
        plan (or a modification thereof accepted by the Association) or 
        disapprove such plan or modified plan within 30 days after such 
        plan or modified plan is first submitted to the Secretary of the 
        Treasury by the Association, unless the Association and 
        Secretary of the Treasury mutually agree to a longer 
        consideration period. If the Secretary of the Treasury approves 
        a plan or modified plan (including a modification of a plan 
        accepted by the Association), the Association shall forthwith 
        proceed with diligence to implement such plan or modified plan 
        to the best of the Association's ability.

        (B) Disapproval

            If the Secretary of the Treasury disapproves a capital 
        restoration plan or modified plan submitted pursuant to 
        subparagraph (A), then, not later than the earlier of the date 
        the Secretary of the Treasury disapproves of such plan or 
        modified plan (by written notice to the Association) or the 
        expiration of the 30-day consideration period described in 
        subparagraph (A) (as such period may have been extended by 
        mutual agreement), the Secretary of the Treasury shall prepare 
        and submit an alternative capital restoration plan, together 
        with a report on his reasons for disapproval of the 
        Association's plan or modified plan, to the Chairman and ranking 
        minority member of the Committee on Labor and Human Resources of 
        the Senate and to the Chairman and ranking minority member of 
        the Committee on Education and Labor of the House of 
        Representatives. A copy of such submission simultaneously shall 
        be sent to the Association and the Secretary of Education by the 
        Secretary of the Treasury. The Association, within 5 days after 
        receipt from the Secretary of the Treasury of such submission, 
        shall submit to the Chairmen and ranking minority members of 
        such Committees, and the Secretary of the Treasury, a written 
        response to such submission, setting out fully the nature and 
        extent of the Association's agreement or disagreement with the 
        Secretary of the Treasury with respect to the disapproved plan 
        and the alternative plan of the Secretary of the Treasury and 
        any findings of the Secretary of the Treasury.

        (C) Review by Congress; Association implementation

            Congress shall have 60 legislative days after the date on 
        which Congress receives the alternative plan under subparagraph 
        (B) from the Secretary of the Treasury to review such plan. If 
        Congress does not take statutory action with respect to any such 
        plan within such 60-day period, the Association shall 
        immediately proceed with diligence to implement the alternative 
        capital restoration plan of the Secretary of the Treasury under 
        subparagraph (B). If Congress is out of session when any such 
        alternative plan is received, such 60-day period shall begin on 
        the first day of the next session of Congress.

              (7) Actions by Secretary of the Treasury

        If the capital ratio of the Association does not equal or exceed 
    1.75 percent at the end of the Association's most recent calendar 
    quarter, the Secretary of the Treasury may, until the capital ratio 
    equals or exceeds 1.75 percent, take any one or more of the 
    following actions:

        (A) Limit increase in liabilities

            Limit any increase in, or order the reduction of, any 
        liabilities of the Association, except as necessary to fund 
        student loan purchases and warehousing advances.

        (B) Restrict growth

            Restrict or eliminate growth of the Association's assets, 
        other than student loans purchases and warehousing advances.

        (C) Restrict distributions

            Restrict the Association from making any capital 
        distribution.

        (D) Require issuance of new capital

            Require the Association to issue new capital in any form and 
        in any amount sufficient to restore at least a 1.75 percent 
        capital ratio.

        (E) Limit executive compensation

            Prohibit the Association from increasing for any executive 
        officer any compensation including bonuses at a rate exceeding 
        that officer's average rate of compensation during the previous 
        12 calendar months and prohibiting the Board from adopting any 
        new employment severance contracts.

                    (8) Critical capital standard

        (A) If the capital ratio is less than 1 percent at the end of 
    the Association's most recent calendar quarter and the Association 
    has already submitted a capital restoration plan to the Secretary of 
    the Treasury pursuant to paragraph (4) or (6)(A), the Association 
    shall forthwith proceed with diligence to implement the most 
    recently proposed plan with such modifications as the Secretary of 
    the Treasury determines are necessary to cause the capital ratio to 
    equal or exceed 2 percent within 60 months.
        (B) If the capital ratio is less than 1 percent at the end of 
    the Association's most recent calendar quarter and the Association 
    has not submitted a capital restoration plan to the Secretary of the 
    Treasury pursuant to paragraph (4) or (6)(A), the Association 
    shall--
            (i) within 14 days of such occurrence submit a capital 
        restoration plan to the Secretary of the Treasury which the 
        Association believes is adequate to cause the capital ratio to 
        equal or exceed 2 percent within 60 months; and
            (ii) forthwith proceed with diligence to implement such plan 
        with such modifications as the Secretary of the Treasury 
        determines are necessary to cause the capital ratio to equal or 
        exceed 2 percent within 60 months.

        (C) Immediately upon a determination under subparagraph (A) or 
    (B) to implement a capital restoration plan, the Secretary of the 
    Treasury shall submit the capital restoration plan to be implemented 
    to the Chairman and ranking minority member of the Committee on 
    Labor and Human Resources of the Senate, the Chairman and ranking 
    minority member of the Committee on Education and Labor of the House 
    of Representatives, and the Secretary of Education.

                (9) Additional reports to committees

        The Association shall submit a copy of its capital restoration 
    plan, modifications proposed to the Secretary of the Treasury, and 
    proposed modifications received from the Secretary of the Treasury 
    to the Congressional Budget Office and General Accounting Office 
    upon their submission to the Secretary of the Treasury or receipt 
    from the Secretary of the Treasury. Notwithstanding any other 
    provision of law, the Congressional Budget Office and General 
    Accounting Office shall maintain the confidentiality of information 
    received pursuant to the previous sentence. In the event that the 
    Secretary of the Treasury does not approve a capital restoration 
    plan as provided in paragraph (5)(A) or (6)(A), or in the event that 
    a capital restoration plan is modified by the Secretary of the 
    Treasury pursuant to paragraph (6)(B) or (8), the Congressional 
    Budget Office and General Accounting Office shall each submit a 
    report within 30 days of the Secretary of the Treasury's submission 
    to the Chairmen and ranking minority members as required in 
    paragraphs (5)(B), (6)(B), and (8)(C) to such Chairmen and ranking 
    members--
            (A) analyzing the financial condition of the Association;
            (B) analyzing the capital restoration plan and reasons for 
        disapproval of the plan contained in the Secretary of the 
        Treasury's submission made pursuant to paragraph (5)(B), or the 
        capital restoration plan proposed by the Association and the 
        modifications made by the Secretary of the Treasury pursuant to 
        paragraph (6)(B) or (8);
            (C) analyzing the impact of the capital restoration plan and 
        reasons for disapproval of the plan contained in the Secretary 
        of the Treasury's submission made pursuant to paragraph (5)(B), 
        or the impact of the capital restoration plan proposed by the 
        Association and the modifications made by the Secretary of the 
        Treasury pursuant to paragraph (6)(B) or (8), and analyzing the 
        impact of the recommendations made pursuant to subparagraph (D) 
        of this paragraph, on--
                (i) the ability of the Association to fulfill its 
            purpose and authorized activities as provided in this 
            section, and
                (ii) the operation of the student loan programs; and

            (D) recommending steps which the Association should take to 
        increase its capital ratio without impairing its ability to 
        perform its purpose and authorized activities as provided in 
        this section.

                (10) Review by Secretary of Education

        The Secretary of Education shall review the Secretary of the 
    Treasury's submission required pursuant to paragraph (5)(B), (6)(B), 
    or (8) and shall submit a report within 30 days to the Chairman and 
    ranking minority member of the Senate Committee on Labor and Human 
    Resources and to the Chairman and ranking minority member of the 
    House Committee on Education and Labor--
            (A) describing any administrative or legislative provisions 
        governing the student loan programs which contributed to the 
        decline in the Association's capital ratio; and
            (B) recommending administrative and legislative changes in 
        the student loan programs to maintain the orderly operation of 
        such programs and to enable the Association to fulfill its 
        purpose and authorized activities consistent with the capital 
        ratio specified in paragraph (4).

                          (11) Safe harbor

        The Association shall be deemed in compliance with the capital 
    ratios described in paragraphs (4) and (6)(A) if the Association is 
    rated in 1 of the 2 highest full rating categories (such categories 
    to be determined without regard to designations within categories) 
    by 2 nationally recognized statistical rating organizations, 
    determined without regard to the Association's status as a federally 
    chartered corporation.

             (12) Treatment of confidential information

        Notwithstanding any other provision of law, the Secretary of the 
    Treasury, the Secretary of Education, the Congressional Budget 
    Office, and the General Accounting Office shall not disclose any 
    information treated as confidential by the Association or the 
    Association's associated persons and obtained pursuant to this 
    subsection. Nothing in this paragraph shall authorize the Secretary 
    of the Treasury, the Secretary of Education, the Congressional 
    Budget Office, and the General Accounting Office to withhold 
    information from Congress, or prevent the Secretary of Education, 
    the Congressional Budget Office, and the General Accounting Office 
    from complying with a request for information from any other Federal 
    department or agency requesting the information for purposes within 
    the scope of its jurisdiction, or complying with an order of a court 
    of the United States in an action brought by the United States. For 
    purposes of section 552 of title 5, this paragraph shall be 
    considered a statute described in subsection (b)(3) of such section 
    552.

        (13) Enforcement of safety and soundness requirements

        The Secretary of Education or the Secretary of the Treasury, as 
    appropriate, may request that the Attorney General bring an action 
    in the United States District Court for the District of Columbia for 
    the enforcement of any provision of this section, or may, under the 
    direction or control of the Attorney General, bring such an action. 
    Such court shall have jurisdiction and power to order and require 
    compliance with this section.

                      (14) Actions by Secretary

        (A) In general

            For any fiscal quarter ending after January 1, 2000, the 
        Association shall have a capital ratio of at least 2.25 percent. 
        The Secretary of the Treasury may, whenever such capital ratio 
        is not met, take any one or more of the actions described in 
        paragraph (7), except that--
                (i) the capital ratio to be restored pursuant to 
            paragraph (7)(D) shall be 2.25 percent; and
                (ii) if the relevant capital ratio is in excess of or 
            equal to 2 percent for such quarter, the Secretary of the 
            Treasury shall defer taking any of the actions set forth in 
            paragraph (7) until the next succeeding quarter and may then 
            proceed with any such action only if the capital ratio of 
            the Association remains below 2.25 percent.

        (B) Applicability

            The provisions of paragraphs (4), (5), (6), (8), (9), (10), 
        and (11) shall be of no further application to the Association 
        for any period after January 1, 2000.

                          (15) Definitions

        As used in this subsection:
            (A) The term ``nationally recognized statistical rating 
        organization'' means any entity recognized as such by the 
        Securities and Exchange Commission.
            (B) The term ``capital ratio'' means the ratio of total 
        stockholders' equity, as shown on the Association's most recent 
        quarterly consolidated balance sheet prepared in the ordinary 
        course of its business, to the sum of--
                (i) the total assets of the Association, as shown on the 
            balance sheet prepared in the ordinary course of its 
            business; and
                (ii) 50 percent of the credit equivalent amount of the 
            following off-balance sheet items of the Association as of 
            the date of such balance sheet--
                    (I) all financial standby letters of credit and 
                other irrevocable guarantees of the repayment of 
                financial obligations of others; and
                    (II) all interest rate contracts and exchange rate 
                contracts, including interest exchange agreements, 
                floor, cap, and collar agreements and similar 
                arrangements.

        For purposes of this subparagraph, the calculation of the credit 
        equivalent amount of the items set forth in clause (ii) of this 
        subparagraph, the netting of such items and eliminations for the 
        purpose of avoidance of double-counting of such items shall be 
        made in accordance with the measures for computing credit 
        conversion factors for off-balance sheet items for capital 
        maintenance purposes established for commercial banks from time 
        to time by the Federal Reserve Board, but without regard to any 
        risk weighting provisions in such measures.
            (C) The term ``legislative days'' means only days on which 
        either House of Congress is in session.

                           (16) Dividends

        The Association may pay dividends in the form of cash or noncash 
    distributions so long as at the time of the declaration of such 
    dividends, after giving effect to the payment of such dividends as 
    of the date of such declaration by the Board of Directors of the 
    Association, the Association's capital would be in compliance with 
    the capital standards set forth in this section.

           (17) Certification prior to payment of dividend

        Prior to the payment of any dividend under paragraph (16), the 
    Association shall certify to the Secretary of the Treasury that the 
    payment of the dividend will be made in compliance with paragraph 
    (16) and shall provide copies of all calculations needed to make 
    such certification.

(s) Charter sunset

                    (1) Application of provisions

        This subsection applies beginning 18 months and one day after 
    September 30, 1996, if no reorganization of the Association occurs 
    in accordance with the provisions of section 1087-3 of this title.

                           (2) Sunset plan

        (A) Plan submission by the Association

            Not later than July 1, 2007, the Association shall submit to 
        the Secretary of the Treasury and to the Chairman and Ranking 
        Member of the Committee on Labor and Human Resources of the 
        Senate and the Chairman and Ranking Member of the Committee on 
        Economic and Educational Opportunities of the House of 
        Representatives, a detailed plan for the orderly winding up, by 
        July 1, 2013, of business activities conducted pursuant to the 
        charter set forth in this section. Such plan shall--
                (i) ensure that the Association will have adequate 
            assets to transfer to a trust, as provided in this 
            subsection, to ensure full payment of remaining obligations 
            of the Association in accordance with the terms of such 
            obligations;
                (ii) provide that all assets not used to pay liabilities 
            shall be distributed to shareholders as provided in this 
            subsection; and
                (iii) provide that the operations of the Association 
            shall remain separate and distinct from that of any entity 
            to which the assets of the Association are transferred.

        (B) Amendment of the plan by the Association

            The Association shall from time to time amend such plan to 
        reflect changed circumstances, and submit such amendments to the 
        Secretary of the Treasury and to the Chairman and Ranking 
        Minority Member of the Committee on Labor and Human Resources of 
        the Senate and Chairman and Ranking Minority Member of the 
        Committee on Economic and Educational Opportunities of the House 
        of Representatives. In no case may any amendment extend the date 
        for full implementation of the plan beyond the dissolution date 
        provided in paragraph (3).

        (C) Plan monitoring

            The Secretary of the Treasury shall monitor the 
        Association's compliance with the plan and shall continue to 
        review the plan (including any amendments thereto).

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

            The Secretary of the Treasury may require the Association to 
        amend the plan (including any amendments to the plan), if the 
        Secretary of the Treasury deems such amendments necessary to 
        ensure full payment of all obligations of the Association.

        (E) Implementation by the Association

            The Association shall promptly implement the plan (including 
        any amendments to the plan, whether such amendments are made by 
        the Association or are required to be made by the Secretary of 
        the Treasury).

                 (3) Dissolution of the Association

        The Association shall dissolve and the Association's separate 
    existence shall terminate on July 1, 2013, after discharge of all 
    outstanding debt obligations and liquidation pursuant to this 
    subsection. The Association may dissolve pursuant to this subsection 
    prior to such date by notifying the Secretary of Education and the 
    Secretary of the Treasury of the Association's intention to 
    dissolve, unless within 60 days of receipt of such notice the 
    Secretary of Education notifies the Association that the Association 
    continues to be needed to serve as a lender of last resort pursuant 
    to subsection (q) of this section or continues to be needed to 
    purchase loans under an agreement with the Secretary described in 
    paragraph (4)(A). On the dissolution date, the Association shall 
    take the following actions:

        (A) Establishment of a trust

            The Association shall, under the terms of an irrevocable 
        trust agreement in form and substance satisfactory to the 
        Secretary of the Treasury, the Association, and the appointed 
        trustee, irrevocably transfer all remaining obligations of the 
        Association to a trust and irrevocably deposit or cause to be 
        deposited into such trust, to be held as trust funds solely for 
        the benefit of holders of the remaining obligations, money or 
        direct noncallable obligations of the United States or any 
        agency thereof for which payment the full faith and credit of 
        the United States is pledged, maturing as to principal and 
        interest in such amounts and at such times as are determined by 
        the Secretary of the Treasury to be sufficient, without 
        consideration of any significant reinvestment of such interest, 
        to pay the principal of, and interest on, the remaining 
        obligations in accordance with their terms.

        (B) Use of trust assets

            All money, obligations, or financial assets deposited into 
        the trust pursuant to this subsection shall be applied by the 
        trustee to the payment of the remaining obligations assumed by 
        the trust. Upon the fulfillment of the trustee's duties under 
        the trust, any remaining assets of the trust shall be 
        transferred to the persons who, at the time of the dissolution, 
        were the shareholders of the Association, or to the legal 
        successors or assigns of such persons.

        (C) Obligations not transferred to the trust

            The Association shall make proper provision for all other 
        obligations of the Association, including the repurchase or 
        redemption, or the making of proper provision for the repurchase 
        or redemption, of any preferred stock of the Association 
        outstanding.

        (D) Transfer of remaining assets

            After compliance with subparagraphs (A) and (C), the 
        Association shall transfer to the shareholders of the 
        Association any remaining assets of the Association.

               (4) Restrictions relating to winding up

        (A) Restrictions on new business activity or acquisition of 
                assets by the Association

            (i) In general

                Beginning on July 1, 2009, the Association shall not 
            engage in any new business activities or acquire any 
            additional program assets (including acquiring assets 
            pursuant to contractual commitments) described in subsection 
            (d) of this section other than in connection with the 
            Association--
                    (I) serving as a lender of last resort pursuant to 
                subsection (q) of this section; and
                    (II) purchasing loans insured under this part, if 
                the Secretary, with the approval of the Secretary of the 
                Treasury, enters into an agreement with the Association 
                for the continuation or resumption of the Association's 
                secondary market purchase program because the Secretary 
                determines there is inadequate liquidity for loans made 
                under this part.
            (ii) Agreement

                The Secretary is authorized to enter into an agreement 
            described in subclause (II) of clause (i) with the 
            Association covering such secondary market activities. Any 
            agreement entered into under such subclause shall cover a 
            period of 12 months, but may be renewed if the Secretary 
            determines that liquidity remains inadequate. The fee 
            provided under subsection (h)(7) of this section shall not 
            apply to loans acquired under any such agreement with the 
            Secretary.

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

            The Association shall not issue debt obligations which 
        mature later than July 1, 2013, except in connection with 
        serving as a lender of last resort pursuant to subsection (q) of 
        this section or with purchasing loans under an agreement with 
        the Secretary as described in subparagraph (A). Nothing in this 
        subsection shall modify the attributes accorded the debt 
        obligations of the Association by this section, regardless of 
        whether such debt obligations are transferred to a trust in 
        accordance with paragraph (3).

        (C) Use of Association name

            The Association may not transfer or permit the use of the 
        name ``Student Loan Marketing Association'', ``Sallie Mae'', or 
        any variation thereof, to or by any entity other than a 
        subsidiary of the Association.

(Pub. L. 89-329, title IV, Sec. 439, as added Pub. L. 99-498, title IV, 
Sec. 402(a), Oct. 17, 1986, 100 Stat. 1418; amended Pub. L. 100-50, 
Sec. 10(dd), June 3, 1987, 101 Stat. 347; Pub. L. 100-369, Sec. 7(c), 
July 18, 1988, 102 Stat. 837; Pub. L. 102-325, title IV, Sec. 431, July 
23, 1992, 106 Stat. 554; Pub. L. 103-66, title IV, Secs. 4041(c), 4104, 
Aug. 10, 1993, 107 Stat. 356, 367; Pub. L. 103-208, Sec. 2(c)(69), Dec. 
20, 1993, 107 Stat. 2470; Pub. L. 103-382, title III, Sec. 358, Oct. 20, 
1994, 108 Stat. 3968; Pub. L. 104-208, div. A, title I, Sec. 101(e) 
[title VI, Sec. 602(b)(2)-(4), (c)], Sept. 30, 1996, 110 Stat. 3009-233, 
3009-284 to 3009-286; Pub. L. 106-554, Sec. 1(a)(1) [title III, 
Sec. 309], Dec. 21, 2000, 114 Stat. 2763, 2763A-45.)

                            Repeal of Section

        Pub. L. 104-208, div. A, title I, Sec. 101(e) [title VI, 
    Sec. 602(d)], Sept. 30, 1996, 110 Stat. 3009-233, 3009-289, provided 
    that this section is repealed effective one year after date on which 
    all obligations of trust established under section 1087-3(d)(1) of 
    this title have been extinguished, if reorganization occurs in 
    accordance with section 1087-3 of this title; or date on which all 
    obligations of trust established under subsec. (s)(3)(A) of this 
    section have been extinguished, if reorganization does not occur in 
    accordance with section 1087-3 of this title.

                       References in Text

    For the effective date of the Higher Education Amendments of 1992, 
referred to in subsec. (f)(4), see section 2 of Pub. L. 102-325, set out 
as an Effective Date of 1992 Amendment note under section 1001 of this 
title.

                          Codification

    In subsec. (h)(3) and (5), ``chapter 31 of title 31'' substituted 
for ``the Second Liberty Bond Act, as amended'' and ``the Second Liberty 
Bond Act'', and ``that chapter'' substituted for ``that Act, as 
amended'', on authority of Pub. L. 97-258, Sec. 4(b), Sept. 13, 1982, 96 
Stat. 1067, the first section of which enacted Title 31, Money and 
Finance.


                            Prior Provisions

    A prior section 1087-2, Pub. L. 89-329, title IV, Sec. 439, as added 
Pub. L. 92-318, title I, Sec. 133(a), June 23, 1972, 86 Stat. 265; 
amended Pub. L. 94-273, Sec. 3(9), Apr. 21, 1976, 90 Stat. 376; Pub. L. 
94-482, title I, Sec. 127(a), Oct. 12, 1976, 90 Stat. 2136; Pub. L. 95-
43, Sec. 1(a)(38), June 15, 1977, 91 Stat. 217; Pub. L. 96-374, title 
IV, Sec. 421(a)-(e)(1), title XIII, Sec. 1391(a)(1), (3), Oct. 3, 1980, 
94 Stat. 1427-1430, 1503; Pub. L. 97-35, title V, Sec. 538, Aug. 13, 
1981, 95 Stat. 457; Pub. L. 97-115, Sec. 18, Dec. 29, 1981, 95 Stat. 
1610; Pub. L. 97-301, Sec. 14, Oct. 13, 1982, 96 Stat. 1405; Pub. L. 98-
79, Secs. 2, 8, Aug. 15, 1983, 97 Stat. 476, 483; Pub. L. 99-272, title 
XVI, Secs. 16017(b)(4), 16018(a)(3), Apr. 7, 1986, 100 Stat. 347, 348, 
established the Student Loan Marketing Association, prior to the general 
revision of this part by Pub. L. 99-498.


                               Amendments

    2000--Subsec. (r)(2)(A)(i). Pub. L. 106-554, Sec. 1(a)(1) [title 
III, Sec. 309(1)], which directed amendment of this section by 
substituting ``and fix the compensation of such auditors and examiners 
as may be necessary'' for ``auditors and examiners'', was executed by 
making the substitution for ``auditors or examiners'', to reflect the 
probable intent of Congress.
    Subsec. (r)(2)(F). Pub. L. 106-554, Sec. 1(a)(1) [title III, 
Sec. 309(2)], added subpar. (F).
    1996--Subsec. (r)(1)(C). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(3)(A)], added subpar. (C).
    Subsec. (r)(2)(A)(i), (ii). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(3)(B)(i)], added cls. (i) and (ii) and struck out former 
cls. (i) and (ii) which read as follows:
    ``(i) appoint auditors to conduct audits of the Association from 
time to time to determine the condition of the Association for the 
purpose of assessing its financial safety and soundness; and
    ``(ii) enter into contracts to obtain the services of such technical 
experts as the Secretary of the Treasury determines necessary and 
appropriate to provide technical assistance to any auditor appointed 
under this paragraph.''
    Subsec. (r)(2)(D). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(3)(B)(ii)], added subpar. (D).
    Subsec. (r)(2)(E). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(4)(A)], added subpar. (E).
    Subsec. (r)(12). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(2)(A)], inserted ``or the Association's associated persons'' 
after ``by the Association'' in first sentence.
    Subsec. (r)(13). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(2)(B), (C)], added par. (13) and redesignated former par. 
(13) as (15).
    Subsec. (r)(14). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(3)(C)], added par. (14).
    Subsec. (r)(15). Pub. L. 104-208, Sec. 101(e) [title VI, 
Sec. 602(b)(2)(B)], redesignated par. (13) as (15).
    Subsec. (r)(16), (17). Pub. L. 104-208, Sec. 101(e), [title VI, 
Sec. 602(b)(4)(B)], added pars. (16) and (17).
    Subsec. (s). Pub. L. 104-208, Sec. 101(e) [title VI, Sec. 602(c)], 
added subsec. (s).
    1994--Subsec. (d)(1)(C). Pub. L. 103-382, Sec. 358(1)(A), (D), 
inserted ``(including related equipment, instrumentation, and 
furnishings)'' after ``materials'' in introductory provisions and 
substituted ``30 percent'' for ``15 percent'' and ``types'' for ``type'' 
in concluding provisions.
    Subsec. (d)(1)(C)(ii). Pub. L. 103-382, Sec. 358(1)(B), substituted 
``, dining halls, student unions, and facilities specifically designed 
to promote fitness and health for students, faculty, and staff or for 
physical education courses; and'' for the semicolon.
    Subsec. (d)(1)(C)(iii), (iv). Pub. L. 103-382, Sec. 358(1)(C), (E), 
struck out ``and'' after the semicolon in cl. (iii) and struck out cl. 
(iv) which read as follows: ``related equipment, instrumentation, and 
furnishings for facilities and materials described in clause (i) or 
(iii);''.
    Subsec. (n). Pub. L. 103-382, Sec. 358(2), substituted ``a report of 
the Association's operations and activities, including a report with 
respect to all facilities transactions, during each year'' for ``a 
report of its operations and activities during each year''.
    1993--Subsec. (h)(7). Pub. L. 103-66, Sec. 4104, added par. (7).
    Subsec. (q). Pub. L. 103-66, Sec. 4041(c), amended subsec. (q) 
generally, substituting present provisions for substantially similar 
former provisions.
    Subsec. (r)(12). Pub. L. 103-208 substituted ``section 552'' for 
``section 522''.
    1992--Subsec. (c). Pub. L. 102-325, Sec. 431(a), amended subsec. (c) 
generally, substituting present provisions consisting of pars. (1) to 
(4) for former provisions which provided for: in par. (1), Board 
membership; in par. (2), interim Board; in par. (3), regular Board; in 
par. (4), succession of regular Board; in par. (5), terms of appointed 
and elected members; and in par. (6), meetings and functions of Board.
    Subsec. (d)(1)(C). Pub. L. 102-325, Sec. 431(b), amended subpar. (C) 
generally. Prior to amendment, subpar. (C) read as follows: ``to buy, 
sell, hold, insure, underwrite, and otherwise deal in obligations issued 
for the purpose of financing or refinancing the construction, 
reconstruction, renovation, or purchase of educational and training 
facilities and housing for students and faculties (including the 
underlying real property), and related equipment, instrumentation, and 
furnishings;''.
    Subsec. (d)(5). Pub. L. 102-325, Sec. 431(c), substituted ``second 
highest rating'' for ``third highest rating''.
    Subsec. (f). Pub. L. 102-325, Sec. 431(d), amended subsec. (f) 
generally, substituting present provisions consisting of pars. (1) to 
(4) for former provisions which provided for: in par. (1), common stock 
to insured lenders and eligible institutions only; in par. (2), voting 
rights; in par. (3), number of shares and transferability; in par. (4), 
dividends; and in par. (5), nonvoting common stock.
    Subsec. (r). Pub. L. 102-325, Sec. 431(e), added subsec. (r).
    1988--Subsec. (h)(1). Pub. L. 100-369 substituted ``Internal Revenue 
Code of 1986'' for ``Internal Revenue Code of 1954'' in two places, 
which for purposes of codification was translated as ``title 26'' thus 
requiring no change in text.
    1987--Subsec. (d)(1)(E)(iii). Pub. L. 100-50 inserted ``Labor and'' 
before ``Human Resources''.

                         Change of Name

    Committee on Education and Labor of House of Representatives treated 
as referring to Committee on Economic and Educational Opportunities of 
House of Representatives by section 1(a) of Pub. L. 104-14, set out as a 
note preceding section 21 of Title 2, The Congress. Committee on 
Economic and Educational Opportunities of House of Representatives 
changed to Committee on Education and the Workforce of House of 
Representatives by House Resolution No. 5, One Hundred Fifth Congress, 
Jan. 7, 1997.


                    Effective Date of 1996 Amendment

    Section 101(e) [title VI, Sec. 602(d)(2)] of div. A of Pub. L. 104-
208 provided that: ``The repeals made by paragraph (1) [repealing this 
section and section 1087-3 of this title] shall be effective one year 
after--
        ``(A) the date on which all of the obligations of the trust 
    established under section 440(d)(1) of the Higher Education Act of 
    1965 [20 U.S.C. 1087-3(d)(1)] (as added by subsection (a)) have been 
    extinguished, if a reorganization occurs in accordance with section 
    440 of such Act; or
        ``(B) the date on which all of the obligations of the trust 
    established under subsection [sic] 439(s)(3)(A) of such Act [20 
    U.S.C. 1087-2(s)(3)(A)] (as added by subsection (c)) have been 
    extinguished, if a reorganization does not occur in accordance with 
    section 440 of such Act.''


                    Effective Date of 1993 Amendment

    Amendment by Pub. L. 103-208 effective as if included in the Higher 
Education Amendments of 1992, Pub. L. 102-325, except as otherwise 
provided, see section 5(a) of Pub. L. 103-208, set out as a note under 
section 1051 of this title.


                    Effective Date of 1992 Amendment

    Amendment by Pub. L. 102-325 effective July 23, 1992, except that 
changes in subsec. (d)(1), relating to facilities loans, applicable with 
respect to applications received on or after July 1, 1992, see section 
432 of Pub. L. 102-325, set out as a note under section 1078 of this 
title.


                    Effective Date of 1987 Amendment

    Amendment by Pub. L. 100-50 effective as if enacted as part of the 
Higher Education Amendments of 1986, Pub. L. 99-498, see section 27 of 
Pub. L. 100-50, set out as a note under section 1001 of this title.


                  Termination of Reporting Requirements

    For termination, effective May 15, 2000, of provisions in subsecs. 
(k) and (n) of this section relating to transmitting annual reports to 
Congress, see section 3003 of Pub. L. 104-66, as amended, set out as a 
note under section 1113 of Title 31, Money and Finance, and pages 141 
and 206 of House Document No. 103-7.


         Use of Association Names Upon Dissolution; Enforcement

    Section 101(e) [title VI, Sec. 602(e), (f)] of div. A of Pub. L. 
104-208 provided that:
    ``(e) Association Names.--Upon dissolution in accordance with 
section 439(s) of the Higher Education Act of 1965 (20 U.S.C. 1087-
2[(s)]), the names `Student Loan Marketing Association', `Sallie Mae', 
and any variations thereof may not be used by any entity engaged in any 
business similar to the business conducted pursuant to section 439 of 
such Act (as such section was in effect on the date of enactment of this 
Act [Sept. 30, 1996]) without the approval of the Secretary of the 
Treasury.
    ``(f) Right to Enforce.--The Secretary of Education or the Secretary 
of the Treasury, as appropriate, may request that the Attorney General 
bring an action in the United States District Court for the District of 
Columbia for the enforcement of any provision of subsection (e), 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 subsection (e).''

                  Section Referred to in Other Sections

    This section is referred to in sections 1072a, 1078, 1085, 1087-1, 
1087-3, 1092a of this title; title 12 section 1828.
