---
kind: "section"
citation: "20 U.S.C. § 1087–3"
title: "20"
title_heading: "Education"
number: "1087–3"
heading: "Reorganization of Student Loan Marketing Association through formation of Holding Company"
release: "119-102"
url: "https://uscodex.org/usc/20/1087-3"
units:
  - "Chapter 28 — Higher Education Resources and Student Assistance"
  - "Subchapter IV — Student Assistance"
  - "Part B — Federal Family Education Loan Program"
---

# §1087–3. Reorganization of Student Loan Marketing Association through formation of Holding Company

- (a) **Actions by Association’s Board of Directors—** The [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1) shall take or cause to be taken all such action as the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) deems necessary or appropriate to effect, upon the shareholder approval described in [subsection (b)](#b), a restructuring of the common stock ownership of the [Association](#i-1), as set forth in a plan of [reorganization](#i-6) adopted by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) (the terms of which shall be consistent with this section) so that all of the outstanding common shares of the [Association](#i-1) shall be directly owned by a [Holding Company](#i-3). Such actions may include, in the [Board](/usc/20/4702.md?p=2) of [Director](/usc/20/9101.md?p=3)’s discretion, a merger of a wholly owned [subsidiary](#i-8) of the [Holding Company](#i-3) with and into the [Association](#i-1), which would have the effect provided in the plan of [reorganization](#i-6) and the law of the jurisdiction in which such [subsidiary](#i-8) is incorporated. As part of the restructuring, the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) may cause—
  - (1) the common shares of the [Association](#i-1) to be converted, on the [reorganization effective date](#i-7), to common shares of the [Holding Company](#i-3) on a one for one basis, consistent with applicable [State](/usc/20/1003.md?p=21-A) or District of Columbia law; and
  - (2) [Holding Company](#i-3) common shares to be registered with the Securities and Exchange [Commission](/usc/20/9701.md?p=2).
- (b) **Shareholder approval—** The plan of reorganization adopted by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) pursuant to [subsection (a)](#a) shall be submitted to common shareholders of the [Association](#i-1) for their approval. The reorganization shall occur on the [reorganization effective date](#i-7), provided that the plan of reorganization has been approved by the affirmative votes, cast in person or by proxy, of the [holders](/usc/20/1085.md?p=i) of a majority of the issued and outstanding shares of the [Association](#i-1) common stock.
- (c) **Transition—** In the event the shareholders of the [Association](#i-1) approve the plan of reorganization under [subsection (b)](#b), the following provisions shall apply beginning on the [reorganization effective date](#i-7):
  - (1) **In general—** Except as specifically provided in this section, until the [dissolution date](#i-2) the [Association](#i-1) 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 1087–2 of this title](/usc/20/1087–2.md), and the [Association](#i-1) shall continue to carry out the purposes of such section. The Holding Company and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1)) shall not be entitled to any of the rights, privileges, and obligations, and shall not be subject to the limitations and restrictions, applicable to the [Association](#i-1) under [section 1087–2 of this title](/usc/20/1087–2.md), except as specifically provided in this section. The Holding Company and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1) or a [subsidiary](#i-8) of the [Association](#i-1)) shall not purchase loans insured under this chapter until such time as the [Association](#i-1) ceases acquiring such loans, except that the Holding Company may purchase such loans if the [Association](#i-1) is merely continuing to acquire loans as a lender of last resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q) or under an agreement with the [Secretary](/usc/20/1003.md?p=17) described in [paragraph (6)](#c-6).
  - (2) **Transfer of certain property—**
    - (A) **In general—** Except as provided in this section, on the [reorganization effective date](#i-7) or as soon as practicable thereafter, the [Association](#i-1) shall use the [Association](#i-1)’s best efforts to transfer to the Holding Company or any [subsidiary](#i-8) of the Holding Company (or both), as directed by the Holding Company, all real and personal property of the [Association](#i-1) (both tangible and intangible) other than the [remaining property](#i-5). Subject to the preceding sentence, such transferred property shall include all right, title, and interest in—
      - (i) direct or indirect [subsidiaries](#i-8) of the [Association](#i-1) (excluding special purpose funding companies in existence on September 30, 1996, and any interest in any government-sponsored enterprise);
      - (ii) contracts, leases, and other agreements of the [Association](#i-1);
      - (iii) licenses and other intellectual property of the [Association](#i-1); and
      - (iv) any other property of the [Association](#i-1).
    - (B) **Construction—** Nothing in this paragraph shall be construed to prohibit the [Association](#i-1) from transferring [remaining property](#i-5) from time to time to the Holding Company or any [subsidiary](#i-8) of the Holding Company, subject to the provisions of [paragraph (4)](#c-4).
  - (3) **Transfer of personnel—** On the [reorganization effective date](#i-7), employees of the [Association](#i-1) shall become employees of the Holding Company (or any [subsidiary](#i-8) of the Holding Company), and the Holding Company (or any [subsidiary](#i-8) of the Holding Company) shall provide all necessary and appropriate management and operational support (including loan servicing) to the [Association](#i-1), as requested by the [Association](#i-1). The [Association](#i-1), however, may obtain such management and operational support from persons or entities not associated with the Holding Company.
  - (4) **Dividends—** The [Association](#i-1) 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](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1), the [Association](#i-1)’s capital would be in compliance with the capital standards and requirements set forth in [section 1087–2(r) of this title](/usc/20/1087–2.md?p=r). If, at any time after the [reorganization effective date](#i-7), the [Association](#i-1) fails to comply with such capital standards, the Holding Company shall transfer with [due diligence](/usc/20/1085.md?p=f) to the [Association](#i-1) additional capital in such amounts as are necessary to ensure that the [Association](#i-1) again complies with the capital standards.
  - (5) **Certification prior to dividend—** Prior to the payment of any dividend under [paragraph (4)](#c-4), the [Association](#i-1) shall certify to the [Secretary](/usc/20/1003.md?p=17) of the Treasury that the payment of the dividend will be made in compliance with [paragraph (4)](#c-4) and shall provide copies of all calculations needed to make such certification.
  - (6) **Restrictions on new business activity or acquisition of assets by Association—**
    - (A) **In general—** After the [reorganization effective date](#i-7), the [Association](#i-1) shall not engage in any new business activities or acquire any additional program [assets](/usc/20/1087vv.md?p=f-2) described in [section 1087–2(d) of this title](/usc/20/1087–2.md?p=d) other than in connection with—
      - (i) student loan purchases through September 30, 2007;
      - (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](#i-7);
      - (iii) the [Association](#i-1) serving as a lender-of-last-resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q); and
      - (iv) the [Association](#i-1)’s purchase of loans insured under this part, if the [Secretary](/usc/20/1003.md?p=17), with the approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury, enters into an agreement with the [Association](#i-1) for the continuation or resumption of the [Association](#i-1)’s secondary market purchase program because the [Secretary](/usc/20/1003.md?p=17) determines there is inadequate liquidity for loans made under this part.
    - (B) **Agreement—** The [Secretary](/usc/20/1003.md?p=17) is authorized to enter into an agreement described in [clause (iv)](#c-6-A-iv) of subparagraph (A) with the [Association](#i-1) covering such secondary market activities. Any agreement entered into under such clause shall cover a period of 12 months, but may be renewed if the [Secretary](/usc/20/1003.md?p=17) determines that liquidity remains inadequate. The fee provided under [section 1087–2(h)(7) of this title](/usc/20/1087–2.md?p=h-7) shall not apply to loans acquired under any such agreement with the [Secretary](/usc/20/1003.md?p=17).
  - (7) **Issuance of debt obligations during the transition period; attributes of debt obligations—** After the [reorganization effective date](#i-7), the [Association](#i-1) shall not issue debt obligations which mature later than September 30, 2008, except in connection with serving as a lender-of-last-resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q) or with purchasing loans under an agreement with the [Secretary](/usc/20/1003.md?p=17) as described in [paragraph (6)](#c-6). Nothing in this section shall modify the attributes accorded the debt obligations of the [Association](#i-1) by [section 1087–2 of this title](/usc/20/1087–2.md), regardless of whether such debt obligations are incurred prior to, or at any time following, the [reorganization effective date](#i-7) or are transferred to a trust in accordance with [subsection (d)](#d).
  - (8) **Monitoring of safety and soundness—**
    - (A) **Obligation to obtain, maintain, and report information—** The [Association](#i-1) shall obtain such information and make and keep such records as the [Secretary](/usc/20/1003.md?p=17) of the Treasury may from time to time prescribe concerning—
      - (i) the financial risk to the [Association](#i-1) resulting from the activities of any [associated person](#c-8-G), to the extent such activities are reasonably likely to have a material impact on the financial condition of the [Association](#i-1), including the [Association](#i-1)’s capital ratio, the [Association](#i-1)’s liquidity, or the [Association](#i-1)’s ability to conduct and finance the [Association](#i-1)’s operations; and
      - (ii) the [Association](#i-1)’s policies, procedures, and systems for monitoring and controlling any such financial risk.
    - (B) **Summary reports—** The [Secretary](/usc/20/1003.md?p=17) of the Treasury may require summary reports of the information described in [subparagraph (A)](#c-8-A) 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](/usc/20/1003.md?p=17) of the Treasury has concerns regarding the financial or operational condition of the [Association](#i-1), the [Secretary](/usc/20/1003.md?p=17) of the Treasury may, notwithstanding the preceding sentence and [subparagraph (A)](#c-8-A), require the [Association](#i-1) to make reports concerning the activities of any [associated person](#c-8-G) whose business activities are reasonably likely to have a material impact on the financial or operational condition of the [Association](#i-1).
    - (C) **Separate operation of corporations—**
      - (i) **In general—** The [funds](/usc/20/4702.md?p=3) and [assets](/usc/20/1087vv.md?p=f-2) of the [Association](#i-1) shall at all times be maintained separately from the [funds](/usc/20/4702.md?p=3) and [assets](/usc/20/1087vv.md?p=f-2) of the Holding Company or any [subsidiary](#i-8) of the Holding Company and may be used by the [Association](#i-1) solely to carry out the [Association](#i-1)’s purposes and to fulfill the [Association](#i-1)’s obligations.
      - (ii) **Books and records—** The [Association](#i-1) shall maintain books and records that clearly reflect the [assets](/usc/20/1087vv.md?p=f-2) and liabilities of the [Association](#i-1), separate from the [assets](/usc/20/1087vv.md?p=f-2) and liabilities of the Holding Company or any [subsidiary](#i-8) of the Holding Company.
      - (iii) **Corporate office—** The [Association](#i-1) shall maintain a corporate office that is physically separate from any office of the Holding Company or any [subsidiary](#i-8) of the Holding Company.
      - (iv) **Director—** No [director](/usc/20/9101.md?p=3) of the [Association](#i-1) who is appointed by the President pursuant to [section 1087–2(c)(1)(A) of this title](/usc/20/1087–2.md?p=c-1-A) may serve as a [director](/usc/20/9101.md?p=3) of the Holding Company.
      - (v) **One officer requirement—** At least one [officer](/usc/20/1094.md?p=i-5) of the [Association](#i-1) shall be an [officer](/usc/20/1094.md?p=i-5) solely of the [Association](#i-1).
      - (vi) **Transactions—** Transactions between the [Association](#i-1) and the Holding Company or any [subsidiary](#i-8) of the Holding Company, including any loan servicing arrangements, shall be on terms no less favorable to the [Association](#i-1) than the [Association](#i-1) could obtain from an unrelated third party offering comparable services.
      - (vii) **Credit prohibition—** The [Association](#i-1) shall not extend credit to the Holding Company or any [subsidiary](#i-8) of the Holding Company nor guarantee or provide any credit enhancement to any debt obligations of the Holding Company or any [subsidiary](#i-8) of the Holding Company.
      - (viii) **Amounts collected—** Any amounts collected on behalf of the [Association](#i-1) by the Holding Company or any [subsidiary](#i-8) of the Holding Company with respect to the [assets](/usc/20/1087vv.md?p=f-2) of the [Association](#i-1), pursuant to a servicing contract or other arrangement between the [Association](#i-1) and the Holding Company or any [subsidiary](#i-8) of the Holding Company, shall be collected solely for the benefit of the [Association](#i-1) and shall be immediately deposited by the Holding Company or such [subsidiary](#i-8) to an account under the sole control of the [Association](#i-1).
    - (D) **Encumbrance of assets—** Notwithstanding any Federal or [State](/usc/20/1003.md?p=21-A) law, rule, or regulation, or legal or equitable principle, doctrine, or theory to the contrary, under no circumstances shall the [assets](/usc/20/1087vv.md?p=f-2) of the [Association](#i-1) be available or used to pay claims or debts of or incurred by the Holding Company. Nothing in this subparagraph shall be construed to limit the right of the [Association](#i-1) to pay dividends not otherwise prohibited under this subparagraph or to limit any liability of the Holding Company explicitly provided for in this section.
    - (E) **Holding Company activities—** After the [reorganization effective date](#i-7) and prior to the [dissolution date](#i-2), all business activities of the Holding Company shall be conducted through [subsidiaries](#i-8) of the Holding Company.
    - (F) **Confidentiality—** Any information provided by the [Association](#i-1) pursuant to this section shall be subject to the same confidentiality obligations contained in [section 1087–2(r)(12) of this title](/usc/20/1087–2.md?p=r-12).
    - (G) **Definition—** For purposes of this paragraph, the term “associated person” means any person, other than a natural person, who is directly or indirectly controlling, controlled by, or under common control with, the [Association](#i-1).
  - (9) **Issuance of stock warrants—**
    - (A) **In general—** On the [reorganization effective date](#i-7), the Holding Company shall issue to the District of Columbia Financial Responsibility and Management Assistance Authority a number of stock warrants that is equal to one percent of the outstanding shares of the [Association](#i-1), determined as of the last day of the fiscal quarter preceding September 30, 1996, with each stock warrant entitling the [holder](/usc/20/1085.md?p=i) of the stock warrant to purchase from the Holding Company one share of the registered common stock of the Holding Company or the Holding Company’s successors or assigns, at any time on or before September 30, 2008. The exercise price for such warrants shall be an amount equal to the average closing price of the common stock of the [Association](#i-1) for the 20 business days prior to September 30, 1996, on the exchange or market which is then the primary exchange or market for the common stock of the [Association](#i-1). The number of shares of Holding Company common stock subject to each stock warrant and the exercise price of each stock warrant shall be adjusted as necessary to reflect—
      - (i) the conversion of [Association](#i-1) common stock into Holding Company common stock as part of the plan of reorganization approved by the [Association](#i-1)’s shareholders; and
      - (ii) any issuance or sale of stock (including issuance or sale of treasury stock), stock split, recapitalization, reorganization, or other corporate event, if agreed to by the [Secretary](/usc/20/1003.md?p=17) of the Treasury and the [Association](#i-1).
    - (B) **Authority to sell or exercise stock warrants; deposit of proceeds—** The District of Columbia Financial Responsibility and Management Assistance Authority is authorized to sell or exercise the stock warrants described in [subparagraph (A)](#c-9-A). The District of Columbia Financial Responsibility and Management Assistance Authority shall deposit into the account established under [section 1155(e)](/usc/20/1155.md?p=e)[^1] of this title amounts collected from the sale and proceeds resulting from the exercise of the stock warrants pursuant to this subparagraph.
  - (10) **Restrictions on transfer of Association shares and bankruptcy of Association—** After the [reorganization effective date](#i-7), the Holding Company shall not sell, pledge, or otherwise transfer the outstanding shares of the [Association](#i-1), or agree to or cause the liquidation of the [Association](#i-1) or cause the [Association](#i-1) to file a petition for bankruptcy under [title 11](/usc/11.md), without prior approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury and the [Secretary](/usc/20/1003.md?p=17) of Education.
- (d) **Termination of Association—** In the event the shareholders of the [Association](#i-1) approve a plan of reorganization under [subsection (b)](#b), the [Association](#i-1) shall dissolve, and the [Association](#i-1)’s separate existence shall terminate on September 30, 2008, after discharge of all outstanding debt obligations and liquidation pursuant to this subsection. The [Association](#i-1) may dissolve pursuant to this subsection prior to such date by notifying the [Secretary](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) of the Treasury of the [Association](#i-1)’s intention to dissolve, unless within 60 days after receipt of such notice the [Secretary](/usc/20/1003.md?p=17) of Education notifies the [Association](#i-1) that the [Association](#i-1) continues to be needed to serve as a lender of last resort pursuant to [section 1087–2(q) of this title](/usc/20/1087–2.md?p=q) or continues to be needed to purchase loans under an agreement with the [Secretary](/usc/20/1003.md?p=17) described in [subsection (c)(6)](#c-6). On the [dissolution date](#i-2), the [Association](#i-1) shall take the following actions:
  - (1) **Establishment of a trust—** The [Association](#i-1) shall, under the terms of an irrevocable trust agreement that is in form and substance satisfactory to the [Secretary](/usc/20/1003.md?p=17) of the Treasury, the [Association](#i-1) and the appointed trustee, irrevocably transfer all [remaining obligations](#i-4) of the [Association](#i-1) to the trust and irrevocably deposit or cause to be deposited into such trust, to be held as [trust funds](/usc/20/5602.md?p=12) solely for the benefit of [holders](/usc/20/1085.md?p=i) of the [remaining obligations](#i-4), 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](/usc/20/1003.md?p=17) 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](#i-4) in accordance with their terms. To the extent the [Association](#i-1) cannot provide money or qualifying obligations in the amount required, the Holding Company shall be required to transfer money or qualifying obligations to the trust in the amount necessary to prevent any deficiency.
  - (2) **Use of trust assets—** All money, obligations, or financial [assets](/usc/20/1087vv.md?p=f-2) deposited into the trust pursuant to this subsection shall be applied by the trustee to the payment of the [remaining obligations](#i-4) assumed by the trust.
  - (3) **Obligations not transferred to the trust—** The [Association](#i-1) shall make proper provision for all other obligations of the [Association](#i-1) not transferred to the trust, including the repurchase or redemption, or the making of proper provision for the repurchase or redemption, of any preferred stock of the [Association](#i-1) outstanding. Any obligations of the [Association](#i-1) 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)](#d-1) and [(3)](#d-3), any remaining [assets](/usc/20/1087vv.md?p=f-2) of the trust shall be transferred to the Holding Company or any [subsidiary](#i-8) of the Holding Company, as directed by the Holding Company.
- (e) **Operation of Holding Company—** In the event the shareholders of the [Association](#i-1) approve the plan of reorganization under [subsection (b)](#b), the following provisions shall apply beginning on the [reorganization effective date](#i-7):
  - (1) **Holding Company Board of Directors—** The number of members and composition of the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the Holding Company shall be determined as set forth in the Holding Company’s charter or like instrument (as amended from time to time) or bylaws (as amended from time to time) and as permitted under the laws of the jurisdiction of the Holding Company’s incorporation.
  - (2) **Holding Company name—** The names of the Holding Company and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1))—
    - (A) may not contain the name “Student Loan Marketing [Association](#i-1)”; and
    - (B) may contain, to the extent permitted by applicable [State](/usc/20/1003.md?p=21-A) or District of Columbia law, “Sallie Mae” or variations thereof, or such other names as the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1) or the Holding Company deems appropriate.
  - (3) **Use of Sallie Mae name—** Subject to [paragraph (2)](#e-2), the [Association](#i-1) may assign to the Holding Company, or any [subsidiary](#i-8) of the Holding Company, the “Sallie Mae” name as a trademark or service mark, except that neither the Holding Company nor any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1) or any [subsidiary](#i-8) of the [Association](#i-1)) may use the “Sallie Mae” name on, or to identify the issuer of, any debt obligation or other security offered or sold by the Holding Company or any [subsidiary](#i-8) of the Holding Company (other than a debt obligation or other security issued to and held by the Holding Company or any [subsidiary](#i-8) of the Holding Company). The [Association](#i-1) shall remit to the account established under [section 1155(e)](/usc/20/1155.md?p=e)[^1] of this title, $5,000,000, within 60 days of the [reorganization effective date](#i-7) as compensation for the right to assign the “Sallie Mae” name as a trademark or service mark.
  - (4) **Disclosure required—** Until 3 years after the [dissolution date](#i-2), the Holding Company, and any [subsidiary](#i-8) of the Holding Company (other than the [Association](#i-1)), shall prominently display—
    - (A) in any document offering the Holding Company’s securities, a statement that the obligations of the Holding Company and any [subsidiary](#i-8) of the Holding Company are not guaranteed by the full faith and credit of the United States; and
    - (B) in any advertisement or promotional materials which use the “Sallie Mae” name or mark, a statement that neither the Holding Company nor any [subsidiary](#i-8) of the Holding Company is a government-sponsored enterprise or instrumentality of the United States.
- (f) **Strict construction—** Except as specifically set forth in this section, nothing in this section shall be construed to limit the authority of the [Association](#i-1) as a federally chartered corporation, or of the Holding Company as a [State](/usc/20/1003.md?p=21-A) or District of Columbia chartered corporation.
- (g) **Right to enforce—** The [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) 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.
- (h) **Deadline for reorganization effective date—** This section shall be of no further force and effect in the event that the [reorganization effective date](#i-7) does not occur on or before 18 months after September 30, 1996.
- (i) **Definitions—** For purposes of this section:
  - (1) **Association—** The term “Association” means the Student Loan Marketing Association.
  - (2) **Dissolution date—** The term “dissolution date” means September 30, 2008, or such earlier date as the [Secretary](/usc/20/1003.md?p=17) of Education permits the transfer of [remaining obligations](#i-4) in accordance with [subsection (d)](#d).
  - (3) **Holding Company—** The term “Holding Company” means the new business corporation established pursuant to this section by the [Association](#i-1) under the laws of any [State](/usc/20/1003.md?p=21-A) of the United States or the District of Columbia for the purposes of the reorganization and restructuring described in [subsection (a)](#a).
  - (4) **Remaining obligations—** The term “remaining obligations” means the debt obligations of the [Association](#i-1) outstanding as of the [dissolution date](#i-2).
  - (5) **Remaining property—** The term “remaining property” means the following [assets](/usc/20/1087vv.md?p=f-2) and liabilities of the [Association](#i-1) which are outstanding as of the [reorganization effective date](#i-7):
    - (A) Debt obligations issued by the [Association](#i-1).
    - (B) Contracts relating to interest rate, currency, or commodity positions or protections.
    - (C) Investment securities owned by the [Association](#i-1).
    - (D) Any instruments, [assets](/usc/20/1087vv.md?p=f-2), or agreements described in [section 1087–2(d) of this title](/usc/20/1087–2.md?p=d) (including, without limitation, all student loans and agreements relating to the purchase and sale of student loans, forward purchase and lending commitments, warehousing advances, academic facilities obligations, letters of credit, standby bond purchase agreements, liquidity agreements, and student loan revenue bonds or other loans).
    - (E) Except as specifically prohibited by this section or [section 1087–2 of this title](/usc/20/1087–2.md), any other nonmaterial [assets](/usc/20/1087vv.md?p=f-2) or liabilities of the [Association](#i-1) which the [Association](#i-1)’s [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) determines to be necessary or appropriate to the [Association](#i-1)’s operations.
  - (6) **Reorganization—** The term “reorganization” means the restructuring event or events (including any merger event) giving effect to the Holding Company structure described in [subsection (a)](#a).
  - (7) **Reorganization effective date—** The term “reorganization effective date” means the effective date of the reorganization as determined by the [Board](/usc/20/4702.md?p=2) of [Directors](/usc/20/9101.md?p=3) of the [Association](#i-1), which shall not be earlier than the date that shareholder approval is obtained pursuant to [subsection (b)](#b) and shall not be later than the date that is 18 months after September 30, 1996.
  - (8) **Subsidiary—** The term “subsidiary” means one or more direct or indirect subsidiaries.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(Pub. L. 89–329, title IV, § 440, as added Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 602(a)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–275.)

## Notes

### Repeal of Section

Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 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 subsec. (d)(1) of this section have been extinguished, if reorganization occurs in accordance with this section, or date on which all obligations of trust established under section 1087–2(s)(3)(A) of this title have been extinguished, if reorganization does not occur in accordance with this section.

### Editorial Notes

### References in Text

Section 1155(e) of this title, referred to in subsecs. (c)(9)(B) and (e)(3), was in the original a reference to section 3(e) of the Student Loan Marketing Association Reorganization Act of 1996, and was translated as reading section 603(e) of that Act, which is Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 603(e)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–293, to reflect the probable intent of Congress, because that Act does not contain a section 3(e), but does contain a section 603(e) which establishes the account referred to in text.

### Prior Provisions

A prior section 1087–3, Pub. L. 89–329, title IV, § 439A, as added Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2141, related to a five-year nondischargeability of certain loan debts, prior to repeal by Pub. L. 95–598, title III, § 317, Nov. 6, 1978, 92 Stat. 2678, eff. Nov. 6, 1978.

A prior section 1087–3a, Pub. L. 89–329, title IV, § 439B, as added Pub. L. 95–566, § 8, Nov. 1, 1978, 92 Stat. 2404, authorized any loan under this part to be counted as part of the expected family contribution in the determination of need, prior to repeal by Pub. L. 97–35, title V, § 532(b)(2), Aug. 13, 1981, 95 Stat. 452, applicable to loans for the statement required by section 1078(a)(2)(A) of this title is completed on or after Oct. 1, 1981.