---
kind: "section"
citation: "20 U.S.C. § 1087–2"
title: "20"
title_heading: "Education"
number: "1087–2"
heading: "Student Loan Marketing Association"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/20/1087-2"
units:
  - "Chapter 28 — Higher Education Resources and Student Assistance"
  - "Subchapter IV — Student Assistance"
  - "Part B — Federal Family Education Loan Program"
---

# §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](/usc/20/1066a.md?p=2), including [loans](/usc/20/1066a.md?p=2) which are insured by the [Secretary](/usc/20/1003.md?p=17) under this part or by a [guaranty agency](/usc/20/1085.md?p=j), and which will provide liquidity for student [loan](/usc/20/1066a.md?p=2) investments; (2) in order to facilitate secured transactions involving student [loans](/usc/20/1066a.md?p=2), to provide for perfection of security [interests](/usc/20/1066a.md?p=6) in student [loans](/usc/20/1066a.md?p=2) either through the taking of possession or by notice filing; and (3) to assure nationwide the establishment of adequate [loan](/usc/20/1066a.md?p=2) insurance programs for students, to provide for an additional program of [loan](/usc/20/1066a.md?p=2) insurance to be covered by agreements with the [Secretary](/usc/20/1003.md?p=17).
- (b) **Establishment—**
  - (1) **In general—** There is hereby created a body corporate to be known as the Student [Loan](/usc/20/1066a.md?p=2) 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=21-A), 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](/usc/20/1003.md?p=17) $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](/usc/20/1003.md?p=17) may deem to be appropriate in light of the maturity and solvency of the Association. Such advances shall bear [interest](/usc/20/1066a.md?p=6) at a rate not less than (A) a rate determined by the [Secretary](/usc/20/1003.md?p=17) of the Treasury taking into consideration the current average market yield on [outstanding](/usc/20/1066a.md?p=7) 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](/usc/20/1003.md?p=17) 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)](#f). Commencing with the annual shareholders meeting to be held in 1993—
      - (i) 7 of the elected directors shall be affiliated with an [eligible institution](/usc/20/1058.md?p=b); and
      - (ii) 7 of the elected directors shall be affiliated with an [eligible lender](/usc/20/1019.md?p=4).
    - (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](/usc/20/1058.md?p=b)” or a director “affiliated with an [eligible lender](/usc/20/1019.md?p=4)” means an individual who is, or within 5 years of election to the Board has been, an employee, [officer](/usc/20/1019.md?p=7), director, or similar official of—
    - (A) an [eligible institution](/usc/20/1058.md?p=b) or an [eligible lender](/usc/20/1019.md?p=4);
    - (B) an association whose members consist primarily of [eligible institutions](/usc/20/1058.md?p=b) or [eligible lenders](/usc/20/1019.md?p=4); or
    - (C) a [State](/usc/20/1003.md?p=21-A) 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](/usc/20/1019.md?p=7) 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](/usc/20/1066a.md?p=6) or otherwise deal in, at prices and on terms and conditions determined by the Association, student [loans](/usc/20/1066a.md?p=2) which are insured by the [Secretary](/usc/20/1003.md?p=17) under this part or by a [guaranty agency](/usc/20/1085.md?p=j);
    - (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](/usc/20/1066a.md?p=2), by a [guaranty agency](/usc/20/1085.md?p=j) or by an [eligible lender](/usc/20/1019.md?p=4) in a [State](/usc/20/1003.md?p=21-A) described in [section 1085(d)(1)(D)](/usc/20/1085.md?p=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](/usc/20/1058.md?p=b) 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-1-C-ii);

    - (D) to undertake a program of [loan](/usc/20/1066a.md?p=2) insurance pursuant to agreements with the [Secretary](/usc/20/1003.md?p=17) under [section 1078 of this title](/usc/20/1078.md), and except with respect to [loans](/usc/20/1066a.md?p=2) under [subsection (o)](#o) of this section or under [section 1078–3 of this title](/usc/20/1078–3.md), the [Secretary](/usc/20/1003.md?p=17) may enter into an agreement with the Association for such purpose only if the [Secretary](/usc/20/1003.md?p=17) determines that (i) eligible borrowers are seeking and unable to obtain [loans](/usc/20/1066a.md?p=2) under this part, and (ii) no [guaranty agency](/usc/20/1085.md?p=j) is capable of or willing to provide a program of [loan](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) 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)](#d-1-E) shall be deemed to authorize the Association to acquire, own, operate, or control any bank, savings and [loan](/usc/20/1066a.md?p=2) 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)](#d-1-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](/usc/20/1066a.md?p=2) which are not insured or guaranteed as provided for in this subsection as it may undertake with regard to insured or guaranteed student [loans](/usc/20/1066a.md?p=2). Any warehousing advance made on the security of such [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2).

  - (2) **Warehousing advances—** Any warehousing advance made under paragraph (1)(A) of this subsection shall be made on the security of (A) insured [loans](/usc/20/1066a.md?p=2), (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](/usc/20/1066a.md?p=6) 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](/usc/20/1066a.md?p=6) thereof, in an amount equal to the amount of such advance. The proceeds of any such advance secured by insured [loans](/usc/20/1066a.md?p=2) shall either be invested in additional insured [loans](/usc/20/1066a.md?p=2) or the [lender](/usc/20/1019.md?p=6) shall provide assurances to the Association that during the period of the borrowing it will maintain a level of insured [loans](/usc/20/1066a.md?p=2) in its portfolio not less than the aggregate [outstanding](/usc/20/1066a.md?p=7) balance of such [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2).
  - (3) **Perfection of security interests in student loans—** Notwithstanding the provisions of any [State](/usc/20/1003.md?p=21-A) law to the contrary, including the Uniform Commercial Code as in effect in any [State](/usc/20/1003.md?p=21-A), a security [interest](/usc/20/1066a.md?p=6) in insured student [loans](/usc/20/1066a.md?p=2) created on behalf of the Association or any [eligible lender](/usc/20/1019.md?p=4) as defined in [section 1085(a) of this title](/usc/20/1085.md?p=a) may be perfected either through the taking of possession of such [loans](/usc/20/1066a.md?p=2) or by the filing of notice of such security [interest](/usc/20/1066a.md?p=6) in such [loans](/usc/20/1066a.md?p=2) in the manner provided by such [State](/usc/20/1003.md?p=21-A) law for perfection of security [interests](/usc/20/1066a.md?p=6) in accounts.
  - (4) **Form of securities—** Securities issued pursuant to the offering of participations or pooled [interests](/usc/20/1066a.md?p=6) under paragraph (1) of this subsection may be in the form of debt obligations, or trust certificates of beneficial ownership, or both. Student [loans](/usc/20/1066a.md?p=2) set aside pursuant to the offering of participations or pooled [interests](/usc/20/1066a.md?p=6) shall at all times be adequate to ensure the timely principal and [interest](/usc/20/1066a.md?p=6) 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)](#d-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](/usc/20/1066a.md?p=2) pursuant to [subsection (d)](#d) only after the Association is assured that the [lender](/usc/20/1019.md?p=6) (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](/usc/20/1066a.md?p=2), the student or his family maintain a business relationship with the [lender](/usc/20/1019.md?p=6), except that this clause shall not apply in the case of a [loan](/usc/20/1066a.md?p=2) made by a credit union, savings and [loan](/usc/20/1066a.md?p=2) association, mutual savings bank, [institution of higher education](/usc/20/1001.md?p=a), or any other [lender](/usc/20/1019.md?p=6) 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](/usc/20/1066a.md?p=7) 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)](#g-2), 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](/usc/20/1085.md?p=i) of [outstanding](/usc/20/1066a.md?p=7) 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](/usc/20/1085.md?p=i). Each [outstanding](/usc/20/1066a.md?p=7) 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](/usc/20/1085.md?p=i) 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](/usc/20/1085.md?p=i) of the preferred shares shall be paid in full at par value thereof, plus all accrued dividends, before the [holders](/usc/20/1085.md?p=i) 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](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) of the Treasury to issue and have [outstanding](/usc/20/1066a.md?p=7) obligations having such maturities and bearing such rate or rates of [interest](/usc/20/1066a.md?p=6) as may be determined by the Association. The authority of the [Secretary](/usc/20/1003.md?p=17) of Education to approve the issuance of such obligations is limited to obligations issued by the Association and guaranteed by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=7) amount of the obligations owned by the Association pursuant to the authority contained in subsection [(d)(1)(B)](#d-1-B) and (C) of this section and as to which the income is exempt from taxation under [title 26](/usc/26.md) does not exceed the average stockholders’ equity of the Association, the [interest](/usc/20/1066a.md?p=6) on obligations issued under this paragraph shall not be deemed to be [interest](/usc/20/1066a.md?p=6) on indebtedness incurred or continued to purchase or carry obligations for the purpose of [section 265 of title 26](/usc/26/265.md).
  - (2) **Guarantee of debt—** The [Secretary](/usc/20/1003.md?p=17) is authorized, prior to October 1, 1984, to guarantee payment when due of principal and [interest](/usc/20/1066a.md?p=6) on obligations issued by the Association in an aggregate amount determined by the [Secretary](/usc/20/1003.md?p=17) in consultation with the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Nothing in this section shall be construed so as to authorize the [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) of the Treasury to limit, control, or constrain programs of the Association or support of the Guaranteed Student [Loan](/usc/20/1066a.md?p=2) Program by the Association.
  - (3) **Borrowing authority to meet guarantee obligations—** To enable the [Secretary](/usc/20/1003.md?p=17) to discharge his responsibilities under guarantees issued by him, he is authorized to issue to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) with the approval of the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Such notes or other obligations shall bear [interest](/usc/20/1066a.md?p=6) at a rate determined by the [Secretary](/usc/20/1003.md?p=17) of the Treasury, taking into consideration the current average market yield on [outstanding](/usc/20/1066a.md?p=7) marketable obligations of the United States of comparable maturities during the months preceding the issuance of the notes or other obligations. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/31/chstIII/ch31.md) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) such sums as may be necessary to pay the principal and [interest](/usc/20/1066a.md?p=6) on the notes or obligations issued by him to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) of the Treasury, the [Secretary](/usc/20/1003.md?p=17) of Education or the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education and the [Secretary](/usc/20/1003.md?p=17) of the Treasury submit to the Congress a detailed explanation of reasons for doing so.
  - (5) **Authority of Treasury to purchase debt—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/31/chstIII/ch31.md) of title 31, as now or hereafter in force, and the purposes for which securities may be issued under [chapter 31](/usc/31/chstIII/ch31.md) of title 31, as now or hereafter in force are extended to include such purchases. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=7) holdings of such obligations under this subsection to an amount greater than $1,000,000,000. Each purchase of obligations by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury, taking into consideration the current average rate on [outstanding](/usc/20/1066a.md?p=7) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=2), the payment of [interest](/usc/20/1066a.md?p=6) or principal of which has at any time been guaranteed under section [1078](/usc/20/1078.md) or [1079](/usc/20/1079.md) of this title, to the Federal Financing Bank.
  - (7) **Offset fee—**
    - (A) The Association shall pay to the [Secretary](/usc/20/1003.md?p=17), 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](/usc/20/1066a.md?p=2) made, insured or guaranteed under this part that the Association holds (except for [loans](/usc/20/1066a.md?p=2) made pursuant to [section 1078–3 of this title](/usc/20/1078–3.md), [subsection (o)](#o), or [subsection (q)](#q)) and that was acquired on or after August 10, 1993.
    - (B) If the [Secretary](/usc/20/1003.md?p=17) determines that the Association has substantially failed to comply with [subsection (q)](#q), [subparagraph (A)](#h-7-A) shall be applied by substituting “1.0 percent” for “0.3 percent”.
    - (C) The [Secretary](/usc/20/1003.md?p=17) shall deposit all fees collected pursuant to this paragraph into the insurance fund established in [section 1081 of this title](/usc/20/1081.md).
- (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](/usc/20/1019.md?p=7) and exercise the power granted by this section in any [State](/usc/20/1003.md?p=21-A) without regard to any qualification or similar statute in any [State](/usc/20/1003.md?p=21-A);
  - (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](/usc/20/1066a.md?p=6) 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](/usc/20/1087vv.md?p=f-1);
  - (8) to appoint such [officers](/usc/20/1019.md?p=7), attorneys, employees, and [agents](/usc/20/1019.md?p=1) 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](/usc/20/1087vv.md?p=d) certified public accountants or by [independent](/usc/20/1087vv.md?p=d) licensed public accountants, licensed on or before December 31, 1970, who are certified or licensed by a regulatory authority of a [State](/usc/20/1003.md?p=21-A) or other political subdivision of the United States, except that [independent](/usc/20/1087vv.md?p=d) 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](/usc/20/1003.md?p=17), standards of education and experience representative of the highest standards prescribed by the licensing authorities of the several [States](/usc/20/1003.md?p=21-A) which provide for the continuing licensing of public accountants and which are prescribed by the [Secretary](/usc/20/1003.md?p=17) in appropriate regulations may perform such audits until December 31, 1975. A report of each such audit shall be furnished to the [Secretary](/usc/20/1003.md?p=17) of the Treasury. The audit shall be conducted at the place or places where the accounts are normally kept. The representatives of the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1019.md?p=1), and custodians.
- (k) **Report on audits by Treasury—** A report of each such audit for a fiscal year shall be made by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17), 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)](#d-4) 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](/usc/20/1019.md?p=7) or [officers](/usc/20/1019.md?p=7) 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](/usc/20/1066a.md?p=6) by, the United States. The Association shall, for the purposes of [section 355(2) of title 12](/usc/12/355.md?p=2), 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](/usc/31/3124.md). For the purpose of the distribution of its property pursuant to [section 726 of title 11](/usc/11/726.md), 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](/usc/31/3713.md) 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](/usc/20/1019.md?p=1), 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury. The Association shall reimburse the [Secretary](/usc/20/1003.md?p=17) of the Treasury for any expenditures made in the preparation, custody, and delivery of such obligations. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1019.md?p=1) may, upon request of a borrower, consolidate [loans](/usc/20/1066a.md?p=2) received under this subchapter in accordance with [section 1078–3 of this title](/usc/20/1078–3.md).
  - (2) **Use of existing agencies as agent—** The Association in making [loans](/usc/20/1066a.md?p=2) pursuant to this subsection in any [State](/usc/20/1003.md?p=21-A) served by a [guaranty agency](/usc/20/1085.md?p=j) or an [eligible lender](/usc/20/1019.md?p=4) in a [State](/usc/20/1003.md?p=21-A) described in [section 1085(d)(1)(D)](/usc/20/1085.md?p=d-1-D) or (F) of this title may designate as its [agent](/usc/20/1019.md?p=1) such agency or [lender](/usc/20/1019.md?p=6) 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](/usc/20/1019.md?p=6).
- (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](/usc/20/1085.md?p=j) and [eligible lender](/usc/20/1019.md?p=4) described in subsection 1078(h)(1)[^1] of this title which has an agreement with the Association which sets forth that advances are necessary to enable such agency or [lender](/usc/20/1019.md?p=6) to make student [loans](/usc/20/1066a.md?p=2) in accordance with [section 1078(h)](/usc/20/1078.md?p=h)[^1] 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](/usc/20/1019.md?p=6). Advances made under this subsection shall not be subject to [subsection (d)(2)](#d-2) of this section.
  - (2) **Limitation—** No advance may be made under this subsection unless the [guaranty agency](/usc/20/1085.md?p=j) or [lender](/usc/20/1019.md?p=6) 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](/usc/20/1003.md?p=17) determines that eligible borrowers are seeking and are unable to obtain [loans](/usc/20/1066a.md?p=2) under this part, the Association or its designated [agent](/usc/20/1019.md?p=1) shall, not later than 90 days after August 10, 1993, begin making [loans](/usc/20/1066a.md?p=2) to such eligible borrowers in accordance with this subsection at the request of the [Secretary](/usc/20/1003.md?p=17). The [Secretary](/usc/20/1003.md?p=17) may request that the Association make [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1003.md?p=17), that their students are seeking and unable to obtain [loans](/usc/20/1066a.md?p=2).
    - (B) [Loans](/usc/20/1066a.md?p=2) made pursuant to this subsection shall be insurable by the [Secretary](/usc/20/1003.md?p=17) under [section 1079 of this title](/usc/20/1079.md) with a certificate of comprehensive insurance coverage provided for under [section 1079(b)(1) of this title](/usc/20/1079.md?p=b-1) or by a [guaranty agency](/usc/20/1085.md?p=j) under paragraph (2)(A) of this subsection.
  - (2) **Issuance and coverage of loans—**
    - (A) Whenever the [Secretary](/usc/20/1003.md?p=17), after consultation with, and with the agreement of, representatives of the [guaranty agency](/usc/20/1085.md?p=j) in a [State](/usc/20/1003.md?p=21-A), or an [eligible lender](/usc/20/1019.md?p=4) in a [State](/usc/20/1003.md?p=21-A) described in [section 1085(d)(1)(D) of this title](/usc/20/1085.md?p=d-1-D), determines that a substantial portion of eligible borrowers in such [State](/usc/20/1003.md?p=21-A) or within an area of such [State](/usc/20/1003.md?p=21-A) are seeking and are unable to obtain [loans](/usc/20/1066a.md?p=2) under this part, the Association or its designated [agent](/usc/20/1019.md?p=1) shall begin making such [loans](/usc/20/1066a.md?p=2) to borrowers in such [State](/usc/20/1003.md?p=21-A) or within an area of such [State](/usc/20/1003.md?p=21-A) in accordance with this subsection at the request of the [Secretary](/usc/20/1003.md?p=17).
    - (B) [Loans](/usc/20/1066a.md?p=2) made pursuant to this subsection shall be insurable by the agency identified in [subparagraph (A)](#q-2-A) having an agreement pursuant to [section 1078(b) of this title](/usc/20/1078.md?p=b). For [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1066a.md?p=2) under this part to a student which would cause a subsequent [loan](/usc/20/1066a.md?p=2) made by the Association to be in violation of any provision under this part.
  - (3) **Termination of lending—** The Association or its designated [agent](/usc/20/1019.md?p=1) shall cease making [loans](/usc/20/1066a.md?p=2) under this subsection at such time as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of Education and [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1087–3.md) are being met; and
      - (ii) obtain the services of such experts as the [Secretary](/usc/20/1003.md?p=17) of the Treasury determines necessary and appropriate, as authorized by [section 3109 of title 5](/usc/5/3109.md), 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](/usc/20/1087–3.md) are being met.
    - (B) Each auditor appointed under this paragraph shall conduct an audit of the Association to the extent requested by the [Secretary](/usc/20/1003.md?p=17) of the Treasury and shall prepare and submit a report to the [Secretary](/usc/20/1003.md?p=17) of the Treasury concerning the results of such audit. A copy of such report shall be furnished to the Association and the [Secretary](/usc/20/1003.md?p=17) of Education on the date on which it is delivered to the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
    - (C) The Association shall provide full and prompt access to the [Secretary](/usc/20/1003.md?p=17) of the Treasury to its books and records and other information requested by the [Secretary](/usc/20/1003.md?p=17) of the Treasury.
    - (D) **Annual assessment.—**
      - (i) **In general.—** For each fiscal year beginning on or after October 1, 1996, the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury under this section and [section 1087–3 of this title](/usc/20/1087–3.md) 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](/usc/20/1003.md?p=17) of the Treasury for that purpose. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury under this section and [section 1087–3 of this title](/usc/20/1087–3.md). 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury has concerns regarding the financial or operational condition of the Association, the [Secretary](/usc/20/1003.md?p=17) of the Treasury may, notwithstanding the preceding sentence and [clause (i)](#r-2-E-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)](#r-2-A) may be set and adjusted by the [Secretary](/usc/20/1003.md?p=17) of the Treasury without regard to the provisions of [chapter 51](/usc/20/chch51.md) or subchapter III of chapter 53 of title 5.
      - (ii) **Comparability.—**
        - (I) **In general.—** Subject to [section 5373 of title 5](/usc/5/5373.md), the [Secretary](/usc/20/1003.md?p=17) of the Treasury may provide additional compensation and benefits to auditors and examiners appointed pursuant to [subparagraph (A)](#r-2-A) if the same type of compensation or benefits are then being provided by any agency referred to in [section 1833b of title 12](/usc/12/1833b.md) 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)](#r-2-A), the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall consult with, and seek to maintain comparability with, the agencies referred to in [section 1833b of title 12](/usc/12/1833b.md).
  - (3) **Monitoring of safety and soundness—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury determines that the financial safety and soundness of the Association is at risk, the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall inform the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the Committee on Labor and Human Resources of the Senate, the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the Committee on Education and Labor of the House of Representatives, and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury and the Association shall consult with respect to any capital restoration plan submitted pursuant to [paragraph (4)](#r-4) and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury by the Association, unless the Association and [Secretary](/usc/20/1003.md?p=17) of the Treasury mutually agree to a longer consideration period. If the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury does not approve a capital restoration plan as provided in [subparagraph (A)](#r-5-A), then not later than the earlier of the date the [Secretary](/usc/20/1003.md?p=17) 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)](#r-5-A) (as such period may have been extended by mutual agreement), the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall submit the Association’s capital restoration plan, in the form most recently proposed to the [Secretary](/usc/20/1003.md?p=17) of the Treasury by the Association, together with a report on the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s reasons for disapproval of such plan and an alternative capital restoration plan, to the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the Senate Committee on Labor and Human Resources and to the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the House Committee on Education and Labor. A copy of such submission simultaneously shall be sent to the Association and the [Secretary](/usc/20/1003.md?p=17) of Education by the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury of such submission, shall submit to such Chairmen and ranking [minority](/usc/20/1067k.md?p=2) 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](/usc/20/1003.md?p=17) of the Treasury with respect to the capital restoration plan submitted to the [Secretary](/usc/20/1003.md?p=17) of the Treasury and any findings of the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#r-4)) to increase promptly its capital ratio to equal or exceed 1.75 percent. The [Secretary](/usc/20/1003.md?p=17) of the Treasury and the Association shall consult with respect to any plan or modified plan submitted pursuant to this paragraph. The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury by the Association, unless the Association and [Secretary](/usc/20/1003.md?p=17) of the Treasury mutually agree to a longer consideration period. If the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury disapproves a capital restoration plan or modified plan submitted pursuant to [subparagraph (A)](#r-6-A), then, not later than the earlier of the date the [Secretary](/usc/20/1003.md?p=17) 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)](#r-6-A) (as such period may have been extended by mutual agreement), the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1067k.md?p=2) member of the Committee on Labor and Human Resources of the Senate and to the Chairman and ranking [minority](/usc/20/1067k.md?p=2) 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](/usc/20/1003.md?p=17) of Education by the [Secretary](/usc/20/1003.md?p=17) of the Treasury. The Association, within 5 days after receipt from the [Secretary](/usc/20/1003.md?p=17) of the Treasury of such submission, shall submit to the Chairmen and ranking [minority](/usc/20/1067k.md?p=2) members of such Committees, and the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury with respect to the disapproved plan and the alternative plan of the [Secretary](/usc/20/1003.md?p=17) of the Treasury and any findings of the [Secretary](/usc/20/1003.md?p=17) 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)](#r-6-B) from the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury under [subparagraph (B)](#r-6-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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=2) purchases and warehousing advances.
    - (B) **Restrict growth—** Restrict or eliminate growth of the Association’s [assets](/usc/20/1087vv.md?p=f-1), other than student [loans](/usc/20/1066a.md?p=2) 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](/usc/20/1019.md?p=7) any compensation including bonuses at a rate exceeding that [officer](/usc/20/1019.md?p=7)’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](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(4)](#r-4) or [(6)(A)](#r-6-A), the Association shall forthwith proceed with diligence to implement the most recently proposed plan with such modifications as the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(4)](#r-4) or [(6)(A)](#r-6-A), the Association shall—
      - (i) within 14 days of such occurrence submit a capital restoration plan to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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)](#r-8-A) or [(B)](#r-8-B) to implement a capital restoration plan, the [Secretary](/usc/20/1003.md?p=17) of the Treasury shall submit the capital restoration plan to be implemented to the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the Committee on Labor and Human Resources of the Senate, the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the Committee on Education and Labor of the House of Representatives, and the [Secretary](/usc/20/1003.md?p=17) of Education.
  - (9) **Additional reports to committees—** The Association shall submit a copy of its capital restoration plan, modifications proposed to the [Secretary](/usc/20/1003.md?p=17) of the Treasury, and proposed modifications received from the [Secretary](/usc/20/1003.md?p=17) of the Treasury to the Congressional Budget Office and Government Accountability Office upon their submission to the [Secretary](/usc/20/1003.md?p=17) of the Treasury or receipt from the [Secretary](/usc/20/1003.md?p=17) of the Treasury. Notwithstanding any other provision of law, the Congressional Budget Office and Government Accountability Office shall maintain the confidentiality of information received pursuant to the previous sentence. In the event that the [Secretary](/usc/20/1003.md?p=17) of the Treasury does not approve a capital restoration plan as provided in paragraph [(5)(A)](#r-5-A) or [(6)(A)](#r-6-A), or in the event that a capital restoration plan is modified by the [Secretary](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(6)(B)](#r-6-B) or [(8)](#r-8), the Congressional Budget Office and Government Accountability Office shall each submit a report within 30 days of the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s submission to the Chairmen and ranking [minority](/usc/20/1067k.md?p=2) members as required in paragraphs [(5)(B)](#r-5-B), [(6)(B)](#r-6-B), and [(8)(C)](#r-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](/usc/20/1003.md?p=17) of the Treasury’s submission made pursuant to [paragraph (5)(B)](#r-5-B), or the capital restoration plan proposed by the Association and the modifications made by the [Secretary](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(6)(B)](#r-6-B) or [(8)](#r-8);
    - (C) analyzing the impact of the capital restoration plan and reasons for disapproval of the plan contained in the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s submission made pursuant to [paragraph (5)(B)](#r-5-B), or the impact of the capital restoration plan proposed by the Association and the modifications made by the [Secretary](/usc/20/1003.md?p=17) of the Treasury pursuant to paragraph [(6)(B)](#r-6-B) or [(8)](#r-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](/usc/20/1066a.md?p=2) 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](/usc/20/1003.md?p=17) of Education shall review the [Secretary](/usc/20/1003.md?p=17) of the Treasury’s submission required pursuant to paragraph [(5)(B)](#r-5-B), [(6)(B)](#r-6-B), or [(8)](#r-8) and shall submit a report within 30 days to the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the Senate Committee on Labor and Human Resources and to the Chairman and ranking [minority](/usc/20/1067k.md?p=2) member of the House Committee on Education and Labor—
    - (A) describing any administrative or legislative provisions governing the student [loan](/usc/20/1066a.md?p=2) programs which contributed to the decline in the Association’s capital ratio; and
    - (B) recommending administrative and legislative changes in the student [loan](/usc/20/1066a.md?p=2) 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)](#r-4).
  - (11) **Safe harbor—** The Association shall be deemed in compliance with the capital ratios described in paragraphs [(4)](#r-4) and [(6)(A)](#r-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](/usc/20/1003.md?p=17) of the Treasury, the [Secretary](/usc/20/1003.md?p=17) of Education, the Congressional Budget Office, and the Government Accountability 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](/usc/20/1003.md?p=17) of the Treasury, the [Secretary](/usc/20/1003.md?p=17) of Education, the Congressional Budget Office, and the Government Accountability Office to withhold information from Congress, or prevent the [Secretary](/usc/20/1003.md?p=17) of Education, the Congressional Budget Office, and the Government Accountability Office from complying with a request for information from any other Federal [department](/usc/20/1003.md?p=4) 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](/usc/5/552.md), this paragraph shall be considered a statute described in [subsection (b)(3)](/usc/5/552.md?p=b-3) of such section 552.
  - (13) **Enforcement of safety and soundness requirements—** 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.
  - (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](/usc/20/1003.md?p=17) of the Treasury may, whenever such capital ratio is not met, take any one or more of the actions described in [paragraph (7)](#r-7), except that—
      - (i) the capital ratio to be restored pursuant to [paragraph (7)(D)](#r-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](/usc/20/1003.md?p=17) of the Treasury shall defer taking any of the actions set forth in [paragraph (7)](#r-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)](#r-4), [(5)](#r-5), [(6)](#r-6), [(8)](#r-8), [(9)](#r-9), [(10)](#r-10), and [(11)](#r-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 nationally recognized statistical rating organization, as that term is defined in [section 78c(a) of title 15](/usc/15/78c.md?p=a).
    - (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](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1066a.md?p=6) rate contracts and exchange rate contracts, including [interest](/usc/20/1066a.md?p=6) 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)](#r-16), the Association 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 (16)](#r-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](/usc/20/1087–3.md).
  - (2) **Sunset plan—**
    - (A) **Plan submission by the Association—** Not later than July 1, 2007, the Association shall submit to the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1003.md?p=17) of the Treasury and to the Chairman and Ranking [Minority](/usc/20/1067k.md?p=2) Member of the Committee on Labor and Human Resources of the Senate and Chairman and Ranking [Minority](/usc/20/1067k.md?p=2) 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)](#s-3).
    - (C) **Plan monitoring—** The [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) of the Treasury may require the Association to amend the plan (including any amendments to the plan), if the [Secretary](/usc/20/1003.md?p=17) 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](/usc/20/1003.md?p=17) 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](/usc/20/1066a.md?p=7) debt obligations and liquidation pursuant to this subsection. The Association 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’s intention to dissolve, unless within 60 days of receipt of such notice the [Secretary](/usc/20/1003.md?p=17) of Education notifies the Association that the Association continues to be needed to serve as a [lender](/usc/20/1019.md?p=6) of last resort pursuant to [subsection (q)](#q) or continues to be needed to purchase [loans](/usc/20/1066a.md?p=2) under an agreement with the [Secretary](/usc/20/1003.md?p=17) described in [paragraph (4)(A)](#s-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](/usc/20/1003.md?p=17) 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](/usc/20/1085.md?p=i) 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](/usc/20/1066a.md?p=6) 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](/usc/20/1066a.md?p=6), to pay the principal of, and [interest](/usc/20/1066a.md?p=6) on, the remaining obligations in accordance with their terms.
    - (B) **Use of trust assets—** All money, obligations, or financial [assets](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1066a.md?p=7).
    - (D) **Transfer of remaining assets—** After compliance with subparagraphs [(A)](#s-3-A) and [(C)](#s-3-C), the Association shall transfer to the shareholders of the Association any remaining [assets](/usc/20/1087vv.md?p=f-1) 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](/usc/20/1087vv.md?p=f-1) (including acquiring [assets](/usc/20/1087vv.md?p=f-1) pursuant to contractual commitments) described in [subsection (d)](#d) other than in connection with the Association—
        - (I) serving as a [lender](/usc/20/1019.md?p=6) of last resort pursuant to [subsection (q)](#q); and
        - (II) purchasing [loans](/usc/20/1066a.md?p=2) 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 for the continuation or resumption of the Association’s secondary market purchase program because the [Secretary](/usc/20/1003.md?p=17) determines there is inadequate liquidity for [loans](/usc/20/1066a.md?p=2) made under this part.
      - (ii) **Agreement—** The [Secretary](/usc/20/1003.md?p=17) is authorized to enter into an agreement described in [subclause (II)](#s-4-A-i-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](/usc/20/1003.md?p=17) determines that liquidity remains inadequate. The fee provided under [subsection (h)(7)](#h-7) shall not apply to [loans](/usc/20/1066a.md?p=2) acquired under any such agreement with the [Secretary](/usc/20/1003.md?p=17).
    - (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](/usc/20/1019.md?p=6) of last resort pursuant to [subsection (q)](#q) or with purchasing [loans](/usc/20/1066a.md?p=2) under an agreement with the [Secretary](/usc/20/1003.md?p=17) as described in [subparagraph (A)](#s-4-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)](#s-3).
    - (C) **Use of Association name—** The Association may not transfer or permit the use of the name “Student [Loan](/usc/20/1066a.md?p=2) Marketing Association”, “Sallie Mae”, or any variation thereof, to or by any entity other than a subsidiary of the Association.

## Footnotes

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

## Source credit

(Pub. L. 89–329, title IV, § 439, as added Pub. L. 99–498, title IV, § 402(a), Oct. 17, 1986, 100 Stat. 1418; amended Pub. L. 100–50, § 10(dd), June 3, 1987, 101 Stat. 347; Pub. L. 100–369, § 7(c), July 18, 1988, 102 Stat. 837; Pub. L. 102–325, title IV, § 431, July 23, 1992, 106 Stat. 554; Pub. L. 103–66, title IV, §§ 4041(c), 4104, Aug. 10, 1993, 107 Stat. 356, 367; Pub. L. 103–208, § 2(c)(69), Dec. 20, 1993, 107 Stat. 2470; Pub. L. 103–382, title III, § 358, Oct. 20, 1994, 108 Stat. 3968; Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 602(b)(2)–(4), (c)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–284 to 3009–286; Pub. L. 106–554, § 1(a)(1) [title III, § 309], Dec. 21, 2000, 114 Stat. 2763, 2763A–45; Pub. L. 108–271, § 8(b), July 7, 2004, 118 Stat. 814; Pub. L. 109–291, § 4(b)(5), Sept. 29, 2006, 120 Stat. 1338.)

## 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 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.

### Editorial Notes

### 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.

Section 1078(h) of this title, referred to in subsec. (p)(1), was repealed by Pub. L. 110–315, title IV, § 438(a)(2)(B), Aug. 14, 2008, 122 Stat. 3258.

### 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, § 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, § 439, as added Pub. L. 92–318, title I, § 133(a), June 23, 1972, 86 Stat. 265; amended Pub. L. 94–273, § 3(9), Apr. 21, 1976, 90 Stat. 376; Pub. L. 94–482, title I, § 127(a), Oct. 12, 1976, 90 Stat. 2136; Pub. L. 95–43, § 1(a)(38), June 15, 1977, 91 Stat. 217; Pub. L. 96–374, title IV, § 421(a)–(e)(1), title XIII, § 1391(a)(1), (3), Oct. 3, 1980, 94 Stat. 1427–1430, 1503; Pub. L. 97–35, title V, § 538, Aug. 13, 1981, 95 Stat. 457; Pub. L. 97–115, § 18, Dec. 29, 1981, 95 Stat. 1610; Pub. L. 97–301, § 14, Oct. 13, 1982, 96 Stat. 1405; Pub. L. 98–79, §§ 2, 8, Aug. 15, 1983, 97 Stat. 476, 483; Pub. L. 99–272, title XVI, §§ 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

2006—Subsec. (r)(15)(A). Pub. L. 109–291 substituted “means any nationally recognized statistical rating organization, as that term is defined in section 78c(a) of title 15” for “means any entity recognized as such by the Securities and Exchange Commission”.

2004—Subsec. (r)(9), (12). Pub. L. 108–271 substituted “Government Accountability Office” for “General Accounting Office” wherever appearing.

2000—Subsec. (r)(2)(A)(i). Pub. L. 106–554, § 1(a)(1) [title III, § 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, § 1(a)(1) [title III, § 309(2)], added subpar. (F).

1996—Subsec. (r)(1)(C). Pub. L. 104–208, § 101(e) [title VI, § 602(b)(3)(A)], added subpar. (C).

Subsec. (r)(2)(A)(i), (ii). Pub. L. 104–208, § 101(e) [title VI, § 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, § 101(e) [title VI, § 602(b)(3)(B)(ii)], added subpar. (D).

Subsec. (r)(2)(E). Pub. L. 104–208, § 101(e) [title VI, § 602(b)(4)(A)], added subpar. (E).

Subsec. (r)(12). Pub. L. 104–208, § 101(e) [title VI, § 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, § 101(e) [title VI, § 602(b)(2)(B), (C)], added par. (13) and redesignated former par. (13) as (15).

Subsec. (r)(14). Pub. L. 104–208, § 101(e) [title VI, § 602(b)(3)(C)], added par. (14).

Subsec. (r)(15). Pub. L. 104–208, § 101(e) [title VI, § 602(b)(2)(B)], redesignated par. (13) as (15).

Subsec. (r)(16), (17). Pub. L. 104–208, § 101(e), [title VI, § 602(b)(4)(B)], added pars. (16) and (17).

Subsec. (s). Pub. L. 104–208, § 101(e) [title VI, § 602(c)], added subsec. (s).

1994—Subsec. (d)(1)(C). Pub. L. 103–382, § 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, § 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, § 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, § 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, § 4104, added par. (7).

Subsec. (q). Pub. L. 103–66, § 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, § 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, § 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, § 431(c), substituted “second highest rating” for “third highest rating”.

Subsec. (f). Pub. L. 102–325, § 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, § 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”.

### Statutory Notes and Related Subsidiaries

### Change of Name

Committee on Education and Labor of House of Representatives changed to Committee on Education and the Workforce of House of Representatives by House Resolution No. 5, One Hundred Eighteenth Congress, Jan. 9, 2023.

Committee on Labor and Human Resources of Senate changed to Committee on Health, Education, Labor, and Pensions of Senate by Senate Resolution No. 20, One Hundred Sixth Congress, Jan. 19, 1999.

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

Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 602(d)(2)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–289, provided that: “The repeals made by paragraph (1) [repealing this section and section 1087–3 of this title] shall be effective one year after— 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 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

Pub. L. 104–208, div. A, title I, § 101(e) [title VI, § 602(e), (f)], Sept. 30, 1996, 110 Stat. 3009–233, 3009–289, 3009–290, provided that: 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. 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).”