[Congressional Record Volume 142, Number 138 (Monday, September 30, 1996)]
[Senate]
[Pages S12008-S12009]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




           SALLIE MAE PRIVATIZATION IN OMNIBUS APPROPRIATIONS

  Mr. SIMON. Mr. President, I am pleased that the omnibus 
appropriations bill includes provisions in title VI that would 
privatize the Student Loan Marketing Association, known as Sallie Mae. 
This is the first time that a major government-sponsored enterprise has 
been cut loose from its Federal moorings, and that is an important 
precedent.
  I began calling for Sallie Mae's privatization in 1991, when I 
questioned the high salaries it was paying its executives, and I raised 
concerns about the organization's intense and often-deceptive lobbying 
against student loan reforms. That did not seem appropriate for a 
government-created entity.
  This is not the privatization bill that I would have written. Untying 
the company's ties to Federal taxpayers may take years, longer than I 
believe is necessary. Sallie Mae is not being required to repay any 
significant amount to taxpayers. It is true that a fee was imposed in 
1993, but the company has found a loophole to avoid paying a large part 
of that fee, and the privatization bill fails to close that loophole.
  But despite these flaws, this is an important development, 
particularly in

[[Page S12009]]

the larger context of improving government. We can learn from this 
effort, and I hope that my colleagues, in future Congresses, will take 
a close look at a bill I introduced with Senator Pryor recently, S. 
2095, which promotes a more rational and consistent approach to 
government-sponsored enterprises and government corporations.
  Mr. President, the Sallie Mae privatization provisions include 
important language designed to ensure that all students have access to 
loans. The Higher Education Act already requires that student loan 
secondary markets using tax-exempt bonds may not make lending or loan-
purchasing decisions based on the borrower's race, sex, color, 
religion, national origin, age, handicapped status, income, attendance 
at a particular institution, length of the borrower's educational 
program, or the borrower's academic year. The purpose of this rule is 
to ensure that secondary markets do not use such factors as excuses for 
not effectively performing the supportive functions for which the 
markets have been allowed to participate in the Federal student loan 
program. Section 604 of the omnibus appropriations bill amends the 
Higher Education Act to impose on Sallie Mae the same service 
requirement that apply under current law for tax-exempt secondary 
markets. This is a important element of the privatization 
legislation.

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