THE VIRGINIAN-PILOT 
              Copyright (c) 1995, Landmark Communications, Inc.

DATE: Wednesday, November 22, 1995           TAG: 9511220511
SECTION: BUSINESS                 PAGE: D3   EDITION: FINAL 
SOURCE: BY ALBERT B. CRENSHAW, THE WASHINGTON POST 
DATELINE: WASHINGTON                         LENGTH: Short :   40 lines

FEE IS RULED LEGAL ON MOST STUDENT LOANS

A federal judge has ruled that a special fee imposed by Congress on the Student Loan Marketing Association in 1993 is constitutional, though he ruled that it could not be applied in some circumstances.

The company applauded the restriction imposed by U.S. District Judge Stanley Sporkin Monday, but said it expected to appeal the rest of his decision.

Sallie Mae is a congressionally chartered, stockholder-owned corporation that buys government-guaranteed student loans from banks and other lenders. The company was set up in 1972 to provide a mechanism by which lenders could sell student loans if they desired, rather than being forced to keep funds tied up after the loans were made.

At issue is a 0.3 percent ``offset fee'' imposed annually on the company for, in effect, the privilege of holding a government charter. The fee has been levied on most loans purchased by Sallie Mae since Aug. 10, 1993, and had cost the company a total of $21 million through last spring.

The offset fee, which applies only to Sallie Mae, was imposed on the theory that once such a company reaches the point where it would be viable without its government charter it should reimburse the government for use of the charter. The fee also is meant to reduce the company's cost advantage over competitors.

Sporkin upheld the fee when it is levied on loans the company owns, but ruled that the government could not impose it on loans that have been placed into pools and securities sold based on those pools, a process known as ``securitization.''

KEYWORDS: STUDENT LOAN U.S. DISTRICT COURT RULING by CNB