Shares of the Student Loan Marketing Association jumped in active trading Monday as investors apparently decided that final plans by the government to restructure the college loan program were not as bad as expected.

Sallie Mae stock was up $1.625 to $49.125 at the close, with heavy volume of more than 2 million shares.

Help was provided by a rating increase to "buy" from "hold" from Eric Hemel of Morgan Stanley & Co., with a $56 target for the stock in 12 months.

Based on the congressional compromise, Mr. Hemel raised his 1994 earnings estimate to $5.40 from $4.40 and raised his five-year growth rate estimate to 10% from zero.

Banks Opposed Clinton Plan

But Sallie Mae's price is still nearly 35% below the 52-week high of $75.875 it reached before Bill Clinton's election as president.

Congressional negotiators last Friday reached a compromise to shift up to 60% of government-backed college loans to direct lending within five years.

President Clinton wanted a complete move into direct lending, but that was fiercely opposed by banks, which now originate most student loans.

Sallie Mae makes a secondary market in the loans, buying them from banks and then issuing securities with the loans as collateral.

|More Positive' than Speculated

"The proposal, as it stands, is more positive than the speculation a few weeks ago about what might be coming down the pike," said Thomas O'Donnell. an analyst at Prudential Securities Inc.

Sallie Mae shares bottomed out on June 23 at $40 - 47.3% below their high on Sept. 14 - as worries peaked on Wall Street about the final shape of the government direct lending plan.

Mr. O'Donnell on Monday raised his 1994 earnings estimate for Sallie Mae to $5.40 from $4.45 per share, reflecting the compromise on fees to be paid by the government-sponsored enterprise. His estimate for this year remains at $4.85.

Expresses Caution

But the analyst is extremely cautious about the stock, rating it a "hold" and recommending it only for speculative investors.

"Next year looks like the earnings peak. Beyond that, things are very cloudy, with the ultimate impact of direct lending unknown," he said.

Gary Gordon, an analyst at PaineWebber Inc., has a similar "hold" rating with a "negative bias" on the stock because of what he term a "serious cut" in revenue prospects.

Under the plan, direct student lending by the government would cover 5% of college loans for the 1994-95 academic year, jump to 40% in 1995-96, climb to 50% in each of the two succeeding years and then peak at 60% in 1998-99.

Fee of 0.30% Required

The Clinton administration believes direct lending will be cheaper than paying interest rate subsidies to banks. Critics assert the government and colleges involved will not be able to manage the program.

Under the compromise struck by Senate and House negotiators, Sallie Mae would have to pay an annual fee of 0.30% on new loans it purchases. The fee will cost the company an estimated $540 million.

While the House version imposed no fee, the compromise proposal is better from Sallie Mae's perspective than the Senate version, which levied the fee on the company's entire $46 billion loan portfolio.

"The fee is prospective as opposed to being retroactive." pointed out Mr. O'Donnell.

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