11/3/2009 3:58 PM ET
(RTTNews) -
Senator Mike Johanns, R-Neb., sent a letter to Education Secretary Arne Duncan on Tuesday, calling on Duncan to retract his recent letter advising colleges and universities to move toward a 100-percent government-run student loan delivery system.
"The Obama administration seems intent on denying competition and ramming through a federally-run student loan system," Johanns said in his letter. "By encouraging institutions of higher learning to move quickly to a government-run system, it appears the White House is trying to end run Congress and strong-arm its way toward nationalizing the student loan industry."
Last week, Duncan sent a letter out to thousands of colleges and universities in which he encouraged them to prepare to use the government's Direct Loan Program for the 2010-2011 school year.
"I am writing to seek your assistance and offer mine in taking the necessary steps to ensure uninterrupted access to federal student loans by ensuring your institution is Direct Loan-ready for the 2010-2011 academic year," Duncan wrote in his letter.
He added, "While there are encouraging signs that the financial markets are rebounding, the most prudent course of action is for you to ensure that your institution is Direct Loan-ready for the 2010-2011 academic year. That way, loan access for your students will be assured."
The Federal Direct Student Loan Program was signed into law by President Bill Clinton in 1993, though it did not cover all new loan organizations.
Under the Obama administration's proposal, this would change, and by July 2010, all new loan originations will be under the Direct Loan program.
by RTT Staff Writer
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