Bush administration taking steps on student loans

WASHINGTON, April 23 (Reuters) - The Bush administration said on Wednesday that it was taking steps to address concerns about availability of student loans this summer, but downplayed the possibility of the Federal Financing Bank, a Treasury Department unit, playing a role in any federal intervention.

"We explored utilizing the Federal Financing Bank (FFB) in this manner but after a thorough analysis, it is clear that the FFB does not have the authority," said an April 23 letter from officials to Connecticut Democratic Sen. Christopher Dodd.

The letter was signed by Treasury Secretary Henry Paulson, Education Secretary Margaret Spellings and Jim Nussle, director of the Office of Management and Budget.

Turmoil in the $85-billion student loan market has raised concerns about loan availability this summer as students lock in financing before heading to university for the fall term.

Sallie Mae SLM.N, the largest U.S. student loan provider, has been pushing for the FFB to intervene in the market.

The letter said: "We are strongly committed to working with members of the House and Senate to quickly provide the Department of Education with additional authorities to minimize disruptions with student loan originations."

Among the steps that could be taken are measures included in a bill passed last week by the House of Representatives, the letter said.

The bill would let the Education Department buy federally guaranteed student loans from lenders unable to sell them on the largely inactive secondary market and funnel loan capital to colleges through state guaranty agencies. (Reporting by Kevin Drawbaugh; Editing by Lisa Von Ahn)