KION - Monterey, Salinas, Santa Cruz - News WeatherFeds block Schwarzenegger's plan to sell EdFund
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Associated Press - July 30, 2010 9:14 PM ET
SACRAMENTO, Calif. (AP) - Federal officials are blocking Gov. Arnold Schwarzenegger's plan to sell the state's student loan guarantee operation to help fill California's deficit.
Schwarzenegger had hoped to sell the nonprofit EdFund for as much as $1 billion to help fill the state's $19 billion hole.
But in a letter obtained Friday, the U.S. Department of Education says the federal government plans to terminate its agreement with the state to run EdFund by October.
The nonprofit provides guarantees on loans for students to attend college.
The letter indicates the federal government plans to find a replacement agency.
David Richey, a spokesman for the governor's education secretary, says the decision will not affect student financial aid.
The department's decision was first reported by The Sacramento Bee.
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