In his weekly radio address, Bush warned that time is running out for Congress to act and that students attending college in the fall are in danger of losing access to loans to pay for their schooling.

Last week the House passed overwhelmingly a bill that would allow the Department of Education to buy loans from lending companies such as JPMorgan Chase and Citigroup. The bill authorizes Secretary of Education Margaret Spellings to buy loans if she determines there is not enough available capital to meet student demands.

However, Sen. Edward Kennedy (D-Mass.), chairman of the Health, Education, Labor and Pensions Committee, is building support for his own bill, which significantly differs from the House legislation.

White House officials fear the differences between the House and Senate could slow the passage of legislation.

Dozens of lenders have dropped out of the government-backed student loan program in the wake of a national credit crunch caused by a slump in the housing market. A wave of foreclosures across the country has made it more expensive to raise capital. Now large lending companies say they will be less likely to lend to schools with high default rates such as community colleges.

“Recently, some lenders have dropped out of the federal program that provides college loans to students who have often little or no credit,” said Bush. “Without an adequate response, this means that many students may approach the upcoming school year uncertain of when they will be able to get their loans or where they will come from.”

Earlier this week, three senior Bush administration officials, Spellings, Treasury Secretary Henry Paulson, and Office of Management and Budget Director Jim Nussle, sent a letter to Congress urging the Senate to take quick action on the House bill, H.R. 5715, the Ensuring Continued Access to Student Loans Act of 2008.

Both Senate and House bills would increase the amount of government-backed loans that students could borrow and give lending companies more flexibility by allowing the Department of Education to buy existing loans.

The House bill would allow lenders who sell loans to the Department of Education to continue servicing the loan, giving them opportunity to make money on the loans. Supporters of the legislation say this is an important incentive to keep lending companies in the student loan market.

Critics of Kennedy’s bill, S. 2815, the Strengthening Student Aid for All Act, say that it would give lenders less flexibility and dictate pricing terms.