The new president of the financial-aid-administrators’ association is asking the Education Department to reconsider its interpretation of a rule that requires colleges to have at least three unaffiliated lenders on their preferred-lender lists.

The rule, which was issued in November and goes into effect in July, was written to prevent lender monopolies. But the department has read the rule to require that all lenders on an institution’s list, whether three or 30, be unaffiliated with one another. Many financial-aid officers feel that interpretation is overly broad.

In a letter sent to department officials earlier this month, Philip R. Day Jr., president of the National Association of Student Financial Aid Administrators, argues that the department’s interpretation conflicts with both the regulation itself and the discussion on it that took place in negotiated rule making last year. He says the department’s requirement could “have the effect of seriously limiting borrower choice” at a time when lenders are leaving the guaranteed-loan program at an alarming rate.

The department’s interpretation, he writes, “could not come at a worse time.”

“Combined with the present uncertainty about access to loans and the fact that many schools already have their preferred-lender lists in place,” the letter says, “this interpretation poses significant challenges as financial-aid offices face their peak loan-processing and student-counseling season.” —Kelly Field